The Government’s License to Steal

Indiana’s law barring police departments from enriching themselves through asset forfeiture would be more effective if it weren’t ignored.

In the late 1990s, after a public backlash against the use of civil asset forfeiture to take money and property from innocent people, seven states passed laws assigning all proceeds from such forfeitures to public schools or the general fund instead of police departments and prosecutors’ offices. The idea was to reduce the incentive to seize assets from innocent owners and to target people based on the value of their property instead of the seriousness of their crimes.

In Indiana, the state’s original constitution called for criminal forfeitures to be earmarked for a school fund, and recent attorneys general have applied that provision to civil forfeiture as well. But thanks to various evasive maneuvers, very little forfeiture money actually ends up in the fund.

One way around the rule is “adoption,” a process in which police departments call the feds when they’re about to close a case that promises a big forfeiture payoff. The investigation then becomes a federal case, governed by federal law. The feds collect the proceeds and send as much as 80 percent back to the local cops. The school fund gets nothing, and the perverse incentives remain in place.

Another trick is to negotiate a settlement with the property owner, perhaps by letting him keep some of his allegedly ill-gotten gains. Settlements aren’t considered forfeitures and therefore aren’t governed by the funding earmark.

Many Indiana counties contract out their civil forfeiture cases to private attorneys, who get to keep a hefty commission of 25 percent or more. This arrangement creates new perverse incentives, since the attorneys choose and help prosecute cases from which they gain financially.

Counties also may deduct police and prosecution costs related to a forfeiture case from the proceeds before sending the remainder to the school fund. Judges do not seem to scrutinize the cost estimates very closely, allowing law enforcement agencies to reap profits by highballing their numbers.

Given all of these ways around the law, how much forfeiture money actually flows into Indiana’s school fund? Almost none. In July the Indianapolis attorney Paul Ogden reported on his blog, Ogden on Politics, that “millions of dollars of civil forfeiture funds are being kept by law enforcement agencies, prosecutor’s offices, and private attorneys hired by prosecutors, rather than turned over to the State for education.” His conclusion was echoed a month later in a front-page Indianapolis Star story. According to Ogden, just five of Indiana’s 92 counties paid any forfeiture money into the school fund during the last two years. Three of those made just one payment, and one paid just twice. Only one county could arguably be seen as complying with the law: Wayne County made 18 payments, totaling $38,836.

The total amount of forfeiture money paid into the account from all 92 Indiana counties during the two-year period was just $95,510. To put that figure into perspective, Ogden notes that Christopher Gambill, a private attorney who handles civil forfeiture cases for three Indiana counties, made $113,146 in contingency fees from a single forfeiture case.

Forfeiture experts Steven Kessler and David Smith argue that contracting forfeiture out to private attorneys violates the Constitution’s Due Process Clause because unelected people are reaping a direct financial benefit from public policy decisions they make. But according to Mark Rutherford, chairman of the Indiana Public Defender Commission, “It’s just sort of accepted here that this is the way things are. There are attorneys who have amassed fortunes off of these cases.”

As Ogden notes, one of those attorneys is the celebrity lawyer and talk show host Greg Garrison, whose law firm handles forfeiture cases for Marion County, where Indianapolis is located. Marion County didn’t pay a penny of forfeiture proceeds into the state school fund in the last two years.

“It is not entirely clear where all the money is going,” Ogden writes, “or where the breakdown in the system is that has left only a trickle of money going into the common school fund. Possibly it could be that prosecutors or their hired private counsel aren’t closely analyzing law enforcement costs and are simply assuming that on every forfeiture case law enforcement costs and attorney’s fees consume the entire amount of the proceeds seized.” He also hypothesizes that “judges aren’t properly making the determination as to how much the law enforcement costs.”

Ogden is being charitable. It’s clear that prosecutors and judges in Indiana know they’re gaming the system.

In an earlier issue of reason (see “The Forfeiture Racket,” February), I looked at the case of Anthony Smelley, who had $17,500 in cash taken from him during a traffic stop in Putnam County, Indiana. Smelley was never charged with a crime, but it took well over a year and several court proceedings for him to get his money back. After the article was published, Gambill, the private attorney who does forfeiture work in Indiana, told me he thought the judge in the case, Matthew Headley, might be biased because Headley had once unsuccessfully sought $5,000 from the county forfeiture fund to purchase new audio-visual equipment for his courtroom.

