Innocent Owner Defense to Government Seizure of Real Property Purchased with Drug Proceeds Under Drug Forfeiture Laws: United States v. 92 Buena Vista Ave.

by Sharon Fila, Esq., Bountiful UT
(c) Sharon Fila 1997

Forfeiture laws, once largely ignored, have become the darling of law enforcement agencies in the "war on drugs."⁽¹⁾ Until relatively recently, forfeiture was a curious relic "relegated ... [to] the musty recesses of lawbooks, and rarely invoked in practice."⁽²⁾ Beginning in the 1970s, however, Congress revitalized forfeiture with statutes that targeted the spoils of drug trafficking.⁽³⁾ Congress intended the new laws to punish and deter drug dealers by depriving them of their illegal profits.⁽⁴⁾

The forfeiture provisions resulted in a skyrocketing number of forfeitures, especially during the last ten years. For example, between 1985 and 1992, the Justice Department's Forfeiture Fund received property and proceeds valued at almost $2.6 billion⁽⁵⁾ including over $653 million in 1991 alone.⁽⁶⁾ As of July 30, 1990, the U.S. Marshall's Service stated that it had custody of 3680 parcels of real estate valued at $593,800,000.⁽⁷⁾ The seized assets for fiscal year 1992 amounted over 32,000 properties valued at $1.9 billion, with real estate accounting for fifty one percent of the total value.⁽⁸⁾

The forfeiture concept has several attractions. First, civil forfeiture legitimately enhances the ability of law enforcement to impose accountability on fugitive criminals.⁽⁹⁾ Forfeiture also reduces the possibility that illegally obtained assets will create "`working capital' for future criminal activity."⁽¹⁰⁾ Furthermore, the threat of imprisonment usually creates minimal deterrent value in view of the huge profits associated with drug dealing.⁽¹¹⁾ Thus, frustrated law enforcement officials view substantial asset seizures as an attractive method of making criminals pay for their crimes.⁽¹²⁾ In addition, forfeiture actions usually bring in more revenue than they cost.⁽¹³⁾ Finally, the public, weary of bearing the ever-increasing costs of incarceration, may view civil forfeiture as an appealing alternative sanction for criminal behavior.⁽¹⁴⁾ Indeed, at least some of the confiscated assets help finance law enforcement, thus benefitting taxpayers.⁽¹⁵⁾ Finally, civil forfeiture penalizes persons who, while not involved enough in drug enterprises to merit prosecution, yet know they are assisting criminal activity.⁽¹⁶⁾ The threat of forfeiture can deter such businesses and individuals from lending assistance to criminals.⁽¹⁷⁾

Difficulties arise, however, with the application of the arcane, little understood concept of forfeiture to property which represents the "proceeds" of drug crimes.⁽¹⁸⁾ These problems are compounded by Congress's failure to harmonize different forfeiture statutes.⁽¹⁹⁾ For example, Congress enacted different "innocent owner" defense provisions in civil forfeiture proceedings than it did in criminal forfeiture proceedings without any apparent policy reasons for the variation.⁽²⁰⁾

An additional problem with civil forfeiture mechanisms is that they are so attractive to prosecutors that they sometimes become a substitute for full-blown prosecutions.⁽²¹⁾ Prosecutors generally only prosecute cases that are strongly enough supported by admissible evidence to ensure a high likelihood of conviction.⁽²²⁾ However, because the government's burden of proof in civil forfeiture cases is much lower⁽²³⁾, a criminal who escapes prosecution may still face forfeiture of assets.⁽²⁴⁾ Thus, prosecutors can impose the forfeiture sanction on fugitives,⁽²⁵⁾ individuals acquitted of crimes,⁽²⁶⁾ or even persons never charged with a crime.⁽²⁷⁾

Additional difficulties arise because forfeiture laws afford litigation advantages to the government unseen in an otherwise due process conscious system.⁽²⁸⁾ These statutes allow the government, on a mere showing of probable cause,⁽²⁹⁾ to seize property without prior notice or hearing.⁽³⁰⁾ The burden then shifts to the owners to prove that they are innocent of wrongdoing and entitled to the return of their property.⁽³¹⁾ The innocent owner protections extended by Congress have limitations⁽³²⁾ and can be difficult to establish in forfeiture proceedings.⁽³³⁾ Indeed, one commentator notes that "[t]his bonanza for law enforcement officials ... has become a Kafkaesque nightmare for some property owners ... caught up in a world of bizarre legal doctrine, sometimes without the assets even to defend themselves."⁽³⁴⁾ Owners of property subject to forfeiture find themselves wandering in an "Alice-in-Wonderland world where the property owner ... has the burden of proof, ... innocence is not a defense, rank hearsay is admissible ... and the government's right to the property vests at the time it is used illegally rather than at the time of the forfeiture judgment."⁽³⁵⁾ In essence, forfeiture statutes allow law enforcement agencies to confiscate businesses, homes, cars, and cash without ever even charging the owner with a crime, much less obtaining a conviction.⁽³⁶⁾ One defense attorney describes the reaction of clients after he has explained this "new concept in law enforcement": "They universally react the same way: they tell me I must be mistaken. This cannot happen in America."⁽³⁷⁾

Perhaps one of the most serious consequences of civil forfeiture is that it encourages law enforcement authorities to rely on it as a source of revenue.⁽³⁸⁾ Indeed, the Supreme Court listed "rais[ing] funds for law enforcement" as one of four policy justifications for forfeiture.⁽³⁹⁾ Thus, forfeiture has created a "feeding frenzy"⁽⁴⁰⁾ where government agents and informants are coached to arrange drug transactions on or close to valuable real estate so that the government can seize the entire tract.⁽⁴¹⁾ The government often pays informants a percentage of the value of goods seized.⁽⁴²⁾ As a result, informants and cooperating law enforcement agencies reap substantial rewards by pursuing drug barons.⁽⁴³⁾

Seizure of property, especially homes, not owned by drug dealers or criminals raises fundamental issues of fairness. Civil forfeiture laws, however, apply to property without regard to the innocence of the owner of the property.⁽⁴⁴⁾ "Thus, the family home is fair game for forfeiture if a son, relative or friend [uses] the property unlawfully--say, by using the telephone to arrange a drug purchase."⁽⁴⁵⁾

Government attorneys and law enforcement officials justify forfeitures by relying on legal fictions dating back to feudal times which defy logic in the current context.⁽⁴⁶⁾ One legal fiction associated with forfeiture which has had especially disastrous results for innocent owners is the concept of relation-back. This doctrine states that title in property vests in the government at the time the illegal act occurred, and that the government's title is superior to any subsequent buyer, transferee or owner of the property.⁽⁴⁷⁾

The Supreme Court's recent Buena Vista⁽⁴⁸⁾ decision placed a limit on a particularly irrational use of the relation-back doctrine.⁽⁴⁹⁾ The government urged the Court to find that because funds given a woman to buy a home were connected with drug trafficking, the home she bought automatically belonged to the government, thus stopping her from even asserting her innocent owner defense.⁽⁵⁰⁾ This Note explores the Buena Vista decision, its impact on several issues connected with civil forfeiture, as well as other issues the Court left undecided.

Part II of this Note briefly describes the history of forfeiture and the current federal statutory framework for drug forfeiture as it relates to real property purchased with drug proceeds. Part II also delineates civil forfeiture procedures for real property. Part III outlines the Buena Vista facts and lower court decisions. Part IV contains a description and analysis of forfeiture concepts impacted by the Buena Vista decision. Part V examines other relevant issues not directly affected by the decision. Part VI asserts that punishment of criminals and deterrence of criminal behavior should be the only policy justifications for civil forfeiture. Thus, Congress and the courts should ensure that forfeiture impacts only wrongdoers, providing protection for all innocent owners. Finally, Part VII explores some of the implications of the Buena Vista ruling, including a description of pending legislation aimed at forfeiture reforms. This Note applauds the Buena Vista plurality decision as a positive step towards protection of innocent owners and argues for further congressional reform to avoid the unfair burdens that innocent owners now endure in reclaiming their real estate.
 
