BILL ANALYSIS SENATE COMMITTEE ON JUDICIARY Bill Lockyer, Chairman 1993-94 Regular Session AB 114 (Burton) As amended April 29, 1993 Hearing date: June 20, 1993 Health & Safety Code LGK CONTROLLED SUBSTANCES: ASSET FORFEITURE HISTORY Source: Author Prior Legislation: SB 1705 (1992) - Failed passage, Public Safety AB 2311 (1992) - Vetoed SB 139 (1991) - Failed passage, Public Safety SB 141 (1991) - Held, Assembly Public Safety SB 1786 (1990) - Died in Assembly AB 4251 (1990) - Chaptered AB 1450 (1989) - Chaptered AB 4162 (1988) - Chaptered Support: Individuals Opposition: Los Angeles Area Chamber of Commerce Assembly Floor vote: Ayes 60 - Noes 5 (THIS ANALYSIS REFLECTS AUTHOR'S AMENDMENTS TO BE OFFERED IN COMMITTEE) KEY ISSUES SHOULD ASSET FORFEITURE LAW BE EXTENDED AND REVISED? (More) AB 114 (Burton) Page 2 PURPOSE Existing law permits the forfeiture of a person's real and personal šproperty when the property has been used to facilitate specified šcontrolled substance activities or when the property was obtained šas the result of a controlled substance offense. Existing law, which will sunset January 1, 1994, provides for šforfeiture in a civil action which need not be based on a criminal šconviction. Forfeiture is predicated on a preponderance of the ševidence. This bill, as amended April 29, 1993, would delete the sunset šprovision of the asset forfeiture law and would make numerous šsubstantive, clarifying, and technical changes in the asset šforfeiture law. As proposed to be amended, the existing provisions of this bill šwould be deleted and it would become a "spot bill" for use as a švehicle for further discussion. See Comment 9, below. The purpose of this bill is to make asset forfeiture laws permanent šand to provide additional protections for innocent parties. COMMENT 1. Expressed need for the bill According to the author: Existing asset forfeiture statutes are susceptible to abuse. Innocent people have all too frequently lost their property without due process. At least one man has died defending his home from law enforcement personnel apparently motivated by the desire to seize his property. Although the seizure of the drug profits of kingpins is a desirable goal, when the assets of innocent persons are seized, nobody benefits. The purpose of this bill is to put in place the necessary protections to ensure that people's property rights, and due process rights, are protected. The war on drugs should not be won at the expense of our hard won freedoms. (More) AB 114 (Burton) Page 3 2. Background Asset forfeiture is a civil proceeding. Property alleged to be related to a drug crime (e.g., a car in which drugs were transported or a building out of which drugs were sold) or money or property alleged to be the fruit of the drug crime may be seized by law enforcement. The action is against the property (in rem) itself, not against the owner. Therefore, there is no requirement that the owner of the property, or any other person, be charged with a criminal offense. The owner of personal property valued under $100,000 has 10 days to file a claim with the court if he or she desires to challenge the forfeiture complaint. If a claim is not filed, the property is forfeited. The general provisions of the Code of Civil Procedure apply to forfeiture of real property and property valued over $100,000. Forfeiture is permitted of anything of value which was subject to forfeiture within five years of seizure. A forfeiture complaint must be filed within one year of seizure of the property. The community property interest in a vehicle up to $10,000 and in a family residence up to $100,000 is not subject to forfeiture, unless the spouse knew or should have known of the unlawful use of the property. After a claim is filed, the claimant may move for return of any seized property on the basis that there is no probable cause to believe the property is subject to forfeiture. There is no right to court-appointed counsel for the indigent. If a person hires an attorney and is successful in having the property returned, he or she has no right to recover attorney's fees. Both the court maintaining the criminal action and the civil forfeiture court have jurisdiction over property subject to forfeiture. Either side may move to continue an asset forfeiture case until after the trial of a related criminal case. If an asset forfeiture case goes to trial, the prosecution must prove by a preponderance of the evidence that the property was used or intended to be used to further a drug crime or that the property represents the proceeds of a drug crime. (More) AB 114 (Burton) Page 4 A third party may lose his or her interest in the property if he or she knew or reasonably should have known that the property would be used to further a specified drug crime. However, in the case of a liquor license, forfeiture cannot occur unless the owner had knowledge of the illegal activity and willfully consented to it. There are limited protections for innocent third-party purchasers. Once property is forfeited, it is generally sold at an auction with the net proceeds to be apportioned as set forth above. However, law enforcement is entitled to convert any forfeited vehicles, boats, and airplanes to its own use. Since the current program began in 1989, the program has provided for the forfeiture of over $180 million in drug assets. 