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CONTESTING THE GOVERNMENT'S
FINANCIAL INTEREST IN DRUG CASES
13 CRIMINAL JUSTICE No. 4 (1999)
By Eric D. Blumenson & Eva Nilsen
*
In 1984, the civil asset forfeiture law was amended to allow the Justice
Department and state law enforcement agencies to retain many of the "drug related
assets" they seize for their own law enforcement purposes. Under this amendment, some
local law enforcement agencies have managed to double or triple their appropriated
budgets by targeting such assets. As former Attorney-General Richard Thornburgh has
noted, "its now possible for a drug dealer to serve time in a forfeiture-financed prison
after being arrested by agents driving a forfeiture-provided automobile while working in a
forfeiture-funded sting operation." The American people are paying a price for this
largess, however: economic temptation now hovers over all law enforcement decisions,
and law enforcement activity is becoming increasingly skewed in counterproductive
ways. Since 1984, police and prosecutorial agencies have routinely operated under a
conflict between their economic self-interest and traditional law enforcement objectives.
Both the crime prevention and due process goals of our criminal justice system are
compromised when salaries, continued tenure, equipment, modernization, and budget
depend on how much money can be generated by forfeitures.
This article discusses the constitutional problems with this conflict of interest.
When substantial, police and prosecutorial conflicts of interest violate the Due Process
Clause -- and as we show below, such conflicts are substantial in a great many cases. We
believe that the conflict of interest objection is appropriate not only in civil forfeiture
*
Eric Blumenson is a professor at Suffolk University Law School. Eva Nilsen is an associate
clinical professor at Boston University School of Law. The authors’ research was supported by a
grant from the Open Society Institute’s Individual Project Fellowships Program. Their full report,
including sources for all the information herein, is entitled “Policing for Profit: The Drug War’s
Hidden Economic Agenda,” 65 University of Chicago Law Review 35 (1998).
2
cases themselves, but in any case in which the government's actions may have been
influenced by the potential to fund itself through forfeiture. For example, in a criminal
drug prosecution, counsel should consider a motion to dismiss when a wealthy defendant
was singled out for prosecution because he possessed forfeitable assets; but a motion to
dismiss may be equally sound on behalf of a poor defendant who was not offered as
lenient a plea bargain as equally culpable co-defendants who were able to trade their
assets for time. In both of these contexts, the defendant has suffered actual prejudice
because of the government’s conflict of interest. The government’s conflict may also
provide the basis for a motion to disqualify a prosecutor whose salary is in part dependent
on forfeitures -- as in Eastern Massachusetts, where a recent investigation disclosed that
12% of the district attorneys’ budgets were financed through forfeitures they obtained.
Of course, numerous other challenges may be posed in particular forfeiture cases,
many of which are comprehensively discussed in David Smith’s treatise, Prosecution and
Defense of Forfeiture Cases. Here we focus on previously unasserted challenges to
forfeiture’s economic incentives. It may be that courts will prove more amenable to a
well argued constitutional attack on this aspect of the forfeiture laws than they have been
to attacks on the forfeiture laws generally or on the conduct of well-intentioned law
enforcement officers in particular cases.
THE GOVERNMENT’S DRUG WAR DIVIDEND
The government's conflict results from two 1984 acts redirecting the disposition
of assets forfeited under 21 USC 881. Under sec. 881, cash, bank accounts, jewelry, cars,
boats, airplanes, businesses, houses, land and any other property which "facilitated" a
drug crime may be seized and forfeited to the government. With the Comprehensive
Crime Control Act of 1984 (PL 98-473 sec. 309-310), these assets, which formerly were
deposited in the Treasury's General Fund, were instead channeled into the Justice
Department's Asset Forfeiture Fund where they would be available for law enforcement
3
purposes. A second law initiated a federal "equitable sharing" program, whereby state
police who turn seized assets over to the Justice Department for "adoptive federal
forfeiture" receive back up to 80% of the value, to be used exclusively for law
enforcement purposes. See 21 USC sec. 881(e)(1)(A) and 19 USC sec. 1616a(c). For
many state and local police departments, 80% is a far larger proportion of the assets than
they would receive by proceeding under their own state forfeiture laws, which generally
require sharing with other state agencies. The profit and ease of federal adoption has led
to widespread circumvention of stricter state forfeiture laws.