 

1. Origins
 
 
 

The concept of forfeiture ascribes liability to an inanimate object or animal and springs from ancient times.⁽⁵¹⁾ Roman law required an owner whose animal caused injury to compensate the injured party--which could be done by surrendering the animal to the victim.⁽⁵²⁾

English common law called the object that caused the injury or crime a "deodand."⁽⁵³⁾ Blackstone defined this term as "personal chattel ... [which caused] the death of a [person],"⁽⁵⁴⁾ and further described it as a forfeiture which "arises from the misfortune rather than crime of the owner."⁽⁵⁵⁾ A deodand was forfeited to the crown for distribution to the poor.⁽⁵⁶⁾ In addition to religious origins, courts in Blackstone's time based their justification for forfeiture on the view that injury caused by an object was at least partly due to the owner's negligence and thus forfeiture of the property punishes the owner.⁽⁵⁷⁾ In criminal cases, English common law required forfeiture to the king of all a convicted felon's chattels.⁽⁵⁸⁾ In the case of "atrocious" offenses, an offender's real property might also be confiscated on a temporary (offender's lifetime) or perpetual basis.⁽⁵⁹⁾
 
 
 

2. Early American Law
 
 
 

Americans rejected the deodand concept in English common law.⁽⁶⁰⁾ The framers of the Constitution demonstrated their particular abhorrence for estate forfeitures when they drafted article III, section 3.⁽⁶¹⁾ Nevertheless, early American courts recognized forfeiture in admiralty law because ship owners were often difficult to locate.⁽⁶²⁾

From the beginning, American courts viewed civil forfeiture proceedings as in rem actions.⁽⁶³⁾ Yet decades ago individuals urged courts to view in rem forfeiture as a "worn out fiction" derived from the "'superstitious' belief" that an object is capable of guilt.⁽⁶⁴⁾ Nevertheless, in rem forfeiture has "curiously gained favor in this country"⁽⁶⁵⁾ and serves as a powerful law enforcement mechanism.⁽⁶⁶⁾

The in rem classification accords owners less protection than an in personam proceeding would require.⁽⁶⁷⁾ Accordingly, in an early case, The Palmyra,⁽⁶⁸⁾ the Supreme Court upheld the seizure of a Spanish ship even though there was an acquittal of piracy charges that had initially caused the seizure.⁽⁶⁹⁾ The Court painstakingly justified the apparently unjust result by noting that the civil forfeiture was in rem and thus unrelated to the guilt of the ownership or personal acts of the parties.⁽⁷⁰⁾

Relying on Palmyra to support in rem civil forfeitures, Congress extended forfeiture laws beyond admiralty.⁽⁷¹⁾ In Dobbins Distillery v. United States,⁽⁷²⁾ the Supreme Court upheld the forfeiture of a landlord's property on which the tenant had installed an illegal distillery.⁽⁷³⁾ The Court rationalized the apparently unfair outcome by noting that the proceeding was a Congressionally created rem action; the offense attached to the property notwithstanding the guilt or innocence of the owner.⁽⁷⁴⁾ Thus, the early forfeiture statutes and common law afforded no relief for innocent owners.⁽⁷⁵⁾
 
 
 

3. Development of Current Statutory Scheme
 
 
 

The role of forfeiture laws in crime fighting has been insignificant until the past two decades.⁽⁷⁶⁾ Congress, however, revitalized the use of forfeiture by passing the Comprehensive Drug Abuse Prevention and Control Act of 1970⁽⁷⁷⁾ ("1970 Act"). The 1970 Act empowered the Department of Justice to bring civil forfeiture actions against certain property used or acquired in violation of federal drug laws.⁽⁷⁸⁾ Congress deemed the effect of the 1970 Act to be too limited⁽⁷⁹⁾ and therefore, in 1978, expanded the reach of forfeiture to include proceeds gleaned from drug dealing by enacting section 881(a)(6).⁽⁸⁰⁾ This was the first United States statute allowing forfeiture of the accumulated profits of criminal activities.

⁽⁸¹⁾ The term "proceeds" as used in section 881(a)(6) includes "property acquired with the profits of drug trafficking."⁽⁸²⁾ Finally, Congress amended the civil forfeiture statutes once again by enacting the Crime Control Act of 1984⁽⁸³⁾ ("Crime Control Act"). The Crime Control Act added two important amendments to section 881.⁽⁸⁴⁾ The first revision, section 881(a)(7), permitted forfeiture of real estate connected with illegal drug operations.⁽⁸⁵⁾ The second change codified the relation-back doctrine.⁽⁸⁶⁾ Under this doctrine, title to forfeitable property vests in the government upon the commission of the crime giving rise to the forfeiture.⁽⁸⁷⁾ Relation-back created substantial conflicts when applied to real estate transferred to unsuspecting third parties.⁽⁸⁸⁾ When applied to proceeds used to buy real property, as the Buena Vista case illustrates, the confusion and possibility of unjust results to innocent owners greatly increased.
 

Except in cases where the statute requires a criminal conviction, forfeiture proceedings are considered civil in rem actions against the property.⁽⁸⁹⁾ The government files a complaint against the property in district court, relying on the legal fiction that the property itself is guilty of violating the law.⁽⁹⁰⁾ Consequently, the property is the defendant and the owner must intervene by filing a claim.⁽⁹¹⁾ The government issues notice that it seeks forfeiture by two methods: first, the Justice Department notifies a potential claimant by certified mail after seizing the property; second, the government publishes a list of property for which it seeks forfeiture each Wednesday in USA Today.⁽⁹²⁾ Once the government publishes notice, the individual seeking return of real property must file a verified claim within ten days.⁽⁹³⁾

Arcane rules of customs law govern civil forfeiture cases.⁽⁹⁴⁾ Accordingly, the government must satisfy a probable cause requirement that the property was used in an illegal drug transaction or was purchased with proceeds of illegal drug activity to initiate a forfeiture action.⁽⁹⁵⁾ Probable cause is determined using the same tests as for arrests, searches and seizures.⁽⁹⁶⁾ Once government authorities establish that there is a probable cause connection between the property and a drug law violation, the burden shifts to the landowner to prove that the property is not subject to seizure.⁽⁹⁷⁾ This normally involves asserting an innocent owner defense--that the property owner neither knew nor consented to the alleged narcotics violations connected with the parcel.⁽⁹⁸⁾ If the owner fails to prove the innocent owner defense by a preponderance, the government may be granted summary judgment "solely upon the basis of its showing of probable cause."⁽⁹⁹⁾ The forfeiture cannot then be reversed except by an appeal to the Attorney General for "remission."⁽¹⁰⁰⁾

Once forfeiture is final, the Attorney General disposes of the property, usually allocating portions of the sale to various government agencies.⁽¹⁰¹⁾ Section 881(e) creates a powerful economic incentive for state and local law enforcement agencies to initiate civil forfeiture actions because they are entitled to receive a portion of the forfeiture proceeds.⁽¹⁰²⁾
 
 

"Behind every successful man is a woman that couldn't be more surprised" as the saying goes.⁽¹⁰³⁾ Beth Ann Goodwin ("Goodwin") could certainly vouch for her surprise when, in April of 1989, a United States Marshal seized her home in Rumson, New Jersey.⁽¹⁰⁴⁾ At the time of the seizure, Goodwin was the sole owner and resided there with her infant and two teenaged children.⁽¹⁰⁵⁾ The government claimed there was probable cause to believe Goodwin financed ninety percent of the $240,000 purchase price of the home in 1982 with proceeds of drug transactions.⁽¹⁰⁶⁾ Goodwin received the money as a gift from Joseph Brenna, a reputed drug dealer⁽¹⁰⁷⁾ with whom she shared the house until she severed the relationship in 1⁽¹⁰⁸⁾
 
 

Goodwin moved for summary judgment, asserting the innocent owner defense available under section 881(a)(6).⁽¹⁰⁹⁾ The government argued that the "innocent owner" term extends only to bona fide purchasers who acquire an interest in the property before the illegal act giving rise to the forfeiture.⁽¹¹⁰⁾ Goodwin was foreclosed from asserting the innocent owner defense, contended the government, for two reasons. First, as a donee, Goodwin did not qualify as a bona fide purchaser for value.⁽¹¹¹⁾ Second, "all right, title and interest in the proceeds of the narcotics transactions passed to the United States at the time of the sale."⁽¹¹²⁾ Thus, invoking the relation-back doctrine, the government argued that Goodwin never acquired title to the home because the United States became the property owner when Goodwin used drug proceeds to purchase it.⁽¹¹³⁾ The District Court agreed with the government's contention that Goodwin could not qualify as a valid innocent owner under section 881(a)(6).⁽¹¹⁴⁾

The Court of Appeals, however, reversed the District Court and construed "owner" broadly to include any party with a legitimate legal or equitable interest in property.⁽¹¹⁵⁾ Further, the Court of Appeals ruled that the relation-back doctrine did not apply to property where a property owner raised a valid innocent owner defense.⁽¹¹⁶⁾

