Hey, lawyer folks: Civil asset forfeiture? Whaaa?

A. Asset Forfeiture in Other Contexts

Forfeiture is a comprehensive term which refers to "[t]he divestiture of property without compensation" to the owner. [FN144] Applied in the context of punishment, it is
the legal process by which property[,] which was used unlawfully, or is the product of criminal activity, is seized and its title vested in the government: state, local or federal. [FN145]
No general forfeiture law exists. Each federal crime must have its own forfeiture provision written into the law. Today, there are more than 200 federal statutes which authorize a forfeiture sanction. [FN146] Most forfeiture actions in non-drug cases, however, proceed under either*349 section 981 of title 18 of the United States Code, which governs civil asset forfeiture actions, or section 982 of the same, which governs criminal asset forfeiture actions.
Asset forfeitures, by way of background, are deeply rooted in American history. The government's seizure of property used in, or derived from, a crime dates back to the Crown. Its use was based on the theory that a breach of common law, an offense to the King's peace, should deprive the transgressor of the right to own property. [FN147] During the seventeenth century, American colonial courts enforced English and local civil forfeiture statutes. One of the early acts of the First U.S. Congress following the ratification of the Constitution, in fact, was its enactment of forfeiture statutes for vessels and cargo involved in customs violations. [FN148]
Congress re-introduced the asset forfeiture sanction in 1970 in an effort to combat the rising drug trade and crime waves led by organized crime gangs. In 1970, Congress passed the Comprehensive Drug Abuse Prevention and Control Act, [FN149] which authorized drug-related asset forfeiture. [FN150] In order to wage the war on drugs, Congress sought to strike at the economic roots of the drug trade by divesting drug kingpins of their operating capital and profit. The range of forfeitable property expanded over the years to include all proceeds of a controlled substance transaction, whether direct or indirect, as well as all real property, moneys, negotiable instruments, and securities used or intended for use in the facilitation of the drug violation. [FN151]
The Organized Crime Control Act of 1970 (hereinafter "RICO") and related statutes [FN152] similarly authorized criminal asset forfeiture *350 for any offender who violates RICO section 1962. [FN153] In so legislating, Congress sought to expand efforts to combat organized crime's corruption of American businesses. It concluded that courts needed a means of wrestling economic control over the victimized business from the convicted racketeer; noting that too often incarcerating or fining defendants had little or no effect on their ability to run the business. [FN154] To that end, federal prosecutors, armed with RICO section 1963(a)(1), could obtain the forfeiture of "any interest the person has acquired or maintained [both tangible and intangible] in violation of [the prohibited activities of] section 1962." [FN155] However, since RICO forfeiture actions are in personam actions, the defendant must first be convicted of a RICO violation before any forfeiture can be ordered. The RICO conviction requires proof that the defendant used the proceeds of racketeering activity to acquire control of an enterprise, or used the racketeering activity to acquire or maintain control of an enterprise or to conduct its affairs. [FN156] It also requires proof that the defendant committed the two predicate acts, that those acts were part of a pattern, and that they had a particular impact upon the enterprise. [FN157] Consequently, use of this asset forfeiture provision may be limited when applied outside a narrow class of wrongdoers. [FN158]
Asset forfeiture also is authorized in money laundering cases. Although the Money Laundering Control Act of 1986 ("MLCA") [FN159] was *351 originally conceived as anti-drug legislation, [FN160] prosecutors typically rely upon its broad language and accompanying penalties to impose criminal liability on a variety of non-drug related wrongdoers (including white collar criminals). [FN161] Section 981 authorizes the civil asset forfeiture of property (real or personal) involved in, or traceable to, violations of the federal money laundering statutes, [FN162] among others, while section 982 authorizes the criminal asset forfeiture of property (real or personal) involved in, or traceable to, a money laundering offense. [FN163]
More recently, Congress employed the asset forfeiture sanction in response to the wave of insider trading scandals that marred Wall Street during the 1980s, as well as the savings and loan debacle of the 1980s and 90s. In each case, Congress enacted specific legislation designed to remove the economic motives of corporate insiders and bank fiduciaries who misuse, or foster the misuse of, their trusted positions for illegal gains. Congress adopted the Financial Institutions Reform, Recovery, and Enforcement Act (hereinafter "FIRREA") [FN164] in an effort to combat future savings and loan scandals. Viewing banking crimes as grave, Congress enhanced the existing criminal penalties to make those assets involved in, or traceable to, violations of banking crime statutes subject to both criminal and civil forfeitures, rather than only increasing the potential terms of imprisonment. [FN165] Not only did it amend sections 981 and 982 to require asset forfeitures by violators of the bank fraud and other banking crime statutes, but Congress also made bank fraud a predicate offense under the federal *352 racketeering statute ("RICO"), [FN166] thus ensuring that asset forfeiture would be ordered for convicted wrongdoers.
This approach had been similarly employed years earlier when Congress sought to combat rampant insider trading on Wall Street. At the time, it enacted the Insider Trading Sanctions Act ("ITSA") [FN167] and the Insider Trading and Securities Fraud Enforcement Act ("ITSFEA") [FN168] to combat the abuse of trust by insiders. Again, Congress targeted their economic motives and authorized the recovery of treble damages for profits gained and losses avoided. [FN169] In other words, violators were made to disgorge (as a monetary penalty) treble profits unlawfully gained, or those losses avoided by wrongdoers who traded while in possession of material nonpublic information obtained in breach of a fiduciary duty. As the aforementioned illustrates, Congress' failure to enact asset forfeiture legislation following the wave of corporate accounting frauds that occurred earlier this century is a striking departure from its past responses to criminal wrongdoing.
-DePaul Business & Commercial Law Journal