THE DUE PROCESS OBJECTION
The Constitutional due process guarantee includes the right to an impartial
tribunal in both civil and criminal cases. Tumey v. Ohio, 273 U.S. 510, 523, 532 (1927);
Ward v. Village of Monroeville, 409 U.S. 57 (1972). These precedents should outlaw
such forfeiture statutes as Louisiana's, which authorizes the criminal court to issue a
warrant for seizure of the property, order forfeiture, and then allocate forty percent of the
proceeds to its own criminal court fund.
But the more potentially significant question is whether police and prosecutorial
decisions must also satisfy due process standards of impartiality. At this point the
Supreme Court has indicated only that (1) the stringent impartiality standard it requires
of adjudicatory officials does not apply to prosecuting officials, but (2) neither is the
prosecutor free from all conflict of interest restrictions. Some due process limits on law
enforcement rewards do exist, but where between these poles they may be found must
still be spelled out, and likely will be when litigants focus on the equitable sharing
payback law.
What constitutional guidance exists is found primarily in Marshall v. Jerrico, 446
U.S. 238, 242 (1980). Jerrico upheld a section of the Fair Labor Standards Act that
allowed a division of the Labor Department to retain the civil penalties it assessed for
4
child labor violations, as compensation for the costs of determining violations and
assessing penalties. Distinguishing the conflict of interest prohibitions governing a
factfinder, who must be and appear impartial, from the less stringent limitations on law
enforcement officials, the court held that prosecutors "need not be entirely neutral and
detached. In an adversary system, they are necessarily permitted to be zealous in their
enforcement of the law." At 248. But this was far from a blank check for prosecutorial
self-aggrandizement, because the Court simultaneously emphasized that prosecutors too
are bound by at least some due process limitations on conflicts of interest:
We do not suggest...that the Due Process Clause imposes no limits on the
partisanship of administrative prosecutors. Prosecutors are also public officials;
they too must serve the public interest. In appropriate circumstances the Court has
made clear that traditions of prosecutorial discretion do not immunize from
judicial scrutiny cases in which the enforcement decisions of an administrator
were motivated by improper factors or were otherwise contrary to law. Moreover,
the decision to enforce — or not to enforce — may itself result in significant
burdens on a defendant or a statutory beneficiary, even if he is ultimately
vindicated in an adjudication. A scheme injecting a personal interest, financial or
otherwise, into the enforcement process may bring irrelevant or impermissible
factors into the prosecutorial decision and in some contexts raise serious
constitutional questions. (At 249-50).
In Jerrico the Court found that the constitutional barrier had not been crossed
because the institutional benefit to the prosecuting department (the Employment
Standards Administration) was too small to be a factor in decisions regarding whom to
prosecute and how much to fine. The Court examined three relevant factors — the
degree of institutional financial dependence on the prosecutorial decision, the official's
personal stake, and the penalty distribution formula — and none of them suggested any
temptation towards impropriety. But in the forfeiture situation, each of these three factors
cuts the other way, and to an extreme degree. One could hardly design an incentive
system better calculated to bias law enforcement decisions than the present forfeiture
laws. Taking the Jerrico factors in order:
5
Financial dependence: In Jerrico the penalties collected totaled less than 1% of
the ESA's budget, and because more than this amount was returned to the Treasury, they
had not increased the ESA's funding at all. By contrast, numerous law enforcement
agencies now rely on forfeitures to fund a significant part of their operations. The gross
amounts are prodigious: By 1987 the Drug Enforcement Administration was effectively
paying for itself, with seizures exceeding its annual budget. Between 1985 and 1991, the
Justice Department collected more than 1.5 billion in illegal assets; in the next five years,
the Justice Department almost doubled this intake, depositing $2.7 billion in its Asset
Forfeiture Fund. It appears that this forfeiture income is sometimes required to operate
the Department, which has regularly exhorted its attorneys to make "every effort" to
increase "forfeiture production" so as to avoid budget shortfalls. Similarly, Justice
Department reports have observed that state and local law enforcement agencies are
becoming increasingly dependent upon equitable sharing of forfeiture proceeds, and that
multijurisdictional drug task forces "expect to have to rely increasingly on asset
forfeitures for future resources."