76.5% of the proceeds from asset forfeiture is returned to the state and/or local law enforcement agencies that participated in the seizures, 13.5% is returned to the prosecuting agency, and 10% is deposited in the Asset Forfeiture Distribution Fund and is administered by the Office of Criminal Justice Planning. Proceeds may not supplant any other funds that would otherwise be distributed to those agencies. 3. Offenses which trigger forfeiture provisions Existing law subjects to forfeiture a boat, airplane, or any š vehicle which has been used to facilitate the possession for sale or sale of specified amounts of controlled substances, including 7.125 grams of heroin or cocaine, 14.25 grams of other specified controlled substances, or 5 pounds of marijuana, peyote, or psilocybin. Existing law subjects to forfeiture all raw materials, products, and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing, or exporting any controlled substance. Existing law subjects to forfeiture any moneys or other things of value furnished or intended to be furnished in exchange for a controlled substance, and any proceeds traceable to specified controlled substance-related offenses. Existing law authorizes seizure of controlled substances and instruments or paraphernalia used for unlawfully using or administering controlled substances. Existing law subjects an on-sale or off-sale liquor license to forfeiture for specified offenses related to controlled (More) AB 114 (Burton) Page 5 substances. 4. Summary of issues regarding current law a. Claims procedure Many people do not file claims. Prosecutors contend that this is because they are drug criminals. Defense attorneys contend that many people do not receive legal advice and do not gain knowledge of the procedure within the 10 days available to contest the action. Moreover, they state that if the potential claimant is in jail, he or she may not have access to a claim form. b. No criminal conviction required Existing law permits assets to be seized and forfeited even if the person accused of committing the drug crime is never charged or convicted. Opponents of current law state that an innocent person might lose his or her property merely because he or she is a suspect or a friend or family member of a suspect. Proponents of existing law respond that when a large amount of drug money is seized, it may not be possible to prove beyond a reasonable doubt that the person in possession of the money has committed a drug crime. It is therefore necessary that the civil standard of "preponderance of the evidence" be used. They also point out that when a defendant flees the jurisdiction, it is not possible to obtain a conviction. c. Right to counsel may be denied A person who cannot afford an attorney has no right to a public defender or appointed counsel in a forfeiture action. Moreover, opponents of current law state that some of those who can afford counsel are prevented from hiring an attorney when the prosecutor seizes their assets. Opponents state that, without counsel, it often is futile to contest an asset forfeiture case. Opponents contend that a defendant found "not guilty" or never charged with a criminal offense may lose his or her monetary assets and real property due to lack of legal representation. Observers have made various suggestions regarding this issue. One possibility is the awarding of attorney's fees when a claimant (owner of the seized asset) prevails. Another possibility is a fee schedule to permit limited payment of a claimant's attorney fees from the seized assets. (More) AB 114 (Burton) Page 6 d. Cost of legal fees to contest asset forfeiture may exceed value of property In actions where assets under $10,000 are seized, attorney's fees to contest asset forfeiture often exceed the value of the property. Thus, even when an innocent person is able to hire an attorney to contest asset forfeiture, it is often impractical to do so. For example, in one case a resident of Southern California had his $10,000 bank account seized because a nephew in Northern California was a suspected drug dealer. Although neither the nephew nor the uncle was ever prosecuted for a crime, the district attorney pursued the asset forfeiture case. While this individual eventually prevailed in court, his attorney's fees amounted to $15,000. There is no provision in existing law for an innocent person to recover attorney's fees from