NACDL Analyzes Proposed DOJ Forfeiture Act of 1994
- F.E.A.R. Chronicles, Vol. 2 No. 2 (July 1994)

The National Association of Criminal Defense Lawyers Forfeiture
Abuse Task Force prepared a 22 page Section By Section Analysis of
the Department of Justice's Proposed Forfeiture Act of 1994.  Their
assessment contains powerful legal arguments for rejecting the
government proposals described in this issue.  The following
excerpt describes forfeiture expansions hidden in the tail end of
DOJ's proposed bill. 

[To receive the entire report send $5.00 (copying & postage) to: 
NACDL, 1627 K St. NW, 12th Floor, Washington, DC 20006.]  

So-called Minor and Technical Amendments.

We, of course, do not oppose those amendments that are truly minor
and technical corrections to various forfeiture statutes.  However,
under the guise of being minor or technical amendments, DOJ has
included some of the most bizarre and draconian provisions in the
entire Act.

Extension of 18 U.S.C. Sec. 984 to All Civil Forfeitures.

We do not oppose the clarifying changes to 18 U.S.C. Sec. 984. 
However, we vigorously oppose the extension of Sec. 984 to all
civil forfeitures, which is hardly a "minor and technical
correction" to that statute.  To the contrary, it would vastly
expand the forfeitability of substitute assets in civil in rem
cases.  Prior to [enactment of] the current version of Sec. 984 .
Congress, and even the Department of Justice, believed that the
punitive concept of substitute assets could not and should not be
extended to civil in rem cases because it ran contrary to the
fundamental legal theory upon which in rem forfeitures are based,
i.e., that the property itself is "tainted" by its association with
criminal activity.

Section 984 made a narrowly limited breach in the aforementioned
wall separating criminal and civil forfeiture in order to deal with
a discrete law enforcement problem in the money laundering area. 
Big time launderers move large amounts of cash in and out of bank
accounts also containing funds not being laundered, thereby
frustrating the government's efforts to seize the laundered funds. 
In order to combat such methods, it was thought necessary to
authorize seizure of substitute cash in the same bank account even
if the substitute cash was not otherwise forfeitable. . Having got
its nose under the tent, the DOJ now wants to expand Sec. 984 to
all civil forfeitures, not just money laundering cases.  There is
no law enforcement justification for doing so and DOJ provides
none, preferring to slip this major change in under the smokescreen
of "minor and technical corrections." ..

Expansion of the Term "Proceeds."

Under the guise of a "minor and technical" amendment, DOJ proposes
to radically alter the definition of "proceeds" in all civil and
criminal forfeiture statutes.  Courts have consistently interpreted
the term proceeds to mean net profits, not gross revenues. 
[Citings omitted.] This is the common definition of the term
proceeds.  Forcing criminals to disgorge their ill-gotten gains is
justifiable, and even desirable, as a remedial measure designed to
prevent unjust enrichment.  However, DOJ now wants to convert all
proceeds forfeitures into highly punitive measures by redefining
the term "proceeds" to mean "all of the property derived directly
or indirectly, from an offense or scheme, not just the profit." 
Astoundingly, DOJ offers no justification for this significant
change in the law, while hiding behind the pretense that this is a
minor or technical amendment designed to promote "uniformity" in
the law.

The example unabashedly provided by DOJ in its Section-by-Section
analysis illustrates the draconian results of the proposed change. 
All monies received as the result of a loan application containing
a single false statement would be forfeitableÄeven if the bank was
fully repaid; the bank was never at risk; and there was no intent
to defraud the bank!  Many decent and law-abiding people make some
kind of false statement on a bank loan application in the belief,
correct or not, that the statement will make it more likely that
they will obtain the loan.  DOJ would subject such people to a
complete forfeiture of the loan proceeds.  Ironically, the
forfeiture of the loan proceeds might prevent the borrower from
repaying the loan to the bank.  If the loan is unsecured, the bank
would not have standing to contest the forfeiture and it would be
out of luck unless the government chose to grant it relief through
the mitigation process.

The following example is illustrative of DOJ's proposal.  Assume a
bank loan application for a $100,000 loan contains a false
statement.  The bank grants the loan.  The borrower applies the
proceeds of the loan to a building project of $1,000,000.  The
borrower then secures other financing (with no false statements),
and pays off the first bank.  DOJ then learns of the false
statement in the original loan application.  Under DOJ's proposed
amendment, the borrower would forfeit the entire building project
($1,000,000) plus the $100,000 loan, even though the bank had been
fully repaid.  Such a result defies logic and reason.  DOJ has not
offered any explanation, let alone justification for this bizarre
proposal.