Personal interest: Although the Justices found that the ESA Regional
Administrators had no personal stake in the penalties they assessed, they did note that
constitutional violations might have arisen had the arrangement injected a personal stake
into the prosecutor's decisions. The revised forfeiture laws do create such a stake: when a
police department is allowed to rely on forfeiture income to supplement its allocated
budget, its officer's choice of who and what to target may mean the difference between a
paycheck and a pink slip. Indeed, in some departments, police salaries are paid directly
from asset forfeiture funds, so long as the funds supplement rather than supplant budgeted
positions.
1
1
Directive 91-4 at 8, in DOJ Asset Forfeiture Manual at B-584.35-36. See also “Money at the root of
deals,” Boston Globe at 1, 6 (Sept. 25, 1995)(reporting that forfeiture funds finance police overtime pay
and rents, and that district attorneys “have grown dependent on the drug money as a way to help pay their
basic operating expenses”).
6
The funding formula: Finally, in Jerrico the court stressed that the statutory
scheme reimbursed regional offices according to their expenses rather than their
collections, providing no reason for regional offices to seek unreasonably large penalties.
No such restraint exists in the asset retention statutes; the larger the seizure, the higher the
reward each participating office receives.
The above three factors were singled out by the Supreme Court as indicia of
whether police or prosecutors were affected by their financial stake in the case. But in
many forfeiture-inspired cases, counsel will have direct evidence that decision making
was corrupted in ways that violate the due process guarantee enunciated in Jerrico. In all
of the following types of cases, a defendant may have suffered legally cognizable
prejudice -- i.e. the defendant would not have been targeted, or treated as harshly, in the
absence of the agency’s financial interest:
1. Selective prosecution of asset-rich defendants: Consider whether the law
enforcement agency selected its targets according to the funding they could provide rather
than the threat they posed to the community. A Justice Department-commissioned report
proposed precisely this approach to multijurisdictional task force commanders,
suggesting that as asset seizures become more important "it will be useful for task force
members to know the major sources of these assets and whether it is more efficient to
target major dealers or numerous smaller ones." In one of the worst examples of such
targeting, Donald Scott was killed in 1992 by a multijurisdictional team that invaded his
property, looking (in vain) for drugs and (according to the Ventura County District
Attorney’s investigation
2
) for a chance to forfeit his multi-million dollar ranch.
A similar motivation may have prompted the tactics used in the mid-1980’s by
both the New York City and Washington, D. C. police. Invoking 21 USC 881(a)(4),
police instituted a practice of seizing the cash and cars of persons coming into the city to
2
Report on the Death of Donald Scott 37-41 (Office of District Attorney, Ventura County, Cal, Mar 30,
1993).
7
buy drugs.
3
The consequence of this strategy was that the drugs which would have been
purchased continued to circulate freely. Patrick Murphy, formerly the Police
Commissioner of New York City, described a similar strategy in Florida in testimony to
Congress, noting that police had
a financial incentive to impose roadblocks on the southbound lanes of I-95, which
carry the cash to make drug buys, rather than the northbound lanes, which carry
the drugs. After all, seized cash will end up forfeited to the police dept., while
seized drugs can only be destroyed.
For prosecutors too, funding exigencies have pre-empted other considerations.
One Department of Justice manual governing racketeering prosecutions, for example,
suggests that prosecution may be contingent on the presence of forfeitable assets, rather
than forfeiture being an incident of prosecution.