the government, nor is the innocent individual compensated for the loss of use of his or her money or property. e. Seizure from third parties Property may be seized from third parties on the allegation that the third party knew or should have known the property would be used in a drug crime. Opponents state that this is a very broad standard. One example given was that of an elderly widow who lost her car after loaning it to her son when the son was accused of possession of drugs for sale. Proponents respond that judges closely scrutinize cases involving property loaned to another. Proponents state that there are very few people, if any, who lose their property under the circumstances cited above. f. Conflicts of interest Approximately 90% of the revenue from asset forfeiture is divided between the law enforcement agencies seizing the property and the prosecutor. Asset forfeiture is a multi-million-dollar source of revenue for law enforcement. Thus, there is an incentive to seize property as a revenue source. Opponents of existing law state that there is an inherent conflict of interest in which persons suspected of participation in or having knowledge of drug crimes rarely will be given the benefit of the doubt by those who will gain financially by the seizure. This particular problem (More) AB 114 (Burton) Page 7 is exaggerated in times of tight budgets. Some also fear that in cases involving large amounts of money and property, prosecutors may forgo criminal prosecution of a wealthy drug dealer in exchange for the defendant's agreement not to contest a lucrative asset forfeiture case. Proponents acknowledge the possibility of a conflict of interest but state that strict guidelines and training are in place to prevent conflict-of-interest problems from occurring. They state that they are unaware of any actual problem in this area. However, a recent investigation by the Ventura County District Attorney concluded that a race between law enforcement agencies to obtain a lucrative asset resulted in numerous improprieties and culminated in the death of an innocent party. See Comment 6, below. 5. Summary of AB 114 as amended April 29, 1993 As this bill passed the Assembly, it would extend the asset forfeiture program. Among other provisions, the bill: a. Repeals the sunset. b. Provides attorney fees for claimants who prevail over the state in a forfeiture action. c. Provides 30 or 60 days to file a claim of interest in forfeitable property. d. Requires forfeiture in most situations by clear and š convincing evidence. e. Requires that third party real property owners have actual knowledge of and willfully consent to the offense. f. Gives the court discretion whether to have law š enforcement operate the property during pendency of the forfeiture action. g. Authorizes the court to amend a judgment pursuant to š Code of Civil Procedure Section 473. h. Provides that the choice of a county of jurisdiction shall not place a reasonably avoidable burden on any claimant. (More) AB 114 (Burton) Page 8 i. Requires that the court evaluate the proportionality of š the state's interest in the property in comparison with the magnitude of the underlying offense, in order to provide a uniform and proportionate forfeiture law and ensure against the taking of property in unreasonable proportion to the offense. j. Provides requirements for maintaining and operating property subject to forfeiture so that the assets and properties be maintained and preserved. k. Extends the notification requirements by law š enforcement. l. Provides that proceeds from the forfeiture program be š placed in an asset forfeiture fund maintained by the Department of Justice for redistribution to law enforcement, first to all entities with a legitimate interest in the property, then up to 5 percent each to the Restitution Fund and to county mental health programs, then at least 10% to drug abuse prevention and education programs, then to local law enforcement and prosecution agencies. 6. Alleged abuses under existing law This committee has been contacted by a number of persons alleging law enforcement abuse of existing law. Many of the allegations have been under federal law, while some have been under state law. Two widely publicized situations are: a) Donald Scott The Donald Scott situation drew much attention last year. In a federal forfeiture action Scott was shot and killed by law enforcement officers who entered his home in a rural part of Ventura County looking for drugs they never found. After an investigation, Michael Bradbury, the District Attorney of Ventura County, strongly criticized the law enforcement investigation leading up to the raid on Scott's home and came to the conclusion that the raid on his home was at least partially motivated by the desire to seize his extensive real estate. There appeared to be a race between federal, state, and local