Research & Commentary: Indiana’s Civil Asset Forfeiture Laws in Need of Reform

Published March 9, 2017

The Indiana General Assembly is now considering a significant reform of its regulations governing the ability of law-enforcement officials to seize private property from suspected criminals. Civil asset forfeiture, also known as civil judicial forfeiture, is a controversial legal process through which law-enforcement agencies take personal assets from individuals or groups merely suspected of a crime or illegal activity. Three states have essentially abolished the practice of asset forfeiture – Nebraska, New Mexico, and North Carolina – and more than a dozen other states have made significant forfeiture reforms.

The new reforms being proposed would require the government to secure a criminal conviction before forfeiture could occur. The legislation would also shift the burden of proof away from property owners to the government while requiring “clear and convincing evidence” to forfeit property. The bill recently passed the Senate and will now be considered by the House.

On paper, when compared to most states, Indiana’s civil asset forfeiture laws are strong. The state earned a “B+” grade in a 2015 study of civil asset forfeiture by the Institute for Justice (IJ). Proponents of forfeiture argue it allows law-enforcement agencies to use seized assets toward their enforcement efforts, transforming property illicitly gained by criminals into resources to be used for public benefit.

Critics of the process note it gives law-enforcement agencies economic incentives to seize property, corrupting them and penalizing innocent property owners. Article 8, Section 2 of the Indiana Constitution requires all forfeiture proceeds go to the state school fund, but a loophole in state statutes undermines what should be a strong disincentive to seize. Under current law, law-enforcement agencies can deduct the “law enforcement costs” of a forfeiture case before they deposit seizure proceeds in the school fund. Unfortunately, several agencies have chosen to classify a large portion of these proceeds as deductible law-enforcement costs.

The Institute for Justice points to Marion County, the largest county in Indiana, as an example of how the loophole is abused. In Marion County, law-enforcement officials have used the provision to “keep all the proceeds of forfeiture by dividing forfeited property among a range of law enforcement agencies rather than according to a case-specific cost determination. Some agencies manage to keep nearly all of the bounty, even though Indiana is, on paper, a state where they should retain zero proceeds.”

The standard of proof required for seizure differs from state to state. Currently, there isn’t a strong standard of proof required for seizure in Indiana; the government is only required to demonstrate by a preponderance of the evidence the property to be seized is related to a previously committed crime. Indiana places the burden of proof on the property owner, not the government. IJ also notes innocent property owners are required to demonstrate their noninvolvement with the illegal use of their property to reclaim it. The new bill seeks to address both of these problems.

Another major issue with the state’s forfeiture policies is its use of equitable sharing arrangements, whereby local law enforcement and federal officials agree to classify the suspected criminal activity as a federal crime and divide the seized assets between them. The federal agencies receive between 10 and 20 percent, and the local police get the remainder. This allows local law enforcement agencies to ignore state law and circumvent the will of state legislatures and the people. Indiana ranks 39th in the country on equitable sharing and according to IJ, Indiana agencies collected almost “$6.9 million in equitable sharing proceeds from the Treasury Department between the 2000 and 2013 fiscal years.”

Scott Bullock, senior attorney at the Institute for Justice, advocates eliminating forfeitures altogether, except in cases of maritime and customs law. Assets should be seized only when crimes have been committed and convictions have been made, and law enforcement officials should not be incentivized to seize any more property than is necessary and justified.

While Indiana has made some positive steps toward limiting the incentive for police to seize for profit, more work needs to be done. The “law enforcement costs” loophole needs to be closed, information on seizures should be made available to the public, and equitable sharing should be cut back or eliminated altogether. The new proposal is a good starting point.

The following documents provide additional information about civil asset forfeiture.

Playing Both ‘Cops and Robbers’ on Asset Forfeiture
Jesse Hathaway, managing editor of Budget & Tax News, examines in this article a new digital system that allows highway patrolmen to use civil asset forfeiture laws to seize individuals’ assets stored in bank accounts or on prepaid debit cards at the press of a button. “Civil asset forfeiture creates too many perverse economic incentives. However well-intentioned the idea may be, the practice of civil asset forfeiture has been corrupted and now infringes on Americans’ right to be free from harassment by money-hungry agents of the government,” wrote Hathaway.

Civil Asset Forfeiture: When Good Intentions Go Awry
In this testimony given before the Mississippi Asset Forfeiture Transparency Task Force, John Malcolm of The Heritage Foundation examines forfeiture in Mississippi and other states and argues for reform. “Civil asset forfeiture should remain focused on its original purpose of depriving criminals of their ill-gotten gains, but we must be sure that it is criminals and only criminals who are being impacted,” said Malcolm.

Policing for Profit: The Abuse of Civil Asset Forfeiture 2nd Edition
Dick Carpenter, Lisa Knepper, Angela Erickson and Jennifer McDonald argue civil asset forfeiture laws constitute one of the most serious assaults on private property rights in the nation today. “Civil forfeiture threatens the constitutional rights of all Americans. Using civil forfeiture, the government can take your home, business, cash, car or other property on the mere suspicion that it is somehow connected to criminal activity—and without ever convicting or even charging you with a crime. Most people unfamiliar with this process would find it hard to believe that such a power exists in a country that is supposed to recognize and hold dear rights to private property and due process of law,” they write.

Civil Asset Forfeiture, Equitable Sharing, and Policing for Profit in the United States
Jefferson E. Holcomb and Marian R. Williams, professors in the department of Government and Justice Studies at Appalachian State University, and Tomislav V. Kovandzic, a professor in the University of Texas–Dallas School of Economic, Political, and Policy Studies, identify the effects of civil asset forfeiture reform on law enforcement activities. They write, “There is substantial anecdotal evidence that law enforcement [agencies] utilize a variety of tactics to generate the greatest revenue from their forfeiture operations,” a hypothesis their analysis of U.S. Department of Justice statistics confirms. 

Seize First, Question Later: The IRS and Civil Forfeiture
Institute for Justice researcher Dick M. Carpenter II and attorney Larry Salzman examine the use and abuse of civil asset forfeiture laws by the Internal Revenue Service. “Federal civil forfeiture laws give the Internal Revenue Service the power to clean out bank accounts without charging their owners with any crime,” they write.

Civil Asset Forfeiture: 7 Things You Should Know
This Heritage Foundation Factsheet outlines several important things people should know about civil asset forfeiture. 

Civil Asset Forfeiture Reform Goes Mainstream
Jordan Richardson of The Heritage Foundation discusses how the growing number of civil asset forfeiture abuses has drawn the attention of news media and suggests the increased attention may lead to real reform.

The Civil Asset Forfeiture Racket
A. Barton Hinkle of the Reason Foundation examines the growing problems created by civil asset forfeiture and argues for repeal of such laws.

Inequitable Justice: How Federal ‘Equitable Sharing’ Encourages Local Police and Prosecutors to Evade State Civil Forfeiture Law for Financial Gain
The Institute for Justice examines the federal law enforcement practice known as equitable sharing, which enables and indeed encourages state and local police and prosecutors to circumvent the civil forfeiture laws of their states for financial gain.


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