2. Drug buyers who have been victims of a "reverse sting". In a reverse sting,
police pose as dealers and sell drugs to an unwitting buyer. The chief attraction of the
reverse sting is that it allows police to seize a buyer's cash rather than a seller's drugs
(which have no legal value to the seizing agency). According to J. Mitchell Miller, who
while a graduate student in the South worked as a police officer and participated in some
reverse stings, "this strategy was preferred by every agency and department with which I
was associated because it allowed agents to gauge potential profit before investing a great
deal of time and effort. [Reverse stings] occurred so regularly that the term reverse
became synonymous with the word deal." Whether the suspects were engaged in major
or trivial drug activity, and whether the strategy actually placed more drugs on the street,
were of little if any importance.
3
David B. Smith, Prosecution and Defense of Forfeiture Cases ¶ 1.01 at 1-14 to 1-15 (Matthew Bender
June 1995, Release 16). Presumably these alleged “buyers” were identified by an informant, a wiretap, or
by the existence of sufficient cash revealed in a roadblock. But entirely lawless versions were documented
in Florida, id. at 1.02, p. 1-25, and in Louisiana by NBC Dateline, which revealed massive numbers of
pretext arrests for “improper lane changes”, followed by searches and seizures of money found on the
entirely unsupported grounds that the cash was drug related. “Probable Cause? Policemen in Louisiana
harass motorists and their property for no apparent reason.” Dateline NBC, Jan. 3, 1997
8
3. Disparate plea offers or sentences: Forfeiture laws promote unfair, disparate
sentences by providing an avenue for affluent drug "kingpins" to buy their freedom.
Although wealthy defendants may be targeted in the investigatory stage, in the plea
bargaining context the ultimate losers are the defendants without assets to trade for time.
The harsher treatment they receive is a direct result of the prosecutor’s conflicting
financial interest, and thus should be cognizable under the due process clause. (See also
the 1997 unanimous Supreme Court decision in Bracy v. Gramley, 117 S. Ct. 1793,
which held that a judge’s favoritism towards other defendants who bribed him may have
violated the petitioner’s right to an impartial trial by giving the judge a motive to
camouflage his lenient treatment with a conviction: it would violate due process if the
judge “was biased in this...compensatory sense...to avoid being seen as uniformly and
suspiciously ‘soft’ on criminal defendants.”) Investigations in several jurisdictions have
documented that criminal defendants with the most assets to turn over to the authorities
routinely serve shorter prison sentences and sometimes no prison sentence at all. In
Massachusetts, where as noted 12% of prosecutorial budgets are financed by forfeitures, a
recent investigation by journalists found that on average "payment of $50,000 in drug
profits won a 6.3 year reduction in a sentence for dealers," while agreements to forfeit
$10,000 or more bought elimination or reduction of trafficking charges in almost 3/4 of
such cases. These distorted, disparate plea offers remain untested under the due process
right to an impartial prosecutor, and the most hopeful challenge may come from the asset-
poor defendants who suffer the most in plea bargaining from the government’s conflict
of interest.
PROSPECTS FOR REFORM
Will such a due process challenge bear fruit? Although the Supreme Court has
rejected most forfeiture law reform challenges, the Court has recognized that forfeiture
"can be devastating when used unjustly," Caplin & Drysdale, Chartered v United States,
9
491 US 617, 634 (1989), and that "it makes sense to scrutinize governmental action more
closely when the state stands to benefit." U.S. v. James Daniel Good Real Property, 510
US 43, 56 (1993). Some of the justices are also committed to strengthening property
rights, or restricting legislative delegations to the executive -- legal values entirely at odds
with the present forfeiture laws. Most fundamentally, for a court to sidestep this issue
would betray one of the central concerns that led to the founding of our constitutional
order. Financial incentives promoting police lawlessness and selective enforcement, in
the form of the customs writs of assistance, were high on the list of grievances that
triggered the American Revolution. Writs of assistance authorized customs officers to
seize suspected contraband, and retain a share of the proceeds, often a third, for
themselves and their informants. From the viewpoint of the Crown, this incentive could
help insure that goods landing in American ports were taxed or, if prohibited, confiscated.
