Fishy Federal Asset Seizures

by Chidem Kurdas

A Wall Street Journal article reports that the number of federal statutes giving the government the right to confiscate citizens’ assets has nearly doubled since the 1990s, by one count.  This is not something that happens only to convicted gangsters. Among the more than 400 federal statutes allowing for forfeiture is the Northern Pacific Halibut Act.

Violators of the Halibut Act, which prohibits fishing in certain areas in order to conserve stocks, can lose their boat and – this could get smelly – their fish as well.

“Last year, forfeiture programs confiscated homes, cars, boats and cash in more than 15,000 cases. The total take topped $2.5 billion, more than doubling in five years, Justice Department statistics show,” wrote John Emshwiller and Gary Fields in the WSJ. They don’t mention illicit halibut; I suppose it may not be included in the $2.5 billion.

What is more, federal officials want to make greater use of civil forfeiture, that is, confiscate assets without filing criminal charges against the owner. This can be done by presenting evidence linking the property itself to illegal activity, even if the owner is not involved in the crime. Roger Koppl wrote about this issue here on ThinkMarkets a while back, citing the work of Don Boudreaux and A. C. Pritchard.

With budgets under stress, state and local agencies have great financial incentive to go about taking property—they get to keep up to 80% of the proceeds when they work with the federal government on seizures. A related WSJ article is about how aNevada sheriff’s office is spending its share.

Given financial incentives and officials’ mindset, the trend toward greater seizures to likely to continue. Civil forfeiture makes it easy by expanding the scope, under the doctrine that any asset connected to a crime can be sized.

Now, I wonder. Suppose you bought illegal halibut and put it into your refrigerator. Does that mean your refrigerator is incriminated and can be impounded? What about your kitchen, house, car—-all touched by fish taken from forbidden waters. That’s hypothetical, but it illustrates the potential reach of government confiscation under civil forfeiture.

The examples described in the WSJ article are frightening. In one case, money seized from an  armored-car firm in an FBI fraud investigation included cash belonging to people who happened to employ that armored-car service for transportation. The government told these innocent third-parties to get in line as fraud victims and wait for the end of the criminal case. At that time they might receive 25 cents or less on the dollar, records suggest.

One of them was lucky—he went to court and got back his full $392,000, thanks to a witness who had seen this businessman’s money loaded to the FBI’s truck in the original sealed and marked bags.