Despite the fact that no federal charges were ever brought against them, James Fouch and his family had their Grand Rapids home and property seized and auctioned off for alleged loan fraud, profiting the federal government $500,000. Such due process abuses are all too common across America, and we have advocated for Congressional legislation to curb federal forfeiture laws that allow Washington to run roughshod over the rights of families like the Fouchs.
But forfeiture laws are also a state problem, and Michigan is among the worst offenders. The non-profit, public interest law firm Institute for Justice, which represents victims of forfeiture abuse, rates Michigan a D-minus. Encouragingly, bipartisan legislation has been introduced in Lansing to force state law enforcement to report their seizure cases publicly.
That’s a good start. The Legislature should pass this modest reform as a model for reining in rogue forfeiture laws.
Last year alone, state and federal governments used civil forfeiture to seize more than $4 billion of assets. This blunt instrument has been used to seize homes, businesses, vehicles and cash from lawful citizens like Terry and Sandy Dehkos, owners of Schott’s Supermarket in Fraser, who did nothing more than deposit routine grocery proceeds in their local bank. Under a provision of the 2001 Patriot Act, the federal government determined their transactions suspicious and cleaned out the store’s bank account, amounting to 40 percent of its net income.
“Federal forfeiture law allows the government to take your entire bank account just because it doesn’t like the way you deposit or withdraw your money,” says Institute for Justice attorney Clark Neily. “The government should not be allowed to just show up at your doorstep like a playground bully and take away your milk money.”
Unlike the federal government, Michigan at least recognizes that citizens are innocent until proven guilty — forcing government to prove criminal activity before seizing property. However, there is no requirement that the state report its seizure activities. That lack of transparency, coupled with rules that allow police agencies to keep all forfeiture proceeds to enhance their budgets, has raised red flags among civil libertarian advocates like the Institute for Justice. From 2001 to 2008, Michigan reaped a $149 million windfall in forfeiture revenue.
“Without transparency, we know next to nothing about forfeiture operation,” says Institute for Justice attorney Larry Salzman. “The incentives are to punish first and look for evidence later. Abuse in states is rampant.”
In response to the Dehko case and Michigan’s failing grade, Democrats and Republicans have introduced a bill that would “require law enforcement agencies to file detailed reports on their criminal asset seizures (which in many cases involve individuals charged with a crime but not convicted). The reports would have to include details about the alleged crime and ... how the agency used money from the sale of the assets.”
“It’s a big deal when the government seizes citizens’ property,” says the bill’s chief sponsor, State Rep. Tom McMillin, R-Rochester Hills. “There may be good reasons in some cases, but when there isn’t a conviction required for the forfeiture, that’s a situation where a spotlight should be shown.”
McMillin’s bill has no power over federal cases like the Fouch or Dehkos families. Nevertheless, state reporting requirements can be “helpful in providing transparency that forces states to comply with their own laws,” says Salzman.
“We weren’t trying to hide anything,” says Sandy Thomas, the Dehkos’ daughter. “If we’re guilty of money laundering, why haven’t we been charged?”
Michigan’s legislation is a start in making sure state and federal governments aren’t hiding anything themselves.