IV. Forfeiture Concepts Impacted By Buena Vista

Decision: Description and Analysis

1. Background
 
 
 

American courts have recognized that seizure of an innocent party's property is "based upon a `superstition' inherited from the `blind days' of feudalism."⁽¹¹⁷⁾ The idea that innocence of a property owner is no defense to the forfeiture of the property violates widely accepted notions of fair play and due process.⁽¹¹⁸⁾ Prior to enactment of statutory protection for innocent owners, forfeiture extinguished the guiltless owner's property interest.⁽¹¹⁹⁾ Indeed, the Supreme Court allowed such severe results as recently as 1974 in Calero-Toledo.⁽¹²⁰⁾ There, the Court upheld the forfeiture of a $20,000 yacht on which authorities found a single marijuana cigarette⁽¹²¹⁾ put there by lessees without the knowledge or consent of the owners.⁽¹²²⁾ The forfeiture in Calero-Toledo was pursuant to statutes which had no innocent owner protection.⁽¹²³⁾

As Congress expanded government forfeiture powers, it recognized the vulnerable position of innocent owners in forfeiture proceedings. Thus, in 1978, when Congress extended forfeiture power to include proceeds by enacting section 881(a)(6), it concurrently incorporated broad unambiguous protections for innocent owners of property connected with drugs.⁽¹²⁴⁾ During Senate hearings concerning the innocent owner defense, Senator John Culver declared that the purpose of the defense was "to protect the individual who obtains ownership of proceeds with no knowledge of the illegal transaction."⁽¹²⁵⁾ Similarly, Senator Sam Nunn asserted that "a bona fide party who has no knowledge or consent to the property he owns having been derived from an illegal transaction would be able to establish the fact under this amendment and forfeiture would not occur."⁽¹²⁶⁾

Section 881(a)(6) accordingly declares that "no property shall be forfeited ... to the extent of the interest of an owner, by reason of any act or omission established by the owner to have been committed or omitted without the knowledge or consent of that owner."⁽¹²⁷⁾

Regarding the scope of meaning to be assigned to "owner," Congress explicitly instructed that "[t]he term `owner' should be broadly interpreted to include any person with a recognizable legal or equitable interest in the property seized."⁽¹²⁸⁾
 
 
 

2. Buena Vista: Donees Qualify as Innocent Owners

An important issue in Buena Vista concerned whether an innocent owner under section 881(a)(6) must be a bona fide purchaser for value.⁽¹²⁹⁾ The District Court held that the innocent owner defense under section 881(a)(6) only applied to bona fide purchasers for value.⁽¹³⁰⁾ The Third Circuit, in reversed on this issue, holding that the plain language of the statute refers only to an "`owner' and in no way limits the term `owner' to a bona fide purchaser for value."⁽¹³¹⁾ The Court of Appeals further noted that applying innocent owner protection under section 881(a)(6) only to bona fide purchasers for value would contravene Congressional intent.⁽¹³²⁾ The Court of Appeals supported this contention by noting that the criminal forfeiture statute, section 853, explicitly limits innocent owner protection to bona fide purchasers for value.⁽¹³³⁾ The Court of Appeals further opined that the absence of such a limitation in the civil forfeiture provision manifested Congress's intent.⁽¹³⁴⁾

Finally, the United States Supreme Court, in a plurality decision, affirmed the Court of Appeals, holding that the term "owner" as used in section 881(a)(6) is not limited to bona fide purchasers for value.⁽¹³⁵⁾ The plurality cited the unambiguous language of the statute itself as the strongest support for the ruling.⁽¹³⁶⁾ Notably, on appeal to the Supreme Court, the government did not dispute the Court of Appeals ruling on this issue.⁽¹³⁷⁾

Justice Kennedy, joined by Chief Justice Rehnquist and Justice White, penned a strong dissent.⁽¹³⁸⁾ Adamantly disagreeing with the plurality's reasoning, the dissent asserted that a donee of drug proceeds has no more ownership rights than the donor could transfer.⁽¹³⁹⁾ Accordingly, if a drug dealer uses drug profits to buy a house, the property is forfeitable to the government.⁽¹⁴⁰⁾ If the same drug trafficker gives the house to a close friend or relative, the recipients of the house should have no more ability to defend against forfeiture than the drug dealer would.⁽¹⁴¹⁾ The dissent viewed the protection of drug traffickers' donees to be in conflict with the Congressional desire behind the proceeds forfeiture provision to "lessen the economic power of ... drug enterprises."⁽¹⁴²⁾ The dissent further contended that by giving innocent owner protection to donees of drug violators "the plurality rips out the most effective enforcement provisions in all of the drug forfeiture laws."⁽¹⁴³⁾

While Justice Kennedy probably overstated the plausible repercussions of the Buena Vista decision, it would be naive not to acknowledge the risk that drug traffickers will gift away their profits to close friends and relatives in the hope of regaining those proceeds at a later date. To the extent that this hazard actually allows drug dealers to maintain control of their economic power base, the Buena Vista decision could undermine the Congressional intent of stripping illicit drug enterprises of their financial power.

Courts, however, will no doubt scrutinize innocent owner defenses of drug violator donees with great care.⁽¹⁴⁴⁾ For example, in remission proceedings, the Justice Department requires more than a simple assertion of innocence from a close family member or paramour of a known drug trafficker to establish innocence by a preponderance.⁽¹⁴⁵⁾ Thus, with the burden remaining on donees to prove they had no knowledge that the gift was derived from illegal drug profits, it seems unlikely that narcotics violators will be able to shelter much of their profits from forfeiture by gifting it to people over whom they arguably exert some control.
 
 

1. Background
 
 
 

Title to forfeitable property could pass to the government at any one of three times: first, on the date of the illegal act triggering the forfeiture;⁽¹⁴⁶⁾ second, when the government seizes or "arrests" the property;⁽¹⁴⁷⁾ and third, when the government obtains a judgment of forfeiture.⁽¹⁴⁸⁾ Courts came to "presume" that forfeiture legislation vested title in the government upon the commission of the wrongful act "unless the legislature indicate[d] otherwise."⁽¹⁴⁹⁾ Thus evolved the common law relation-back doctrine set forth by the frequently cited⁽¹⁵⁰⁾ case, United States v. Stowell:⁽¹⁵¹⁾ [T]he forfeiture takes effect immediately upon the commission of the act; the right to the property then vests in the United States, ... and the condemnation, when obtained, relates back to that time, and avoids all intermediate sales and alienations, even [as] to purchasers in good faith.⁽¹⁵²⁾

Justice Story called relation-back a "monstrous",⁽¹⁵³⁾ doctrine, "founded probably on feudal principles, or the barbaric character of the times."⁽¹⁵⁴⁾ Recognizing the "extreme difficulty of ascertaining latent defects of title,"⁽¹⁵⁵⁾ Justice Story further predicted that "great embarrassments will arise to the commercial interests of the country; and no man, whatever may be his caution or diligence, can guard himself from injury and, perhaps, ruin."⁽¹⁵⁶⁾ Indeed, one commentator calls the relation-back doctrine "the most troubling aspect of forfeiture law ... affect[ing] the interests of ... innocent owners."⁽¹⁵⁷⁾

Nevertheless, courts have consistently resisted Justice Story's view,⁽¹⁵⁸⁾ confirming that "it is clear that when property is subject to forfeiture, ... title vests absolutely in the [government on] the date of the illegal act. Seizure and a subsequent decree of forfeiture merely confirm the forfeiture that has already taken place."⁽¹⁵⁹⁾

The question of exactly when title to forfeited property vests in the government is significant for two reasons.⁽¹⁶⁰⁾ First, the government is entitled to all interest and income generated by the property from the time it becomes subject to forfeiture.⁽¹⁶¹⁾ Second, under the common law relation-back doctrine, once the property is subject to forfeiture, it will be forfeited regardless of subsequently acquired interests.⁽¹⁶²⁾ Thus all subsequent owners will lose their interest. To ameliorate the harsh results suffered by innocent third parties under relation-back, Congress enacted remission and mitigation procedures to provide relief.⁽¹⁶³⁾

