Lawsuit Claims Indiana Unconstitutionally Seizes Millions in Cash From FedEx Packages Every Year

The Institute for Justice says Indianapolis police and prosecutors are exploiting one of the biggest FedEx hubs in the U.S. to seize cash for alleged crimes they never explain.

A new class action lawsuit accuses Indiana law enforcement of seizing millions of dollars a year in cash from FedEx packages without ever informing owners of what crime they're suspected of violating.

Henry and Minh Cheng, who run a small California jewelry wholesaler business, allege in a class action countersuit filed in Indiana state court that police seized over $42,000 in cash from a FedEx package en route to them from a client in Virginia. County prosecutors then filed a lawsuit to forfeit their money through civil asset forfeiture, claiming the Chengs' money was connected to a violation of a criminal statute, but the complaint never stated which statute.

The Chengs' suit, though, says they're not the only victims. The lawsuit says Indiana law enforcement officials "exploit Indianapolis's location at the Crossroads of America to forfeit millions of dollars in currency being shipped from one side of the nation to the other."

The Chengs' countersuit against the Marion County Prosecutor's Office and the State of Indiana was filed on their behalf by the Institute for Justice (I.J.), a libertarian public interest law firm that has challenged civil asset forfeiture laws in several states.

According to I.J., the Marion County Prosecutor's Office has sued to forfeit $2.5 million in currency from at least 130 FedEx parcels in transit from one non-Indiana state to another over the past two years.

"This scheme is one of the most predatory we have seen, and it's past time to put a stop to it," I.J. senior attorney Sam Gedge said in a press release. "It's illegal and unconstitutional for Indiana to forfeit in-transit money whose only connection to Indiana is the happenstance of FedEx's shipping practices."

Under civil asset forfeiture laws, police and prosecutors can seize property suspected of being connected to criminal activity, even when the owner is not convicted, charged, or even arrested for a crime. Law enforcement groups say civil forfeiture allows them to interdict and disrupt organized crime like drug trafficking by seizing its illicit gains. 

However, civil liberties groups argue lax safeguards and perverse profit incentives lead police to brand any large amount of cash as drug money, even in cases where no drugs are found and even though traveling with large amounts of cash is legal.

In this case, though, I.J. says Indiana's Marion County Prosecutor's Office isn't even bothering to articulate which crime the seized cash is allegedly facilitating.

According to the Chengs' countersuit, their business sold $42,825 in jewelry to a store in Virginia in January. (Their lawsuit includes an image of the receipt.) When the payment was late, the buyer offered to send the full amount in cash immediately through an overnight FedEx delivery.

The package was routed through FedEx's massive hub in Indianapolis, Indiana. The hub is the second-largest in the country and processes up to 99,000 parcels an hour.

At the Indianapolis FedEx Hub, an Indianapolis Metropolitan Police Department officer flagged the package as "suspicious" and showed it to a K-9 unit, which alerted to it. 

According to the Chengs' countersuit, the officer's warrant affidavit listed several of the package's "suspicious" characteristics, such as having all the seams taped, which the FedEx website recommends, and several factually incorrect statements—such as a claim that the delivery did not have a signature requirement, when in fact it did.

The Marion County Prosecutor's Office then moved to forfeit the Chengs' cash under Indiana's civil asset forfeiture statute. However, the complaint only stated that the "seized currency was furnished or was intended to be furnished in exchange for a violation of a criminal statute, or is traceable as proceeds of a violation of a criminal statute, in violation of Indiana law, as provided in I.C. 34-24-1-1."

"The government can't even identify a crime that would allow them to keep the money that we need to run our business," Henry Cheng said in an I.J. press release. "We were shocked when we found out what was going on in Indianapolis and we want to put a stop to it."

I.J. argues that the Marion County Prosecutor's Office systematically files deficient civil forfeiture actions against seized cash that never identify what specific violation of Indiana criminal law supports the forfeiture.

What this all means for out-of-state owners is that they must find and pay for an Indiana lawyer to fight an unspecified allegation. A cynical person might suspect Indiana is targeting these packages on the assumption that most owners will look at the time and cost of challenging the seizure and not bother.

The countersuit alleges that, because Marion County prosecutors do not articulate a legal basis for the seizures, their pleadings are deficient, they fail to duly notify owners, and they lack jurisdiction to seize packages originating in and bound for other states. I.J. argues this scheme violates a wide range of constitutional rights, including the Fourth, Eighth, 10th, and 14th Amendments.

The countersuit seeks injunctions in favor of the Chengs and similarly situated plaintiffs, as well as injunctions declaring the Marion County Prosecutor's Office's policies unconstitutional.

The Marion County Prosecutor's Office declined to comment, citing the pending litigation.