A federal asset forfeiture program known as equitable sharing provides law enforcement agencies with a major loophole, allowing them to continue seizing property almost unabated – even when state laws seek to limit such practices.
WHAT IS ASSET FORFEITURE?
Civil asset forfeiture is the process by which governments seize cash or property that was allegedly involved in criminal activity or that was the proceeds of a crime. As the Institute for Justice points out, unlike criminal forfeiture “property owners do not have to be convicted of a crime, or even charged with one, to permanently lose their cash, cars, businesses or even their homes.”
Police frequently seize property and cash during investigations. In many states, they don’t even have to make an arrest. Once seized, the property enters a judicial process to determine its alleged connection to criminal activity.
If the government prevails, it keeps the assets. In many states, law enforcement receives a share – or even all – of the proceeds. This incentivizes “policing for profit,” where law enforcement prioritizes cases with the potential for lucrative seizures.
Notably, civil asset forfeiture does not require a guilty verdict in most states. In some, the property’s owner doesn’t even have to face criminal charges. Instead, the property itself is charged with a crime, undergoing a legal proceeding that often results in its transfer to state ownership.
In contrast, a criminal asset forfeiture can only proceed after a suspect has been convicted of a crime. Prosecutors must then bear the burden of proving that the property was directly tied to the criminal activity as either its proceeds or an instrumentality.
THE FEDERAL LOOPHOLE
The Federal Equitable Sharing Program is a U.S. Department of Justice (DOJ) initiative that allows state, local, tribal, and federal law enforcement agencies to collaborate in seizing and forfeiting assets.
The process runs through federal courts and follows federal law. Participating state and local law enforcement agencies get to keep up to 80 percent of the proceeds, regardless of any restrictions imposed by their state laws.
Even in states that have restricted or completely abolished civil forfeiture at the state level, law enforcement can easily bypass these reforms by leveraging the federal equitable sharing program. This loophole effectively undermines state efforts to limit or eliminate civil forfeiture.
Without closing this loophole in state law, local agencies can still participate in the federal program and circumvent state limitations
In fiscal 2023 alone, the DOJ distributed nearly $473.9 million in equitable sharing money.
THE EQUITABLE SHARING PROCESS
There are two ways state and local police can tap into federal equitable sharing funds: adoption and participation in joint task forces.
Under the adoption process, state or local police conduct an investigation independently and then turn the case over to a federal agency for prosecution. Even though the federal government wasn’t even involved in the initial investigation, they “adopt” the case and prosecute it under federal law. If the forfeiture is successful, the federal government hands out up to 80 percent of the take to the state or local law enforcement agency that started the investigation.
This process allows state and local police to cash in on civil asset forfeiture even if state law limits or prohibits it.
Adoption accounts for about 15 percent of equitable sharing cases.
The second and most common method involves participation in joint federal task forces. In these cases, state and local officers work alongside federal agents throughout the investigation. The forfeiture process then takes place in federal courts, and, as with adoption, the state and local agencies receive up to 80 percent of the take.
OPT-OUT
Forfeiture reform at the state level has gained momentum over the last several years, but as long as equitable sharing exists, state and local law enforcement can continue to cash in on asset forfeiture in a big way.
However, the solution is straightforward. States can simply opt out of equitable sharing by prohibiting state and local law enforcement from participating in the program.
To be fully effective, any prohibition must include language to cover both adoption and federal task forces.
To date, no state has fully ended participation in the federal equitable sharing program. However, nine states have taken smaller strategic steps that limit their participation in the scheme.
The first step is to ban adoption with language that prohibits state and local law enforcement from passing cases to the federal government. Since adoption accounts for about 15 percent of equitable sharing cases, such a measure can have an immediate impact. Pennsylvania and Washington D.C. have taken this step.
California and Colorado took another approach: They allow participation in federal adoptions, but limit the share of proceeds law enforcement can keep. While this approach doesn’t end participation in the program, it at least removes the policing for-profit motive.
Arizona, Maryland, Nebraska, New Mexico, and Ohio have all prohibited states from transferring property to the federal government for forfeiture if the value is below a certain threshold amount. For instance, state law may limit participation in equitable sharing if the total value of the seizure is greater than $50,000.
Determining the exact number of cases impacted by such thresholds is challenging because only 21 states report forfeiture data. However, based on analysis by the Institute for Justice, the vast majority of cases fall below that amount.
The median value of forfeiture currency across these 21 states is just $1,276. Minnesota, which has the most transparent reporting, highlights the issue: According to an IJ lawyer, only seven of the 3,873 cases reported in 2023 included proceeds above $50K.
The next step is a blanket prohibition on law enforcement agencies working with federal task forces from participating in equitable sharing. If the case doesn’t proceed through state court under state laws, state and local law enforcement should be prohibited from accepting the proceeds.
ENDING THE CRISIS
Civil asset forfeiture incentivizes the seizure of property, often without due process, and the federal equitable sharing program allows state and local law enforcement to bypass state-level reforms intended to curb or end this practice.
States have several options to reduce participation in equitable sharing: banning adoption, restricting participation in federal task forces, and setting minimum thresholds for property transfers to federal authorities. These steps can reduce financial incentives that prioritize revenue generation over adherence to stricter state standards.
While some progress has been made, the scale of the problem remains significant. Unless states take decisive action to close the federal loophole, property owners will remain vulnerable to unjust seizures and forfeitures.
The solution is clear: address the incentives that drive civil asset forfeiture and ensure property cannot be taken without proper accountability and due process.
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