Although Headley admitted asking for the money, he denied that getting turned down affected the way he presided over forfeiture cases. But the issue of whether Headley was biased obscures the larger point: In a state where all proceeds from forfeiture cases are supposed to go to a school fund, why would Headley have assumed there would be $5,000 in forfeiture proceeds available to upgrade his courtroom? The obvious answer is that judges and prosecutors, at least in some parts of Indiana, know the school fund requirement is routinely disregarded.

Civil asset forfeiture is an unjust practice under any circumstances. It is an invitation to corruption, offering a way for the government to get its hands on someone’s property under a lower standard of proof than it must meet to convict someone. What’s happening in Indiana, where virtually the entire legal system is ignoring the spirit if not the letter of state law, only confirms that once you give the government a license to steal, it’s very difficult to wrest it back. 

Radley Balko (rbalko@reason.com) is a senior editor at reason.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    When the stealing is this blatant, yet nothing is ever done about it (even, for instance, in Indiana, where you'd think maybe the teacher's union or the people who claim the schools need more money would care), it doesn't give much hope that anything will ever be done.

    I mean, $95,000 makes it into the school fund, and no one raises a peep?

  • ||

    Hey Balko, how does it feel 2 years later to know that uneducated Joe the plumber was right and you were nothing more than an Obamba butt boy trying to impress guys like Ezra Klein and Andy Sullivan. Then they wouldn't even let you in on Jourolist. Must suck to be so wrong.
    God Bless America!

  • ||

    Obama is involved in this?????? Is there a possibility that a far right lunatic social con has oozed into the libertarian room? Yeah we know, Bush was great and 'borshun kills baaaaabys.

  • ||

    Bluecrane did you time that out on your laptop while you were riding the bus to you job at the non-profit? Or are you one of the record unemployed sitting at home today? Someone commented that this looks like the same story Radley Balko rights about once every two months. I've noticed many of the Reasonites have strayed from politics lately. Maybe out of shame for being so pro-Obama last time around?

  • ||

    Since I clearly directed my comments to Pat Lynch, I'm not at all sure what you're talking about. Doubtful you do either.

    No shame for backing Obama last time; no non-profit job, not unemployed, doing just fine thank you. Only problem I have is seeing the movement I've supported since the 1960s being pimped by fascists.

  • ||

    The liberal Democrats are going to get fucking killed at the ballot box next week. Retards like Balko will call this the "stupid season" while so many people have suffered under Obama's hate-America-first agenda. Shit sandwich is coming assholes.

  • ||

    Its not stealing if the government is doing it, its just a tax on whatever is used to justify the forfeiture.

    Forfeiture, taxation, and other forms of government taking are not immoral because and only because we government employees are doing it. We are exempt from your moral code, and the laws recognize such.
    http://youareproperty.blogspot.....ality.html

  • Barely Suppressed Rage Clone||

    Well, Radley, you've ruined another day.

  • DK||

    Isn't this a repeat of an article he published awhile (maybe a month) ago?

  • DK||

    Never mind. Guess it just sounds similar to one he published about eight months ago. Time flies, apparently.

  • Mike the Grouch||

    Look. If you've done nothing wrong, you have nothing to fear. These laws are there to help make sure criminals don't get away with their crimes or commit further crimes. We have a system of checks and balances. And that guy in the story got his money back, so what's the big deal?

  • Mike the Grouch||

    And why was he carrying $17,500 in cash around anyway? Sounds to me like he was up to no good and they just couldn't pin it on him.

  • Max||

    Fucking libertardian fuck with his payment for sukcing Ron Puals' cock. He should be locked up with the other conservative teabaggers.

  • ||

    I know you are probably sarcastic in your response, but I would like to respond any way.

    "These laws are there to help make sure criminals don't get away with their crimes or commit further crimes."

    No. Criminal Forfeiture is there to make sure criminals don't get away with their crimes. Civil Forfeiture is there to steal property from law abiding citizens.

    "And that guy in the story got his money back, so what's the big deal?"

    It took a year of his life and probably just as much in legal fees to get back his personal property. That sounds like a big deal.

    "And why was he carrying $17,500 in cash around anyway?"

    Sounds like just enough cash to buy a new car, or purchase a full state of the art audio-video system for a living room. There are many other reasons a person would be carrying around that much cash.

    Again, your tone denotes sarcasm and it should not be thought that I was responding because of a lack of understanding. But there are people who really do think as you stated.

  • Almanian||

    I refuse to read this - I was already having a mediocre day.

    But resisting is like not clicking on one of SugarFree's links...it's soooooo tempting....

    But no, I will not read this and subject my mood to any more damage today...wheeeew....one day at a time, one day at a time...

  • Federal Dog||

    Part of how the DA here uses forfeiture funds is as an unofficial campaign fund.

