Visa, Mastercard, Cash or Your Home:  Asset Forfeiture

Citizen Wealth Financial Justice

New Orleans    There are not a huge number of issues where there is bipartisan agreement, but over the last five years the widespread reports of abuse in civil asset forfeiture have achieved that rarity.  The original policy rationalization for seizing property was based on the recovery ill-gotten gains produce through criminal activity.  Fair enough.  Crime shouldn’t pay. Unfortunately, too many towns, cities, counties, and states begin to see asset forfeiture as a fundraising scheme, and were in such a hurry they didn’t wait until someone was convicted of a crime or in fact even charged with a crime to seize their property, nor did they return it in most cases when the alleged scofflaw was found to be innocent.  Many politicians, though certainly not all, couldn’t defend state sanctioned theft.

Since 2014, according to the Institute for Justice, thirty-three states have reformed their civil forfeiture procedures to prevent abuses.  Three states, North Carolina, Nebraska, and New Mexico have abolished civil forfeiture and only seize through criminal procedures.  Fifteen states now require a criminal conviction in order to seize most properties.  Sixteen states and DC require the government to bear the burden of proof for innocent-owner claims.  Many states have tightened up reporting and created transparency on forfeitures.

In short, there’s been progress when it comes to alleged criminal activity and civil asset forfeiture.  What about when it’s not about criminality, but low-and-moderate income families falling behind on a bill to a governmental unit?  They have the right to collect, but surely, they don’t have the right to civil asset forfeiture when it comes to a family’s home.  In fact, in thirteen states they do have the right, and they exercise it with impunity.

We heard some of these stories in Detroit on the doors, but were still amazed to read in the Daily Kos reports from neighboring Oakland County, Michigan:

Imagine losing your property, and more than $20,000 in equity, over less than $10. That’s what happened to Uri Rafaeli of Southfield, Michigan, in Oakland County.  When Oakland County seized Rafeili’s house because of $8.41 in accidentally underpaid taxes, the county didn’t just recoup the lost tax money and any added fines and fees. Instead, the county kept the entire $24,500 it earned from the sale of his property. When the same county took Andre Ohanessian’s home over a $6,000 past-due bill, the county likewise made a profit of $82,000.

A lawyer from the Pacific Legal Foundation in an argument before the Michigan Supreme Court hit the nail on the head saying, “It’s kind of like, how would you like to pay that $8.41. Would you like to pay by Visa, MasterCard, cash, or your house?”

I think we can all agree that this just isn’t right.  Ironically, this is not a progressive issue.  The Institute for Justice and the Pacific Legal Foundation are all somewhere on the right-libertarian spectrum.  Their websites are peppered with mentions and applause for the work of the Charles Koch Foundation.  Fighting against land and home seizures after Katrina hit Louisiana, we heard from all of these types of organizations regularly in fighting against potential abuse of eminent domain in the storm’s aftermath.  We weren’t friends, but we were allies on these issues.

Some of these cases might be tricky.  The Michigan case is in the name of an LLC, so this might not be a poor homeowner like the ones we met.  The $6000 water bill might have been one of the many cases of low-riders trying to stiff a tenant.  We certainly found many land installment contracts where the new occupant found out the company didn’t disclose a monster water bill, and they were stuck with it.

Governments have the right to collect debts owed and even potentially the costs of collecting, but have no right to profit past recovery.  That’s expropriation.  That’s abuse of power.  Ironically, Michigan, and undoubtedly some other states on the list that are finally getting the message to stop unwarranted civil asset forfeiture for criminal activity, need to understand that you can’t steal from your citizens for simple debts either.

We ought to be leading this fight, but at the least we should join it.