But for the colonists, it was an outrage that brought with it corrupt officials, lawless
seizures, selective enforcement, fabricated evidence, and extortionate agreements from
subjects who had no effective legal recourse. From these complaints, John Adams said,
"the child Independence was born." The same fundamental grievances are now lodged
against our present forfeiture laws. What court can read such formative concerns out of
the Constitution?
APPENDICES
A SEPARATION OF POWERS OBJECTION
Agencies that can finance themselves through asset seizures need not justify their
activities through any regular budgetary process. As a Justice Department report notes,
"one 'big bust' can provide a task force with the resources to become financially
independent. Once financially independent, a task force can choose to operate without
Federal or state assistance." Justice Research and Statistics Association (“JRSA”),
10
Multijurisdictional Drug Control Task Forces: A Five-Year Review 1988-1992 9 (Oct
1993). This situation violates not only a defendant's due process rights, but also the
constitution's Appropriations Clause and the separation of powers framework that the
clause was designed to support, as follows.
Under Art. I, sec. 9, cl. 7, Congress is vested with exclusive appropriations power.
Along with supporting statutes, the Appropriations Clause assures that government
income cannot be spent until a specific congressional appropriation releases it. By
contrast, under 28 U.S.C. 881(e)(2)(B) money seized by a federal agency is deposited in
the Department of Justice's Asset Forfeiture Fund, where it is then available to the
Department and other federal agencies for drug law enforcement and, in some cases,
funding prisons. This arrangement bypasses the Treasury, leaving the Justice Department
free to determine the contours of its own budget. The Justice Department, the DEA and
other federal law enforcement agencies have essentially been given the freedom to fund
themselves in whatever amount their agents can legally seize. The constitutional
questions are whether this kind of blank check comports with section 9 and, more
broadly, the constitutional scheme of separate powers that serve to check and balance
each other.
The complication is that this blank check was issued by Congress, and in theory it
can terminate the privilege at any time. This generates two alternative possible
interpretations: sec. 881 might be deemed either an exercise of the congressional
appropriations power, or it might be considered an unconstitutional transfer of this power
to the executive branch. Obviously executive agencies must exercise legislatively
delegated power, but just as obviously there must be limits of degree or the organizing
principle of the constitutional structure, the separation of powers, could be lawfully
11
destroyed. In theory the non-delegation doctrine is designed to discern this limit. After a
long period of decline, the non-delegation doctrine has been showing new signs of life.
4
If some delegations of legislative power are constitutionally suspect, giving law
enforcement agencies the opportunity to set the size of their own budgets through police
seizures must be one of them. By issuing this blank check Congress has alienated the
vital legislative function assigned to it by the Appropriations Clause: specifying the size
and nature of the government's activities. This is precisely what Congress did not do
when it enabled law enforcement agencies to fund themselves with whatever assets they
might lawfully seize. A law enforcement agency can now decide for itself what its size
and resources will be, unconstrained by any legislative determination of an appropriate
budgetary level. This wholly thwarts sec. 9's constitutional function as defined by the
Supreme Court, which is "to assure that public funds will be spent according to the letter
of the difficult judgments reached by Congress as to the common good and not according
to the individual favor of Government agents..." OPM v. Richmond, 496 U.S. 414, 428
(1989).
The prospect of a self-financing law enforcement branch, largely able to set its
own agenda and accountable to no one, might sound promising to Colonel North or
General Pinochet -- but it should not be mistaken for a legitimate organ in a democracy.
It presents the kind of dangers one of the framers, George Mason, must have had in mind
when he warned that "the purse and the sword ought never to get into the same hands,
whether legislative or executive."
