Asset Forfeiture – Money Laundering
Many criminals are motivated by greed and the acquisition of material goods. Therefore, the ability of the government to forfeit property connected with criminal activity can be an effective law enforcement tool by reducing the incentive for illegal conduct. Asset forfeiture “takes the profit out of crime” by helping to eliminate the ability of the offender to command resources necessary to continue illegal activities.
The use of asset forfeiture in criminal investigations aims to undermine the economic infrastructure of the criminal enterprise. Criminal enterprises in many ways mirror legitimate businesses. They require employees, equipment, and cash flow to operate. Criminal enterprises also generate a profit from the sale of their “product” or “services.” The obvious difference is that the profit generated from criminal enterprises is derived from criminal activity. Asset forfeiture can remove the tools, equipment, cash flow, profit, and, sometimes, the product itself, from the criminals and the criminal organization, rendering the criminal organization powerless to operate.
Asset forfeiture is also the most effective means of recovering property and funds which can then be used to compensate innocent victims. Restoration of property to victims in white collar cases is the first priority of law enforcement when it comes to disbursing forfeited property. Much time and effort is expended in such cases to ensure that the wrongdoer’s assets are preserved pending trial, so they remain available for this purpose once the case is settled. While most people associate forfeiture with the activity of drug trafficking groups, the FBI’s white collar crime program is the largest contributor to the FBI’s forfeiture program.
To accomplish its goals, the Bureau provides training, resources, and operational assistance to local FBI field offices, entities at FBI Headquarters, state and local law enforcement, and our international partners to ensure that asset forfeiture is incorporated into as many investigations as possible, where appropriate and allowed by law, to deter criminal activity and dismantle criminal enterprises.
The seizure of property is a practice long used by governments. For example, in English common law, the value of an inanimate object could be forfeited to the English Crown if that object caused the death of a person. Therefore, the forfeiture of property was generally justified as a penalty for carelessness. This tradition and justification has, over time, merged with a belief that the right to own property could be denied an individual who engaged in criminal conduct.
The forfeiture sanction is a legal concept that involves the application of procedures resulting in the transfer of the ownership of property to the government. Many of the criminal laws enforced by the Federal Bureau of Investigation (FBI) contain forfeiture provisions. Some of these forfeiture provisions are excellent deterrents, for example, forfeiture under federal drug laws and under money laundering laws.
The seizure of property by law enforcement authorities generally is permissible when the property is evidence of a crime or is subject to forfeiture. The seizure of property for forfeiture implicates tenets of the Fourth and Fifth Amendments of the United States Constitution. The proper method of seizure of property, for example in a civil forfeiture action, depends upon the methods permitted in the relevant statute, the location of the property, Department of Justice and FBI policy, and whether or not exigent circumstances are present. It is FBI policy to seize property for forfeiture pursuant to a seizure warrant.
Types of Forfeiture Actions
There are two types of forfeiture actions: criminal and civil. The criminal forfeiture action is referred to as an in personam action, meaning that the action is against the person, and, that upon conviction, the punitive effect of forfeiture can be used against the convicted offender. The civil forfeiture action is referred to as an in rem action, meaning that the action is against the property. The two actions differ in many ways, including: (1) the point in the proceeding, generally at which the property may be seized; (2) the burden of proof necessary to forfeit the property; and (3) in some cases, the type of property interests that can be forfeited.
Criminal Forfeiture Actions
A criminal forfeiture action must be judicial. The property subject to forfeiture is named in the same indictment that charges the defendant with a criminal violation. The jurisdiction of the court over the defendant provides the court with jurisdiction over the defendant’s property interests. While there is some disagreement among the appellate courts, generally, the government must meet the legal standard of proof, beyond a reasonable doubt, necessary to convict the defendant in order to forfeit the property. The property may be forfeited in this manner only if the defendant is convicted of the underlying offense charged, and the trier of fact finds that the property named in the indictment was illegally tainted.
As a general rule, the seizure of the property through criminal forfeiture may not occur until after the property has been forfeited. The district court then issues an order to seize the property, and the seizure is made by the U.S. Marshal Service. There are some exceptions to this rule. For example, a seizure warrant may be used in certain circumstances in a criminal forfeiture matter under the Controlled Substances Act (CSA) and under the Money Laundering Control Act (MCLA). Criminal forfeiture laws provide for a post-forfeiture hearing by the court, called an ancillary hearing, to consider the claims of third parties to the forfeited property.
Criminal forfeiture provisions such as those found in the Racketeer Influenced and Corrupt Organizations Act (RICO) and CSA identify property that can be forfeited upon conviction of a defendant in broader terms than the provisions of law concerning most civil forfeitures. Criminal forfeiture laws name interests subject to forfeiture that are more complex, including property acquired or maintained in violation of RICO, and various types of legal interests in property that have afforded a source of influence over the illegal enterprise. The civil forfeiture laws generally name specific property that is integrally connected with prohibited activity, including conveyances used, money furnished, and real property used.
Civil Forfeiture Actions
A civil forfeiture action is effected through either a summary, administrative, or judicial procedure. A summary forfeiture procedure is limited to the CSA and then only to a narrow category of property.
An administrative forfeiture procedure can be commenced by a seizing agency against most property if it is valued at $500,000 or less, unless the property is a monetary instrument, in which case there is no maximum monetary limit. If the administrative action is not contested in a timely manner, any legal claim to the property is thereafter barred and the agency may declare the property forfeited.
An administrative action can be contested by the filing of a claim of ownership. A timely claim to the property forces the government to terminate the administrative forfeiture action and to commence a civil judicial action.
If a claim has been filed in a timely manner, the FBI must transmit it to the U.S. Attorney and the administrative forfeiture must cease. If the property subject to forfeiture is not a monetary instrument or a hauling conveyance, and is valued over $500,000, the proceedings must commence as a judicial action. In addition, if the forfeiture action is against real property, the proceedings must be judicial, regardless of the value of the property.
Burden of Proof
The burden of proof on the FBI to seize property for civil, administrative and judicial forfeiture is probable cause. This burden must be met to satisfy both statutory and constitutional requirements. A civil forfeiture action commences upon notification by mail and publication of the government’s intent to forfeit the property.
Probable cause for an administrative forfeiture is defined as a reasonable ground for belief of guilt, supported by less than prima facie proof, but more than mere suspicion.
The initial burden of proof in a judicial action is also probable cause. After seizure, the United States Attorney’s Office must make an independent determination of whether the property can be forfeited. After finding the forfeiture action has merit, a verified complaint must be filed, in effect, charging the property with violating the law. The burden is then on the government to prove the property is subject to forfeiture by a preponderance of the evidence. Preponderance of the evidence is defined as “superior evidentiary weight that, though sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”
It should be remembered that a civil judicial forfeiture action is a civil proceeding, rather than a criminal proceeding, so the Federal Rules of Civil Procedure are applicable. Discovery processes under these rules are different than those found in criminal procedures.