Feds, Anaheim Try to Seize $1.5M Building . . . With No Charges Against the Owner

Published June 25, 2013

A controversy in California that began with the state’s medical marijuana law has evolved into a battle over civil forfeiture between a property owner and the state of California on one side, and the city of Anaheim and the federal government on the other.

Anaheim small business owner Tony Jalali faces the loss of his office building, which is worth $1.5 million, even though he has committed no crime. The city of Anaheim is colluding with federal prosecutors to do an end-run around state laws to take away Jalali’s building because he rented space to medical marijuana dispensaries, even though they operated legally under California law.

Jalali is fighting back. Represented by the Institute for Justice, he is challenging the constitutionality of the taking of his land to put an end to the civil forfeiture in the U.S. District Court for the Central District of California in Santa Ana, Calif. IJ is joined in the case by Lake Forest, Calif., attorney Matthew S. Pappas, as local counsel.

‘Policing for Profit’

“Allowing the police to keep the proceeds of forfeited property gives them a direct financial incentive to use civil forfeiture,” said Scott Bullock, lead attorney on the case for the Institute for Justice. “No one in the United States should lose their property without being convicted of, or even charged with, any crime. But as this case shows, fair and impartial law enforcement cannot exist as long as we allow this policing for profit.”

Civil forfeiture allows government to take and sell property without ever charging the owner with a crime, let alone convicting the person of one. Such forfeitures fund law enforcement officials’ budgets, giving them a direct financial incentive to abuse this power. Civil forfeiture is now being employed as the key strategy in the federal government’s battle against states that have legalized medical marijuana, threatening the property of small landlords who have been convicted of no crime.

Jalali immigrated to the United States from Iran in 1978. He now owns a modest, two-story office building mortgage-free, but because two of his tenants were medical marijuana dispensaries, the federal government demands the property be forfeited for “facilitating” drug crimes. The federal government makes this demand even though medical marijuana dispensaries are legal under state law, and even though Jalali evicted the dispensaries immediately upon receiving the federal complaint. Indeed, the federal complaint threatening to take away his life savings in the form of the building was the first notice Jalali received from the federal government that there was a legal concern about the relatively common practice in California of renting out retail space to such dispensaries.

The profits from the property that law enforcement agents take by civil forfeiture are kept by those same agencies. When local law enforcement agencies team up with federal agencies, the federal government takes the property and pays out up to 80 percent of the money to local or state law enforcement agencies—something it calls “equitable sharing” of forfeiture proceeds.

End-Run on Two Fronts

Anaheim is colluding with the federal government to do an end-run around state law on two fronts. Not only did California voters legalize the sale of medical marijuana, but state law also bars local or state officials from taking private property by civil forfeiture unless the property owner has been convicted of a crime. Simply put, by using equitable sharing, Anaheim and federal officials are looking to cash in on a $1.5 million bounty by subverting state law.

“The law must be predictable if it is going to be followed and enforced, yet the law was anything but predictable in this case,” said IJ Attorney Larry Salzman. “It is legal to rent property to a medical marijuana dispensary under California law. The city of Anaheim, while now hoping to cash in on Jalali’s property in this case, has hosted the world’s largest marijuana trade show in its city-owned convention center each year since 2010, attracting tens of thousands of visitors. And since 2009, the federal government has said that it would not pursue federal cases against medical marijuana users or dispensaries in states that have made the activity legal. Anaheim and the federal government have snared Tony Jalali in a trap that could cost him his property.”

More than $450 million was paid by the federal government to local law enforcement agencies nationwide under the equitable sharing program in 2012.

More Than 1,000 Warnings

The forfeiture case against Jalali is part of a campaign by U.S. Attorneys to enforce a federal prohibition on marijuana—letters have been sent to more than 1,000 property owners in California, Washington, Colorado and other states where marijuana has been made legal under state law threatening them with civil forfeiture.

“I am fighting for my rights, because it is wrong for the federal government and city of Anaheim to bypass state law, and try to take my property when I have done nothing wrong,” said property owner Tony Jalali.  “I left Iran to escape government brutality which has no respect for human rights.  This nation has given me a home and has a great history of respecting human rights.  I have every hope it will ultimately respect those rights, including my property rights.”

John Kramer ([email protected]) is vice president for communications at the Institute for Justice.