THE LEGISLATIVE REFORM OPTION
4
See, e.g., Industrial Union Department, AFL/CIO v American Petroleum Institute, 448 US 607 (1980);
INS v Chadha, 462 US 919, 944-59 (1983); See also Justice Kennedy’s concurring opinion in the Supreme
Court’s recent decision holding the line item veto unconstitutional, Clinton v. City of New York, 118 S. Ct.
2091, 2108 (1998).
12
It appears likely that Congress will enact some measure of forfeiture reform in the
coming year. But pending forfeiture reform bills do not include any measures to rectify
equitable sharing and other asset distribution provisions or the conflict of interest and
accountability problems that result. House Judiciary Committee Chair Henry Hyde has
omitted asset allocation reform from his bill despite its importance because, he says, "the
financial considerations involved in the present federal adoption system mean unyielding
opposition from law enforcement officials at all levels to any change in the law...." Hyde,
Forfeiting our Property Rights 68 (Cato Institute, 1995). Nevertheless, unless Congress
wants to abandon any hope of regaining control over the drug war bureaucracy it has
created, it had better try to do so sooner rather than later.
The most obvious federal reform, and one that would cure both the
conflict of interest and accountability hazards of the present system, would require
forfeited assets to be deposited into the Treasury's general fund. This one measure would
restore congressional budgetary oversight, and remove the incentive for police
departments to distort their agendas for budgetary reasons. An alternative, identical in
effect, would require that a law enforcement agency debit the value of any forfeited assets
it retains from the budget it receives through congressional appropriation.
If Congress cannot or will not enact these fundamental reforms, there are lesser
but crucial steps it might take to ameliorate the particularly destructive impact of the
adoption procedure, which allows local police to “federalize” a forfeiture and receive
back 80% of the assets, more than their own state laws might provide. Adoption serves to
provide police with a means of manipulative forum shopping without furthering any
other, more legitimate purpose. Congress should either (1) repeal the federal adoption
law or (2) amend it to require that money given back to the states after an adoptive
forfeiture be allocated according to state forfeiture law.
SOME OTHER CONSTITUTIONAL CHALLENGES
13
If the Supreme Court is unresponsive to constitutional claims regarding asset
retention, there are other, less direct litigative strategies to limit the abusive application of
Sec. 881. A significant 1993 Supreme Court decision provides one such avenue: in
Austin v. United States,
509 U.S. 602, 113 S.Ct. 2801 (1993), the Court held unanimously
that civil forfeitures are subject to the Eighth Amendment's prohibition on excessive
fines. This is an important limitation because on its face, sec. 881 would seem to allow
forfeiture of any property, no matter how valuable, if it could be linked to even a minor
drug violation. Civil forfeiture formerly was thought not to implicate the excessive fines
provision because it was labeled civil. In Austin, however, the Court found that forfeiture
constitutes punishment regardless of whether it is considered civil or criminal, and
therefore is subject to the Eighth Amendment. (Just this year, in U.S. v. Bajakajian, 118
S. Ct. 2028 (1998), the Court announced that the test of excessiveness in criminal
forfeitures is whether the forfeiture was grossly disproportionate to the gravity of the
criminal offence.) Presumably Austin’s holding will now provide recourse for a family
whose home was seized because a teenage son had sold “nickel bags” in his bedroom.
As forfeiture law and constitutional doctrine continue to develop, additional
possible challenges may be grounded in the ethical constraints that govern prosecutors or
doctrinal limitations on “outrageous governmental conduct”; or in the Supreme Court’s
emerging doctrines designed to protect states’ rights against national power. Given the
Supreme Court’s rapidly increasing interest in the latter issue -- see United States v.
Lopez, 115 S. Ct. 1624 (1995), Seminole Tribe of Florida v. Florida, 116 S. Ct. 1114
(1996), New York v. United States, 505 U.S. 144 (1992), and Printz v. United States, 117
S. Ct. 2365 (1997) -- there may come a time when the adoptive forfeiture law -- which
permits local police departments to combine with the federal government in order to
circumvent their own state forfeiture laws -- is ripe for effective challenge on federalism
grounds.
