Forfeiture Laws and Sharing

Forfeiture laws engender considerable controversy because many of them have sharing provisions. Federal law and most state laws provide that a certain amount of forfeiture proceeds can go back to the police agency (or agencies) that set the wheels in motion. There is also considerable collaboration between federal officials and local police, for reasons this section summarizes.

The amounts of money that move between state governments and the federal level are significant. In FY2007, for example, more than $1.5 billion20 was deposited from the states into the U.S. Department of Justice Assets Forfeiture Fund. However, this figure does not reflect the total amount of proceeds forfeited, because, as the following section explains, pursuing federal forfeiture is not always attractive to local agencies.

Federal Law

When cash is forfeited, it is transferred to the appropriate asset forfeiture fund.§ Personal and real property is sold at auction, and, once sales costs are deducted, remaining proceeds are deposited into the fund. In FY2007, more than $71 million in real property was sold, the proceeds from which were placed in the Justice Department's Assets Forfeiture Fund. Federal agencies can also retain personal property, such as certain conveyances, for law enforcement purposes. In FY2007, 465 items valued at more than $6.7 million were placed into law enforcement use from the Justice Department's Assets Forfeiture Fund.21 Forfeiture fund monies are also retained to care for real property, pay informants, and fulfill other obligations related to property (such as paying off lien holders).

§ The Comprehensive Crime Control Act of 1984 (Public Law 98-473) established the U.S. Department of Justice Assets Forfeiture Fund (see Appendix A for other relevant federal forfeiture laws). The fund is set up to receive the proceeds from forfeiture resulting from the Justice Department law enforcement agencies (e.g., the FBI, DEA, ATF). Another fund, housed in the Department of the Treasury, is the Treasury Forfeiture Fund (31 U.S.C. §9703[a]). Treasury Department law enforcement agencies (e.g., the Secret Service) participate in this fund

Equitable Sharing

Numerous federal statutes22 provide that local police agencies can team up with federal law enforcement officials in a practice known as adoptive forfeiture. An adoptive forfeiture occurs when local police officials effectively hand a case over to federal officials (e.g., Drug Enforcement Administration, which then passes it off to the U.S. Attorney's Office in the case of civil-judicial forfeiture). A key restriction is that the property in question is forfeitable under federal law. Proceeds from successful adoptive forfeitures are managed by the appropriate federal forfeiture fund and, importantly, as much as 80 percent of adoptive forfeiture proceeds can be returned to the initiating state or local police agency (or agencies).§

§ The federal share is 20 percent if all the preseizure activity was conducted by a state or local agency. This does not necessarily mean, however, that 80 percent automatically goes to such agencies. The share is based on the number of agencies involved and on each agency's degree of participation in an investigation. This is usually determined by the number of hours contributed by personnel.

The Adoptive Forfeiture Process

The process begins with a request for adoption,§§ which is then reviewed by the appropriate federal agency. If a forfeiture is adopted, the process continues to unfold as follows:

An agreement is signed, in which the local law enforcement agency promises the proceeds "shall be used for law enforcement purposes in accordance with the statutes and guidelines that govern equitable sharing" and also that they will be used as the local agency specified in the application it submitted requesting equitable sharing in that case. The agreement also states that "the misuse or misapplication of shared resources is prohibited" and will subject the local agency to sanctions.23

§§ A request for adoption form is at www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/crm02288.htm

When the proceeds from an adoptive forfeiture are shared with the participating local agency (or agencies), this is known as equitable sharing. Equitable sharing proceeds are considerable. During FY2007, for example, more than $400 million was paid out by the U.S. Justice Department's Assets Forfeiture Fund to state and local police agencies.

Despite the possible windfall that can result from an equitable sharing payout, there are a few restrictions on how the proceeds can be spent. First, payments are intended to enhance and supplement police resources and activities. Second, property and funds awarded must be used in accordance with specific federal guidelines: "Permissible uses of shared property include activities designed to enhance future investigations, such as payment of overtime, provision of police training, purchase of equipment, improvement of police facilities, upgrading of detention facilities, and conducting drug education awareness programs."24 Third, there is an express requirement that the funds not be used to supplant agency resources.

State Law

State laws vary considerably in terms of how forfeited assets are to be disposed. At the risk of simplification, there are basically three distribution formulas. First, a number of states, such as Nevada, permit the return of all forfeiture proceeds to the initiating agency.25 At the opposite extreme, a number of states permit do not permit the return of proceeds to law enforcement. Missouri, for example, requires that forfeiture proceeds be placed into an education fund.26 All other states allocate forfeiture proceeds based on complicated formulas that involve multiple agencies, restrictions, and other limitations. Therefore, it is useful to think in terms of "generous" states, "restrictive" states, and states with "alternative arrangements" (also see Appendix B for a list of disposition statutes by state).

Generous States

Generous forfeiture states allow forfeiture proceeds to be retained for official use. Nevada, for example, requires that the governing body controlling a police agency that pursues forfeiture open a special account known as the "... Forfeiture Account" and requires, simply, that "The money in the account may be used for any lawful purpose deemed appropriate by the chief administrative officer of the law enforcement agency."27 To avoid having too much money accumulate in the fund, the law mandates that at the end of each fiscal year a percentage of the fund in excess of $100,000 be distributed to local schools.

Several other generous forfeiture states (e.g., Montana, Oklahoma) permit local agencies to retain forfeited property for official use; however, if they sell such property, the law may require that the proceeds be deposited into some type of law enforcement fund. For example, South Dakota's law requires that "All moneys seized or remaining proceeds from the sale of any forfeited property shall be paid into the drug control fund" or forwarded to the state's Bureau of Narcotics and Dangerous Drugs.28 Local agencies can then apply for and receive any or all of the funds they were required to deposit in the drug control fund.29

Restrictive States

Restrictive forfeiture states either (1) have no laws governing the disposition of forfeited assets, or (2) place the funds in a law enforcement trust fund of sorts, or (3) require that funds be paid into other non-law enforcement funds. For example, Maryland and Vermont require forfeiture proceeds be paid into a state or county general fund30, whereas Minnesota requires the proceeds be paid into a state general fund.31

Asset forfeiture critics have argued that officials in restrictive forfeiture states are most inclined to pursue adoptive forfeitures due to the prospect of receiving proceeds. A series of articles in The Kansas City Star detailed examples of law enforcement officials in Missouri, a state that allows no forfeiture proceeds to go to law enforcement32, bypassing state law in favor of adoptive forfeitures.33 A recent study reached similar conclusions, namely that police agencies in restrictive states receive more equitable sharing payments than their counterparts in generous forfeiture states.34

Alternative Arrangements

In states whose forfeiture disposition formulas permit less than 100 percent but more than none go to law enforcement agencies, the percentages range from 25 percent, as in Hawaii35, to 90 percent, as in West Virginia.36 Some states also allow certain percentages to go to prosecutors. For example, Colorado permits 10 percent37, and California permits as much as 25 percent.38 Still other states combine these percentages with distributions based on the level of involvement by each investigating agency39, the role each agency plays40, or local agreements. Texas is an example of the latter; distribution is based on agreements arranged by prosecutors.41