When Congress amended section 881 in 1984, one of the sections, in addition to section 881(a)(6), that lawmakers enacted was section 881(h),⁽¹⁶⁴⁾ which codified the common law relation-back doctrine. However, while Congress provided a defense for innocent owners of drug proceeds,⁽¹⁶⁵⁾ the relation-back provision provided no such protection.⁽¹⁶⁶⁾ Thus, the government position in forfeiture cases, naturally, was that only property owners acquiring interests before the illicit act could utilize the innocent owner defense.⁽¹⁶⁷⁾

At least two difficulties arise under the government's theory.⁽¹⁶⁸⁾ First, the legislative history clearly indicates that Congress did not intend relation-back to cut off innocent owner protections.⁽¹⁶⁹⁾ Second, if relation-back applies to section 881(a)(6), then it cuts off the rights of bona fide purchasers for value as well as innocent parties who do not pay for the property.⁽¹⁷⁰⁾ The Third Circuit, in Buena Vista, recognized this, declaring that the government's construction of section 881(h) "would essentially ... emasculate the innocent owner defense provided for in section 881(a)(6). No one obtaining property after the occurrence of the drug transaction--including a bona fide purchaser for value-- would be eligible to offer an innocent owner defense."⁽¹⁷¹⁾ Such a result would so corrupt the "notice" system in our economy whereby buyers can ascertain prior interests in property before buying, as to clearly subvert public policy. Under the Uniform Commercial Code ("U.C.C."), for example, bona fide purchasers without notice of problems with the property are almost always accorded protection.⁽¹⁷²⁾ Nevertheless, prior to Buena Vista, courts rebuffed petitions for protection from innocent owners who had not given value for the property.⁽¹⁷³⁾ For example, the United States Court of Appeals for the Fourth Circuit, in One 1985 Nissan 300 ZX VIN: IN1C214SFX069854,⁽¹⁷⁴⁾ adopted the government's extreme position that relation-back completely foreclosed innocent owner claims.⁽¹⁷⁵⁾ According to the Fourth Circuit, "[n]o third party can acquire a legally valid interest in the property forfeited from anyone other than the government after the illegal act takes place."⁽¹⁷⁶⁾ The Fourth Circuit further elaborated that "[t]he fair implication of this language is that unless a claimant has a claim to the property forfeited which existed prior to the time the acts take place which bring on forfeiture, then the innocent owner provision of the statute has no application."⁽¹⁷⁷⁾ One 1985 Nissan addressed the question of whether a government forfeiture action against property of a deceased drug trafficker defeated the claim of his minor children to inherit his property. The Fourth Circuit applied the relation-back doctrine and ruled that the United States, not the drug trafficker, held title to the property at the time of the drug trafficker's death.⁽¹⁷⁸⁾ Consequently, according to the court, the drug trafficker had no property interests to pass to his heirs.⁽¹⁷⁹⁾

The Tenth Circuit applied similar reasoning in Eggleston v. Colorado,⁽¹⁸⁰⁾ which involved a dispute between Colorado state tax authorities attempting to collect unpaid taxes from a drug dealer, and the United States which sought forfeiture of the drug trafficker's property under section 881. According to the Tenth Circuit, "when the government brings an action for forfeiture under 21 U.S.C. § 881, a judgment of forfeiture relates back to the time of the unlawful act, vesting title to the forfeited property in the government as of that moment."⁽¹⁸¹⁾ In addition, held the court, "[f]orfeiture ... cuts off the rights of subsequent lienholders or purchasers ...."⁽¹⁸²⁾ The court then rejected the Colorado's innocent owner argument, stating "[t]he innocent owners exception applies only to owners whose interest vests prior to the date of the illegal act that forms the basis for the forfeiture."⁽¹⁸³⁾

The One 1985 Nissan and Eggleston line of decisions adopt an interpretation of the relation-back doctrine which vitiates the innocent owner protection of section 881(a)(6).⁽¹⁸⁴⁾ The Third Circuit's rejection of the government's interpretation of the relation-back doctrine in Buena Vista created the conflict among circuit courts that prompted the Supreme Court to hear the Buena Vista case.⁽¹⁸⁵⁾
 
 
 

2. The Government's Relation-Back Argument
 
 
 

The heart of the Buena Vista decision rests upon the interaction of the relation-back doctrine and the innocent owner defense mechanism in section 881(a)(6). Because the statutory relation-back provision, section 881(h), did not go into effect until two years after Goodwin acquired the property, the government relied heavily, but not exclusively,⁽¹⁸⁶⁾ on the common law concept of relation-back.⁽¹⁸⁷⁾ The government based its argument on the premise that the relation-back doctrine should apply to anything purchased with drug tainted funds which represented forfeitable proceeds under section 881(a)(6).⁽¹⁸⁸⁾ The government first noted that section 881(a) vests "[a]ll right, title, and interest in property" subject to forfeiture "in the United States upon commission of the act giving rise to forfeiture."⁽¹⁸⁹⁾ Section 881(a) further declares that "`no property right shall exist' in property that belongs to the United States as the result of an act triggering forfeiture."<sup>(190)</sup> Thus, reasoned the government, "no one other than the United States can acquire a valid ownership interest in property after it becomes subject to forfeiture."<sup>(191)</sup> Accordingly, "the `innocent owner' defense can only be asserted by a claimant who acquired an interest in the property before commission of the act triggering the forfeiture."⁽¹⁹²⁾ In other words, the government advocated cutting off the innocent owner defense to anyone who acquired a property interest after the commission of a crime giving rise to forfeiture--no matter how innocent that person may be.⁽¹⁹³⁾ If accepted by the courts, the government's view "would have virtually nullified the innocent owner defense, since most innocent owners are likely to have acquired their property interests subsequent to the date of the illegal activity giving rise to the forfeiture."⁽¹⁹⁴⁾
 
 
 
 
 

3. Potential Impact of Government's Relation-Back Interpretation on Institutional Innocent Owners
 
 
 

Many commercial enterprises as well as government entities have interests in property that the government's relation-back theory could severely impact.⁽¹⁹⁵⁾ Mortgage lenders and real estate title insurers were particularly concerned about the repercussions of the relation-back doctrine. For example, the Federal Home Loan Mortgage Corporation ("FHLMC") asserted in its amicus curiae brief that Supreme Court approval of the government's Draconian interpretation of the relation-back doctrine would "`disrupt state regulation of land transfers' or ... `place all land titles in doubt ....'"⁽¹⁹⁶⁾ Allowing the relation-back theory to "trump" a valid mortgage would "undercut the stability" of the secondary mortgage market.⁽¹⁹⁷⁾ FHLMC is a major player in the secondary mortgage market which buys approximately half of all conventional mortgages originated in this country.⁽¹⁹⁸⁾ The secondary mortgage market equalizes the distribution of capital for mortgage lending throughout the country and lowers interest rates.⁽¹⁹⁹⁾ The stability of this system of mortgage purchases depends upon the enforceability of the lenders' security interests in property.⁽²⁰⁰⁾ Accordingly, Supreme Court approval of the government's "take all" interpretation of the relation-back provision would make it impossible for lenders to guarantee the loans they originate are valid and enforceable.⁽²⁰¹⁾ The result, claimed FHLMC, would be more litigation between innocent lenders and mortgage buyers to determine who must bear losses initiated by government forfeiture actions.⁽²⁰²⁾ Ultimately, the American consumer would bear the burdens of higher interest rates, decreased funding and possibly more delays before loans can close.⁽²⁰³⁾

In addition, forfeiture losses could "inadvertently encourage discrimination in lending" because lenders might refuse to make loans in low income areas or neighborhoods known for drug trafficking.⁽²⁰⁴⁾ Borrowers with latin sur-names or recent immigrants might find lenders reluctant to accept their mortgages because of lender concern that such borrowers may fit a "drug profile."⁽²⁰⁵⁾ Thus, the government's overreaching interpretation of the relation-back doctrine would inhibit the distribution of mortgage funds and cause losses for innocent owners without advancing the fight against illegal drugs.⁽²⁰⁶⁾

The Dade County Tax Collector, et al. ("Dade County") addressed additional far-reaching concerns of state and local taxing authorities.⁽²⁰⁷⁾ Approval of the government's extreme position, asserted Dade County, "would cause severe and unnecessary harm not only to Dade County but to all state and local governments and schoolboards in the United States that rely upon real estate taxes for revenue."⁽²⁰⁸⁾ Dade County pointed out the fallacy in government reassurances that its view of relation-back would not "result in the confiscation of property in the hands of truly blameless parties."⁽²⁰⁹⁾ In fact, according to Dade County, the federal government engaged in a "nation-wide campaign to forfeit the real property tax liens of `truly blameless parties'--namely state and local governments and schoolboards."⁽²¹⁰⁾ The government contended that the relation-back doctrine allows not only the forfeiture of the drug related property, but of "all state, county, city, and school board real property tax liens that attached to the property after the date of the criminal act giving rise to the forfeiture."⁽²¹¹⁾ Under this interpretation, the federal government could force local taxing authorities to turn over real estate taxes collected and spent years before the filing of a forfeiture action.⁽²¹²⁾ Moreover, the federal government announced that remission procedures were not available to pay property taxes accruing after the date of the illegal act.⁽²¹³⁾ Dade County Florida stood to lose over $750,000 in unpaid real estate taxes accruing on property prior to final judgment of forfeiture.⁽²¹⁴⁾ Such losses, on a state-wide basis could undermine state constitutional balanced budget provisions.⁽²¹⁵⁾ Moreover, contended Dade County, distributing the forfeited money to law enforcement when local governments had allocated real estate taxes to education violates principles of federalism.⁽²¹⁶⁾ Thus, the distribution of tax dollars allocated by local governments to local needs was at stake in the Buena Vista case.
 