    He publicizes seizing "ill-gotten" gains from social predators and "putting them back into the community" by doling the money out as he deems fit.

    Read: As necessary to secure political support and votes at the right time.

  • Paul||

    laws assigning all proceeds from such forfeitures to public schools

    So... essentially all assets forfeited are given to the teacher's unions... I know I feel better.

  • ||

    Civil forfeiture is so friggin' unconstitutional that they should've impeached every justice that voted to uphold it.

  • ||

    I love the picture from Dukes of Hazzard. Boss Hogg and Retard B. Coltrane were the poster children of small-town corruption.

  • ||

    I have a fleeting desire to go to the Putnam County, Indiana courthouse, and accidentally call the judge "Matthew Heddy" so he can correct me.

    "That's Headley."

    In a Heartland-y little county like Putnam, that poor guy probably could have left his $17,500 in a backpack under a stool in his neighborhood bar/pool hall, and it would have been safer than with the cops.

  • Mad Max||

    This is interesting . . . I was just reading about the Regulator movement in North Carolina in the 1760s and 1760s, when official stealing (quite often with the connivance and indeed active assistance of attorneys) actually prompted farmers in the back country to rise up in armed revolt. The revolt was suppressed in 1771, but at least some of the rebels went on to fight in the Big One (1776-1783).

    I think about the Regulator movement for some reason when I hear about incidents like this:

    'In a state where all proceeds from forfeiture cases are supposed to go to a school fund, why would [a state judge] have assumed there would be $5,000 in forfeiture proceeds available to upgrade his courtroom?'

    I looked up the relevant constitutional provisions in Indiana , and there was nothing in there about refurbishing courtrooms or giving more loot to cops. Check for yourself:

    'ARTICLE 8. Education . . .

    'Section 2. Common school fund

    'Section 2. The Common School fund shall consist of [among other things] . . .
    The fund to be derived . . . from the fines assessed for breaches of the penal laws of the State; and from all forfeitures which may accrue; . . .

    'Section 3. Principal and income

    'Section 3. The principal of the Common School fund shall remain a perpetual fund, which may be increased, but shall never be diminished; and *the income thereof shall be inviolably appropriated to the support of Common Schools, and to no other purpose whatever*.'

    Very little wriggle room there.

    And I bet this judge regularly instructs jurors in criminal cases not to interpret the law for themselves, because he's the expert on the law and what he says *is* the law as far as jurors concerned - at least according to modern theories.

    But looking again at the Indiana Constitution, this time at the state Bill of Rights, I see this:

    Art. I, Sec. 19: :In all criminal cases whatever, the jury shall have the right to determine the law and the facts."

  • Mad Max||

    1760s and 1770s.

  • ||

    It'll will never happen because police departments are corrupt and politically connected but the answer is simply to require that 100% of all proceeds (as well as all traffic fines) go to private charity.

    Charity would make much but the cop practice of legalized theft would come to an effective end.

  • ||

    ooops, typo. "Charity would" should be "Charity wouldn't"

  • CK||

    I've spent the past year researching forfeiture for my master's thesis and probably the most surprising thing is just how little oversight there actually is. Only 29 states make agencies report to the how much they make from it and to me that's just stunning. Most forfeitures are pretty small in value too, so most of the time it's not even worth it to go to court, you just lose your stuff.

    I don't remember it being mentioned here, so if it has I apologize, but if you ever get a chance, I'd suggest you read the Minnesota gang strike force audit (http://www.house.leg.state.mn.us/comm/docs/FINALRepMetroGangStrikeForceReview.PDF). They stopped people and took cell phones and cash. During searches of homes they took property unrelated to warrants including jewelry, computers, televisions and even an ice auger. It's impossible to argue that only criminals have to worry about having their stuff taken when incidents like these happen.

  • Patriot Mike||

    See what happens when we let them get away with Federal Reserve Notes and the income tax? They've gone from being our servents to being our masters. Revolution, anyone?

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    Here in Oregon we passed a ballot measure that forbids forfeiture unless the individual has been convicted of a crime.

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  • رش مبيدات||

    This is interesting . . . I was just reading about the Regulator movement in North Carolina in the 1760s and 1760s, when official stealing (quite often with the connivance and indeed active assistance of attorneys) actually prompted farmers in the back country to rise up in armed revolt. The revolt was suppressed in 1771, but at least some of the rebels went on to fight in the Big One (1776-1783).
    شركة مكافحة حشرات بالرياض
    I think about the Regulator movement for some reason when I hear about incidents like this:

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