law enforcement agencies to "make the bust" in order to claim the asset forfeiture proceeds. This example showcases the dangers of the zeal that may cause law enforcement to overemphasize the revenue-enhancing aspect of asset forfeiture. b) Bilal Nasir (More) AB 114 (Burton) Page 9 Mr. Nasir's son borrowed his car and drove from Southern California to Sacramento, where he was arrested on a drug charge. Mr. Nasir was notified that the police were seizing his car and that he had 10 days within which to file a verified claim. In the time it took him to find out what he had to do to file his claim, and to be able to come to Sacramento, 11 days had passed. When the claim was filed, the Sacramento District Attorney opposed it on the grounds that it was not filed in a timely manner. The court would not let Mr. Nasir file his claim. Eventually the Court of Appeal ordered the District Attorney to allow the man's claim to be litigated, for reasons unrelated to the statute of limitations. However, by the time of the court's order, Nasir's car had been sold by the District Attorney (Nasir v. Sacramento County District Attorney (1992) 11 Cal.App.4th 976). 7. Constitutionality Although asset forfeiture is structured as a civil in rem proceeding with the complaint filed against the property rather than the owner, the United States Supreme Court has recently decided that asset forfeiture is a punishment and is therefore subject to the Excessive Fines Clause of the Eighth Amendment to the U.S. Constitution. (Austin v. United States, June 28, 1993, 93 Daily Journal D.A.R.8138). In Austin, the petitioner brought two grams of cocaine in his mobile home to his body shop and sold the cocaine to an undercover agent. The government seized the mobile home and body shop under federal asset forfeiture law. Refusing to determine the permissible limits of forfeiture under the excessive taking clause, the Court returned the case to the lower court for a determination of proportionality. In anticipation (?) of the Court's decision, AB 114 as amended April 1, 1993, would add the following language to the forfeiture statutes: The Legislature finds that even though forfeiture law is civil in nature, it does penalize persons for their criminal behavior, and therefore equal protection and due process must be observed in all phases of the proceedings. The court entering a judgment of forfeiture shall evaluate the proportionality of the state's interest in the subject property, in comparison with the magnitude of the underlying offense. The objective of this evaluation shall be to provide a uniform and proportionate forfeiture law, and to ensure against the taking of property in unreasonably proportion to the offense. (More) AB 114 (Burton) Page 10 The California Supreme Court, in Nasir v. Sacramento County District Attorney, 11 Cal.App.4th 976 (1992), discussed under Comment 6, above, determined that the district attorney must rigidly adhere to statutory requirements for notice. The court also noted that there is a long-standing judicial policy that šstrongly favors determination of disputes on the merits rather šthan by forfeiture. The United States Supreme Court recently decided that the federal asset forfeiture provision relating to innocent owners has been interpreted too narrowly by prosecutors. In United States v. A Parcel of Land, 93 Daily Journal D.A.R.2408 (February 24, 1993), the Court held that a third party owner of property must have the chance to invoke and offer evidence to support the innocent owner defense, even when the property has been purchased with funds traceable to sale of controlled substances. 8. Related legislation SB 1158 (Maddy), which is currently before the Assembly Public Safety Committee, would also extend the asset forfeiture program. Among other provisions as amended May 24, 1993, that bill would have: a. Repealed the sunset provision governing the asset forfeiture program. b. Expanded the asset forfeiture laws to include property used in additional offenses and to include the whole of any tract of land subject to forfeiture. c. Modified the community property exception to asset forfeiture laws. d. Restricted jurisdiction over forfeiture actions to the civil court. e. Revised the notice and standing provision of the asset forfeiture laws. During the hearing before this committee, it was agreed that SB 1158 would be amended to delete the new language and would be reported out of the committee in anticipation of a Conference Committee later this year, during which the differences between SB 1158 and AB 114 could be rectified. 9. Author's proposed amendment In anticipation of a Conference Committee later this year, the author has agreed to delete the current language of AB 114 and (More) AB 114 (Burton) Page 11 allow it to become a "spot bill" to be used as a vehicle for further debate later this year. ********** (More)