 
 

D. Buena Vista Rejects Relation-Back Limit on Innocent Owner Rights
 
 
 

1. The Plurality Construes Relation-Back
 
 
 

In Buena Vista, six justices clearly determined that the government could not employ relation-back to cut off the innocent owner defense, but a majority could not agree on the rationale.⁽²¹⁷⁾ The plurality, Stevens, J., joined by Blackmun, O'Connor and Souter, J.J., rejected outright the government's construction of the relation-back doctrine.⁽²¹⁸⁾ The plurality opinion reconciled the innocent owner provision in section 881(a)(6) with the relation-back provision, section 881(h), by concluding that relation-back applies only after the government obtains a judicial determination of forfeiture.⁽²¹⁹⁾ First, the plurality noted the total paucity of precedent supporting the application of common law relation-back to "proceeds."⁽²²⁰⁾ Indeed, the Court could have avoided a broad limitation on the relation-back provision by narrowly holding that no relation-back doctrine applied in Goodwin's case. Instead, the plurality, in harmony with the concurrence on this issue, decided the case "assuming" relation-back applied.⁽²²¹⁾ This signaled the Court's willingness, at long last, to intervene when the government employs forfeiture fictions to confiscate the property of innocent citizens under the guise of "law enforcement." The plurality next asserted that at common law "fictional and retroactive vesting"⁽²²²⁾ of title under the relation-back doctrine is "not self-executing,"⁽²²³⁾ but occurs only when the government wins a judgment of forfeiture.⁽²²⁴⁾ The plurality supported this assertion with plainly worded precedent: "[I]n all forfeitures accruing at common law, nothing vests in the government until some legal step shall be taken for the assertion of its right...."⁽²²⁵⁾ The plurality also cited case support for applying the same rule when a statute involving forfeiture (without a specific relation-back provision) is involved:⁽²²⁶⁾

[W]henever a statute enacts [the forfeiture of property connected with the commission of certain acts], ... the right to the property then vests in the United States, although their title is not perfected until judicial condemnation; the forfeiture constitutes a statutory transfer of the right to the United States at the time the offence is committed; and the condemnation, when obtained, relates back to that time....⁽²²⁷⁾

Thus, concluded the plurality, until the government obtains a judgment of forfeiture, someone else owns the property and may assert defenses to the forfeiture action.⁽²²⁸⁾

The plurality next employed a common sense construction of section 881 giving force to section 881's relation-back provision while preserving the section's innocent owner protections. First, noting that section 881(h) applies to forfeitable property described in section 881(a),⁽²²⁹⁾ the plurality construed section 881(a) forfeitable property to include only proceeds which escaped the innocent owner exemption in section 881(a)(6).⁽²³⁰⁾ In other words, "the success of any defense available under [section] 881(a) will necessarily determine whether [section] 881(h) applies."⁽²³¹⁾ Thus, contrary to the government's contention, the statute compels allowing the innocent owner defense to be asserted before the relation-back provision applies.⁽²³²⁾

The plurality bolstered its reasoning by construing that section 881(h) merely codifies the common law rule.⁽²³³⁾ Consequently, "when Congress enacted [the] innocent owner defense, and then specifically inserted [the] relation back provision into the statue, it did not disturb the common-law rights of either owners ... or the Government."⁽²³⁴⁾ The common law rule, reiterated the plurality, allowed owners to assert defenses before the government perfected its title through judicial proceedings.⁽²³⁵⁾ After the government's title vested, the common law rule related it back to the date when the wrongful act was committed.⁽²³⁶⁾ Essentially, the plurality considered Goodwin to be an "owner" under the statute in the same way she would be considered an "owner" under the common law.⁽²³⁷⁾ Accordingly, the plurality ruled that "the Government cannot profit" from the relation-back doctrine under either common law or section 881(h) until after a court decreed forfeiture to the United States.⁽²³⁸⁾ In addition, section 881(a)(6) entitled Goodwin to assert an innocent owner defense to ascertain whether her property is subject to forfeiture.⁽²³⁹⁾
 
 
 

2. The Concurrence Construes Relation-Back
 
 
 

The concurring opinion agreed that relation-back retroactively vests title "only upon entry of the judicial order of forfeiture or condemnation."⁽²⁴⁰⁾ The concurrence, however, based its conclusion on a different interpretation of section 881 language than employed by the plurality.⁽²⁴¹⁾ First, the concurrence disagreed with the notion that an "owner" under section 881(a) is the same as an "owner" under common law.⁽²⁴²⁾ In addition, the concurrence contended that section 881(h) applies to "`property described,' not `property forfeited.'"⁽²⁴³⁾ Accordingly, the concurrence agreed with the government that section 881(h) "`covers all `property' described in subsection (a),' including property so described that is nonetheless exempted from forfeiture because of the innocent owner defense."⁽²⁴⁴⁾ However, the concurrence points out that section 881(h) cannot be construed to "operate[] at the time of the wrongful act."⁽²⁴⁵⁾ The concurrence proceeds to reason that "if [section] 881(h) operates at the time of the illegal transaction, ... either the plain language of the innocent-owner provision must be slighted or the provision must be deprived of all effect."⁽²⁴⁶⁾ The government's interpretation of subsection (h) creates an "unheard of ... immediate, undecreed, secret vesting of title in the United States."⁽²⁴⁷⁾ The concurrence, however, reconciles the two provisions by reading subsection 881(h) to explain "when title shall vest if forfeiture is decreed."⁽²⁴⁸⁾

3. The Dissent's View
 
 
 

The dissent, Justice Kennedy, joined by Chief Justice Rehnquist and Justice White, asserted that Goodwin's title was defective and forfeitable from the outset.⁽²⁴⁹⁾ Relying on the rules of "voidable title," the dissent urged that donees of criminals obtain no better title than the criminal had.⁽²⁵⁰⁾The dissent's construction, nevertheless, allows innocent owner protection for bona fide purchasers for value.⁽²⁵¹⁾ The dissent chose this line of reasoning because it wanted to avoid the possibility that drug dealers would not truly be deprived of their economic power if they could give away their ill-gotten profits to innocent friends or relatives.⁽²⁵²⁾ However, the dissent mistakenly focused on criminals, while the case concerned innocent owners.⁽²⁵³⁾ The innocent owner defense involves the mindset of the "innocent" person--whether that person knew and consented to the crimes or knew of the property's tainted origin.⁽²⁵⁴⁾
 
 

1. Relevant Time for Determining Knowledge
 
 
 

A sub-issue, related to relation-back and innocent owner status and argued before the Supreme Court in Buena Vista, concerns when an owner's lack of knowledge of the criminal activity should be tested.⁽²⁵⁵⁾ Section 881(a)(6) protects an owner from forfeiture who "by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owners."⁽²⁵⁶⁾ The government believed that the statute "looks to the state of the owner's mind at the time the acts were committed."⁽²⁵⁷⁾ This could produce the "untenable result" of allowing an innocent owner defense to persons who knew of the illegal act at the time they acquired the property, but did not know of it at the time the act was committed.⁽²⁵⁸⁾ Accordingly, the government argued that title should pass upon the commission of the crime.⁽²⁵⁹⁾ Goodwin disputed the government's position, contending that "legislative history and common sense" imply that the transferee's lack of knowledge must be established "`at the time of the transfer.'"⁽²⁶⁰⁾

The Buena Vista plurality chose not to rule on the issue, but curiously asserted that "[Goodwin] has assumed the burden of convincing the trier of fact that she had no knowledge of the alleged source of Brenna's gift in 1982, when she received it."⁽²⁶¹⁾ The plurality presumably came to this conclusion because that is the position advanced by Goodwin before the Court.⁽²⁶²⁾

The concurrence, noting that the issue was outside the scope of the question presented for review, thus wondered how the plurality could decide that Goodwin must prove her ignorance in 1982 of the source of the funds she used to purchase her home.⁽²⁶³⁾ In dicta, however, the concurring opinion, did not "find inconceivable the possibility that post-illegal-act transferees with post-illegal-act knowledge of the earlier illegality are provided a defense against forfeiture."⁽²⁶⁴⁾ The government could still successfully acquire property held by family and associates of drug dealers who could not prove their ignorance of the crime when it occurred.⁽²⁶⁵⁾ Thus, the concurrence can be read to say that it would not object to the government's construction.