(1)(A)(i) Except as provided in clauses (ii) through (v), in any nonjudicial civil forfeiture proceeding under a civil forfeiture statute, with respect to which the Government is required to send written notice to interested parties, such notice shall be sent in a manner to achieve proper notice as soon as practicable, and in no case more than 60 days after the date of the seizure.

(F) If the Government does not send notice of a seizure of property in accordance with subparagraph (A) to the person from whom the property was seized, and no extension of time is granted, the Government shall return the property to that person without prejudice to the right of the Government to commence a forfeiture proceeding at a later time. The Government shall not be required to return contraband or other property that the person from whom the property was seized may not legally possess.
(2)(A) Any person claiming property seized in a nonjudicial civil forfeiture proceeding under a civil forfeiture statute may file a claim with the appropriate official after the seizure.
(B) A claim under subparagraph (A) may be filed not later than the deadline set forth in a personal notice letter (which deadline may be not earlier than 35 days after the date the letter is mailed), except that if that letter is not received, then a claim may be filed not later than 30 days after the date of final publication of notice of seizure.
(C) A claim shall--
(i) identify the specific property being claimed;
(ii) state the claimant's interest in such property; and
(iii) be made under oath, subject to penalty of perjury.
(D) A claim need not be made in any particular form. Each Federal agency conducting nonjudicial forfeitures under this section shall make claim forms generally available on request, which forms shall be written in easily understandable language.
(E) Any person may make a claim under subparagraph (A) without posting bond with respect to the property which is the subject of the claim.

(B) If the Government does not--
(i) file a complaint for forfeiture or return the property, in accordance with subparagraph (A); or
(ii) before the time for filing a complaint has expired--
(I) obtain a criminal indictment containing an allegation that the property is subject to forfeiture; and
(II) take the steps necessary to preserve its right to maintain custody of the property as provided in the applicable criminal forfeiture statute, the Government shall promptly release the property pursuant to regulations promulgated by the Attorney General, and may not take any further action to effect the civil forfeiture of such property in connection with the underlying offense.

(c) Burden of proof.--In a suit or action brought under any civil forfeiture statute for the civil forfeiture of any property--

(1) the burden of proof is on the Government to establish, by a preponderance of the evidence, that the property is subject to forfeiture;
(2) the Government may use evidence gathered after the filing of a complaint for forfeiture to establish, by a preponderance of the evidence, that property is subject to forfeiture; and
(3) if the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government shall establish that there was a substantial connection between the property and the offense.

(d) Innocent owner defense.--

(1) An innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence.
(2)(A) With respect to a property interest in existence at the time the illegal conduct giving rise to forfeiture took place, the term "innocent owner" means an owner who--
(i) did not know of the conduct giving rise to forfeiture; or
(ii) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.