Commentary on the issue, however, agrees with Goodwin's position. A claimant must prove by a preponderance, lack of knowledge "of the facts subjecting the property to forfeiture at the time [they] became the owner."⁽²⁶⁶⁾ Moreover, deliberately "sticking one's head in the sand" in order to avoid "knowing" about any illegality connected with the property "will be equated with actual knowledge."⁽²⁶⁷⁾ Even negligent ignorance does not preclude an innocent owner defense.⁽²⁶⁸⁾ In other words, the section 881(a)(6) innocent owner provision does not incorporate the Calero-Toledo standard of doing "all that could reasonably be expected."⁽²⁶⁹⁾

Courts should adopt the construction urged by Goodwin. Allowing persons closely associated with drug dealers to retain ownership of property which they knew was acquired with drug money as long as they didn't know about the illegal act when it occurred, seems at odds with the notion of "taking the profit out of crime." Under such a view, which Justice Scalia remarkably does not find "inconceivable," drug lords could funnel ill-gotten gains to relatives and friends who knew in a general way how their benefactor made his money, but knew no details. The government rightly labels such a result "untenable," and persuasively argues that it would undermine the effectiveness of civil forfeitures in the enforcement of federal drug laws.

Stripping drug dealers of their illicitly acquired wealth comports with Congressional intent and public sentiment. Forfeiture remains desirable when extended to the friends and relatives who receive gifts, knowing the source, even if not the specific act from which money for the gifts originated. Public outrage ensues, however, when the government brings forfeiture actions against individuals who are entirely innocent of any knowledge of the tainted character of the property.
 
 
 

2. Scope of "All Proceeds Traceable" to a Drug Sale
 
 
 

Another issue not reach by the Court is whether the statutory reference to "all proceeds traceable to" an exchange for illegal drugs should be narrowly construed to avoid harsh results not intended by Congress.⁽²⁷⁰⁾ An example is posed by the plurality: "[A] house [is] received in exchange for a quantity of [drugs] and that house [is] in turn exchanged for another house. [W]ould the traceable proceeds consist of the first house, the second house" or whichever house the government wants?⁽²⁷¹⁾ Could the government choose the most valuable property or both properties?

Another troubling issue arises in a case where a property may have been purchased with a substantial down payment and only is deemed forfeitable because several years later, some of the monthly payments were made with drug trafficking proceeds. In United States v. Pole No 3172,⁽²⁷²⁾ the government contended that an entire property was forfeitable because some of the monthly payments were allegedly made with drug proceeds.⁽²⁷³⁾ The First Circuit rejected this reasoning, stating that "forfeitability [does not] spread like a disease from one infected mortgage payment to the entire interest in the property acquired prior to the payment."⁽²⁷⁴⁾ Common sense dictates that courts and legislatures abandon legal fictions which put innocent parties through the anguish and expense of losing property without the normal due process guarantees. If what we are about is the punishment of culpability, then let the government seize whatever interest a culpable party may have in the property, but not the entire property. Lien holders, or partners, should be able to protect their legitimate interests without expensive legal battles. Property may depreciate substantially while such actions creep through the judicial system. Thus, courts should narrowly construe the "traceable proceeds" language.

Buena Vista Decision
 
 

Some cases have held that where real property is subject to forfeiture, the government must have "probable cause to believe there is a substantial connection between the property" and the named crime.⁽²⁷⁵⁾ The belief need not amount to prima facie proof, but must be grounded on more than mere suspicion.⁽²⁷⁶⁾ In Buena Vista, Goodwin moved for summary judgment on the grounds that the government had not met the "substantial connection" standard.⁽²⁷⁷⁾ In United States v. United States Coin and Currency,⁽²⁷⁸⁾ the Supreme Court said that "[w]hen the forfeiture statutes are viewed in their entirety, it is manifest that they are intended to impose a penalty only upon those who are significantly involved in a criminal enterprise.⁽²⁷⁹⁾ However, several recent cases have rejected the "substantial connection" test, articulating, instead, the lower probable cause standards of "nexus"⁽²⁸⁰⁾ and "reasonable grounds, rising above ... mere suspicion."⁽²⁸¹⁾ The District Court, in Buena Vista,⁽²⁸²⁾ asserted that "probable cause merely requires that the available facts would `warrant a man of reasonable belief' that the property is subject to forfeiture; `it does not demand any showing that such a belief be correct or more likely true or false.'"⁽²⁸³⁾ The District Court also noted that "`[p]robable cause deals with probabilities, not certainties'" and that "the totality of circumstances are considered."<sup>(284)</sup> "[A]ll that is required is that a court be able to look at the `aggregate' of the facts and find reasonable grounds to believe that the property was derived from drug transactions."⁽²⁸⁵⁾ In addition, the government need not link the property to any particular transaction to establish probable cause.⁽²⁸⁶⁾

In determining whether probable cause exists in a civil forfeiture case, hearsay evidence,⁽²⁸⁷⁾ circumstantial evidence, as well as other evidence that would be inadmissible at trial, may be considered as long as the evidence is reliable.⁽²⁸⁸⁾ Using inadmissible hearsay to establish probable cause in a forfeiture case arguably contradicts the Federal Rules of Civil Procedure which require that affidavits in support of a motion for summary judgment be based on personal knowledge and admissible evidence.⁽²⁸⁹⁾ It can be argued that application of the probable cause determination used in criminal cases, where arrest and search warrants may be based on hearsay, to civil forfeiture proceedings is inappropriate.⁽²⁹⁰⁾ Indeed, a "full panoply of procedural rights" during a determination of guilt or innocence follows an initial probable cause determination in criminal cases.⁽²⁹¹⁾ Accordingly, the absence of these safeguards in the civil forfeiture context argues for a requirement of using only admissible evidence to determine probable cause.⁽²⁹²⁾

Courts, however, have not been receptive to the argument that Rule 56(e) should be literally applied to forfeiture cases.⁽²⁹³⁾ The Ninth Circuit has held that "`[s]ummary judgment procedures under Rule 56 ... must necessarily be construed in the light of the statutory law of forfeitures, and particularly the procedural requirements set forth therein.'"⁽²⁹⁴⁾ Consequently, in the civil forfeiture context, courts may deprive persons of their property even if the government bases its showing of probable cause entirely on inadmissible evidence. Buena Vista provides an illustration:

"the probable cause ... essentially amount[ed] to `evidence' that Brenna had money in 1982; that he was allegedly involved in specified marijuana transactions in 1985; therefore all money he possessed in 1982 is probably traceable to similar drug transactions. There is only one witness ... who provided a basis for probable cause that the proceeds used to purchase the house were traceable to a drug transaction. Yet the government refused to permit him to be deposed or to file an affidavit. This case proceeded, virtually to conclusion, based on the statement of an agent as to his recollection of the informal, unsworn interview of an unreliable informant who apparently lacked adequate information himself.⁽²⁹⁵⁾

The Drug Enforcement Administration ("DEA") agent who drafted the complaint merely asserted that Goodwin must have known Brenna's money derived from drug dealing because she lived with him.⁽²⁹⁶⁾ In addition, the lower courts based their finding of probable cause on Brenna's indictment in 1990, a full year after marshals seized Goodwin's home.⁽²⁹⁷⁾

Court approval notwithstanding, the burden of proof advantages accorded to the government in civil forfeiture proceedings are so lopsided as to shake public confidence in the justice system that enforces them. The procedural bias favoring the government in the current forfeiture system violates fair-minded reason; the government can confiscate property on a mere showing of probable cause based on inadmissible evidence, while innocent property owners must produce a preponderance of admissible evidence to retain their property.⁽²⁹⁸⁾
 
 

The government's construction of relation-back could produce harsh consequences--"the forced deprivation of property innocently obtained or owned."⁽²⁹⁹⁾ Thus, in Buena Vista, the government attempted to allay concerns about such severe results by pointing out the relief available to innocent owners through remission or mitigation procedures.⁽³⁰⁰⁾

Remission and mitigation procedures, however, offer inadequate remedies to innocent owners faced with forfeiture. First, claimants have no legal right to remission because it is considered a form of pardon which is granted purely as a matter of grace.⁽³⁰¹⁾ Further, while the Department of Justice promulgates guidelines to determine when remission is warranted, the Department may still refuse to grant full recovery for a claimant who satisfies those standards.⁽³⁰²⁾ "A procedure in which a claimant can satisfy the standard for remission but nevertheless be denied relief is not a satisfactory substitute for statutory protection of innocent ... owners."⁽³⁰³⁾

Mitigation is an alternative relief granted when the official does not believe the party deserves full remission.⁽³⁰⁴⁾ The Justice Department defines mitigation as "the granting of remission on condition that the petitioner pay a money penalty for the return of his property."⁽³⁰⁵⁾ Because these proceedings are generally unreviewable⁽³⁰⁶⁾, government abuses can easily go on with no recourse to the property owner. Under current regulations, Justice Department officials can require property owners to pay a mitigation "fine" in order to get their property back even when the owners are fully entitled to the return of their property under remission standards.⁽³⁰⁷⁾ Equally as troubling is the fact that even though independent personnel may decide remission petitions, the "institutional interest in the success of forfeiture" creates a due process conflict.⁽³⁰⁸⁾

In addition, since remission is distinct from forfeiture proceedings, the official must presume the forfeiture is valid.⁽³⁰⁹⁾ Thus, the government has no duty to show anything while petitioners must prove they deserve remission according to standards more stringent than most statutory innocent owner exemptions.⁽³¹⁰⁾ Remission standards essentially require that the innocent owner establish "not only that he was uninvolved in and unaware of the wrongful activity, but also that he had done all that reasonably could be expected to prevent the proscribed used of his property."⁽³¹¹⁾ This is a frightening proposition for lenders and landlords. What would be considered "all reasonable steps" in terms of preventing renters or their friends or relatives from transacting drug business on the property?

Thus, remission proceedings are backwards affairs (in due process terms) where guilt is presumed and a stringent standard of innocence must be proven by a preponderance. Even if petitioners prove their innocence, relief need not be granted, and parties unfairly deprived of their property cannot appeal incorrect decisions.

In essence, then, the government urged the Supreme Court to trust the Justice Department to provide forfeiture relief to those the Department deemed worthy of it. Gratefully, the Buena Vista Court provided statutory relief for all innocent property owners faced with forfeiture.⁽³¹²⁾
 
 

The various arcane fictions employed in forfeiture proceedings facilitate government seizure and condemnation of property belonging to completely innocent parties. Reason and basic fairness dictate that only wrong-doers should lose property in a forfeiture action. Thus, current policy justifications for forfeiture should abandon use of fictions which lead to inappropriate and anomalous results.⁽³¹³⁾

The Supreme Court has articulated several policies justifying civil forfeiture.⁽³¹⁴⁾ Most recently, in Caplin & Drysdale⁽³¹⁵⁾ the Court advanced four justifications: (1) "separating the criminal from his ill-gotten gains," (2) providing money for law enforcement, (3) providing restitution funds for crime victims, and (4) reducing "the economic power of organized crime and drug enterprises."⁽³¹⁶⁾

Congress and courts should concentrate on a policy that deprives criminals of their illicitly acquired assets. This policy punishes criminals, deters future crimes, and diminishes the possibility of future activity by confiscating "working capital" that criminals might wield in further criminal transactions.⁽³¹⁷⁾

Clearly, policies such as funding law enforcement or raising money to compensate crime victims should not serve as independent reasons justifying forfeiture.⁽³¹⁸⁾ Congress, however, established statutory incentives whereby informants and law enforcement agencies receive a percentage of the value of forfeited property.⁽³¹⁹⁾ These "awards" encourage abusive practices where the importance of enriching law enforcement coffers exceeds punishing criminals.⁽³²⁰⁾ By recognizing that the sole purpose of forfeiture is "to deprive the criminal of the fruits of the crime," conflicts between the purpose of forfeiture and innocent owner protection will disappear.⁽³²¹⁾ When policy focuses on culpability, justice is served. No valid policy justifies stripping innocent wives and children of their homes, or landlords or mortgage lenders of their property interests.

The only explanation for such government action appears to be enhancing government coffers without appealing to taxpayers. Government confiscation of innocently owned or acquired property comports more with the arbitrary authority associated with totalitarian governments than Constitutional Due Process or fundamental fairness.
 
 

The Supreme Court sent a clear message in Buena Vista that the government cannot use the relation-back doctrine to deprive innocent owners of property interests.⁽³²²⁾ Buena Vista was one of five forfeiture cases heard by the Supreme Court inside of one year where the court ruled against the government.⁽³²³⁾ However, the primary duty to reform forfeiture laws that invite government abuse lies with the legislative branch. Two legislators, Rep. Henry Hyde (R-Ill) and Rep. John Conyers (D-MI) currently lead the growing effort in Congress to establish some sensible limits to government forfeiture powers.⁽³²⁴⁾ Conservative Rep. Hyde, recognizing that the government uses some forfeiture provisions in "terribly unjust ways, ... depriving innocent citizens of their property with nothing that can be called due process,"⁽³²⁵⁾ introduced reform legislation in June, 1993.⁽³²⁶⁾ One of the most important aspects of the bill would substantially elevate the government's burden of proof and require the use of admissible evidence.⁽³²⁷⁾ In current form, the bill would compel the government to prove by clear and convincing evidence that property was purchased with drug proceeds or that it was used in the commission of a drug violation.⁽³²⁸⁾ The Hyde bill would also protect owners who did not consent to the illegal use of their property.⁽³²⁹⁾ In addition the Hyde bill would give property owners sixty days to challenge a forfeiture instead of the current ten days.⁽³³⁰⁾ Hyde would also abolish the requirement that owners must post a bond equal to ten percent of the property's value in order to contest the forfeiture.⁽³³¹⁾

In October, 1993, Rep. John Conyers introduced a bill more restrictive than the Hyde bill.⁽³³²⁾ In addition to reforms adopted by the Hyde bill, Conyers would require preseizure notice and hearings as well as court-appointed counsel for claimants unable to afford legal assistance.⁽³³³⁾ Moreover, the government could not bring an action more than one year after the crime was committed and would be liable for any property damage while the government was in possession.⁽³³⁴⁾ Congressional action is likely because federal forfeiture laws have harmed and threatened not just criminals, but innocent middle class people and major commercial and state institutions. Overly vigorous application of forfeiture laws has undermined respect for government and law enforcement. The courts are beginning to limit forfeiture excesses. However, Congress is responsible for the provisions that have led to abuse and should act expeditiously to place more reasonable limits on government forfeiture powers.
 
 

To combat the escalation of drug related crimes in this country, Congress enacted stringent forfeiture statutes aimed at stripping drug lords of their illicit profits. Reason and fundamental fairness dictate that a property owner innocent of involvement or knowledge of any activity implicating forfeiture should be protected in forfeiture proceedings. Thus, Congress enacted innocent owner protection to insure that the forfeiture sanction punishes only wrongdoers. Nevertheless, in Buena Vista, the government, by resorting to the doctrine of relation-back, urged the Court to extend innocent owner protection only to owners who acquired an interest in property before the crime triggering the forfeiture action. Such a position created a blatantly unfair situation for a myriad of innocent property owners.

This Note applauds the Supreme Court for limiting the impact of the relation-back doctrine on innocent owner defenses in drug forfeiture cases, thus allowing all innocent parties to assert the statutory innocent owner defense. While six justices agreed that relation-back could not cut off innocent owner defenses, a majority could not agree on the rationale. Nevertheless, Buena Vista endorses the proposition that forfeiture's impact must be limited to wrongdoers.

Many inequities still exist in the system, which Congress should address through pending legislation. Laws should take the profit out of crime, but only to the extent of the culpable party's ownership interest. Valid policy cannot justify augmenting the federal treasury at the expense of innocent property owners. Sharon G. Fila

1. 0. Terrence G. Reed, American Forfeiture Law: Property Owners Meet the Prosecutor, Pol'y Analysis (CATO Institute, Washington, D.C.), Sept. 29, 1992, at 1.

2. 0. Id.; see also U.S. Dep't of Justice, Drug Agents' Guide to Forfeiture of Assets 1 (1987 rev.) [hereinafter Drug Agents' Guide] ("[U]ntil recently, [forfeiture] has played a very insignificant role in our struggle with crime."); Terrence P. Farley, Asset Forfeiture Talking Points, 27 The Prosecutor: J. Nat'l Dist. Att'y Ass'n, 17 (1993) ("[The] large scale use [of asset forfeiture] against criminal activity ... dates back only to the early 1980s.").

3. Alice M. O'Brien, Note, Caught In The Crossfire, 65 St. John's L. Rev. 521, 521 (1991); Pub. L. No. 91-513, 84 Stat. 1236 (1970) (currently codified at 21 U.S.C. § 881 (1981 & Supp. 1993).

4. Mark A. Jankowski, Tempering the Relation-back Doctrine: A More Reasonable Approach to Civil Forfeiture In Drug Cases, 76 Va. L. Rev., 165, 167 (1990). Senator Robert Byrd underscored Congress's intent that the new forfeiture provisions punish and deter drug traffickers when he asserted that "by visiting heavy economic sanctions on their predatory business practices this legislation should prove to be a mighty deterrent to any further expansion of organized crime's economic power." Id. (second emphasis added) (citation omitted).

5. Congress Hears Charges of Forfeiture Abuse, 15 Nat'l L.J., Oct. 12, 1992, at 5 (quoting Cary H. Copeland, director and chief counsel to the Justice Department's Executive Office for Asset Forfeiture); see also, Reed, supra note 1, at 1 (noting that between 1985 and 1991 forfeitures multiplied 1500% to $2.4 billion (citing United States v. $12,390.00, 956 F.2d 801, 807 (8th Cir. 1992) (Beam, J., dissenting))).

6. See Reed, supra note 1, at 1 (citing Dep't Just., Ann. Rep. Dep't Just. Asset Forfeiture Program (1991) (forward of Attorney General William Barr)).

7. 0. Eugene J. Morris & Steven L. Kessler, Real Property Forfeiture: Seizure of Property Emerges as Law Enforcement Device, N.Y. L.J. 1, 39 (1991) (citing Oct. 10, 1990 Memorandum issued by U.S. Marshall's Service).

8. U.S. Dep't of Just., Ann. Rep. Dep't Just. Asset Forfeiture Program 1992, 23 (1992) [hereinafter 1992 Annual Report].

9. 0. Judge Vito J. Titone, Speech to the New York Criminal Bar Association, excerpted in N.Y. L.J., June 29, 1993, at 2.

10. 0. David F. B. Smith, Mortgage Lenders Beware: The Threat to Real Estate Financing Caused by Flawed Protection For Mortgage Lenders In Federal Forfeiture Actions Involving Real Property, 25 Real Prop., Prob. & Trust J., 481, 497 (1990).

11. Titone, supra note 2, at 2.

12. Id.

13. 0. Id. The federal government has not actually determined whether revenues generated by civil forfeitures exceed their expense. David F. B. Smith, 1 Prosecution and Defense of Forfeiture Cases ¶ 1.02, at 1-5 n.1 (1992). Some government agencies discourage seizure of vehicles valued under $2500 and real property worth less than $10,000. Id.

14. Titone, supra note 2, at 2. The director of the National Drug Prosecution Center asserts that forfeiture of property associated with criminal activity is an appropriate sanction for the many criminals who go unpunished by the judicial system. Farley, supra note 2, at 18. Forfeiture appears especially attractive when viewed in light of the fact that it now costs over $60,000 to build prison space for one inmate and averages over $20,000 per year to incarcerate one prisoner. Id. at 18. See also, Smith, supra note 13, ¶ 1.01, at 1-3 ("[T]raditional incarceration strategy was defective ... because it failed to deprive criminals of their profits [and] because our society's willingness to place increasing numbers of people in prison for longer and longer periods of time has limits."); Steven L. Kessler, Invasion of the Property Snatchers: Real Property Forfeiture, Prob. & Prop., Mar.-Apr., 1992, at 53, 54 ("Forfeiture has been called a 'sort of liquidated damages to society for the harm caused by crime.' Actually, it is a frustrated society's last-ditch effort to control crime.").

15. Farley, supra note 2, at 18 (noting that since 1985, half a billion dollars in forfeited assets have been used to finance prison construction).

16. Smith, supra note 13, ¶ 1.02, at 1-7.

17. Id.

18. Smith, supra note 10, at 483. Mr. Smith concentrates on the problems facing lenders when property that serves as security for loans is subject to forfeiture. Id. at 481.

19. Id. at 483.

20. Id. at 498. For example, the innocent owner exception in 21 U.S.C. section 881(a)(6) and (7) protects property from forfeiture "to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner." Id. at 498-99 (citing 21 U.S.C. § 881(a)(6)-(7) (Supp. 1993)).

The criminal forfeiture provision, on the other hand, protects property from forfeiture when the "transferee establishes in a hearing ... that he is a bona fide purchaser for value of such property who at the time of the purchase was reasonably without cause to believe that the property was subject to forfeiture." Id. at 499 (citing 21 U.S.C. § 853(c) (Supp. 1993)).

21. See Titone, supra note 2, at 2.

22. Smith, supra note 13, ¶ 1.02, at 1-6.

23. A showing of probable cause justifies law enforcement agencies in starting a forfeiture action. Drug Agents' Guide, supra note 2, at 9.

24. Id.

25. Id. at 1-6 to 1-7.

26. United States v. One Assortment of 89 Firearms, 465 U.S. 354, 366 (1984) (ruling that acquittals have no collateral estoppel effect because of lower burden of proof in forfeiture suits).

27. See Drug Agents' Guide, supra note 2, at 3-4.

28. 0. Reed, supra note 1, at 2; see also Smith, supra note 13, ¶ 1.02, at 1-5 ("[C]ivil forfeiture is a prosecutor's dream and a defense attorney's nightmare.").

29. According to section 881(b), "[a]ny property subject to forfeiture ... under this subchapter may be seized by the Attorney General ... when ... the Attorney General has probably cause to believe that the property has been used or is intended to be used in violation of this subchapter." 21 U.S.C. § 881(b) (Supp. 1992).

30. Reed, supra note 1 at 2-3. Allowing the government seize before any hearing gives the government lop-sided bargaining power. Id. at 3.

The Supreme Court confronted whether ex parte seizures of forfeitable property satisfy the Due Process Clause in Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974). The Court ruled that Due Process did not require the government to give prior notice or afford a hearing before seizing a yacht subject to civil forfeiture. Id. at 679.

However, the Supreme Court recently clarified that the Calero-Toledo analysis only applies to the "sort [of property] that could be removed to another jurisdiction, destroyed, or concealed, if advance warning of confiscation were given." United States v. James Daniel Good Real Property, 114 S. Ct. 492, 500 (1993) (quoting Calero-Toldeo, 416 U.S. at 679). Because real estate is not removable, there is no "plausible claim of urgency" which justifies its seizure without prior notice or hearing. Id. at 505. The Court accordingly concluded that the due process clause requires the government to afford notice and meaningful opportunity to be heard before seizing real property subject to civil forfeiture. Id.

31. Reed, supra note 1, at 2-3. See also, U.S. v. 101 Kimberly Ave., 765 F. Supp. 39, 42 (D. Conn. 1991) ("Once the government has made its probable cause showing, the burden shifts to the claimant to prove [innocent owners status] by a preponderance of the evidence.").

32. Smith, supra note 10, at 485.

33. Id. See also, United States v. 15 Black Ledge Dr., 897 F.2d 97, 99 (2d Cir. 1990), where the claimant was the wife of a drug dealer who asserted by affidavit that she had "no knowledge whatsoever" of any narcotics possession, selling or storage in their home. She further stated that her husband "never consumed, displayed, or spoke or narcotics or drug related materials in [her] presence." Id. The Black Ledge court ruled that "more detailed factual substance in support of her claim of ignorance was required" to defeat summary judgment in favor of the government. Id. at 102.

34. Reed, supra note 1, at 1.

35. Smith, supra note 13, ¶ 1.02, at 1-6.

36. "Unless a forfeiture statute expressly requires a conviction, it is considered a civil action against property, totally independent of any criminal action against anyone." Drug Agents' Guide, supra note 2, at 3-4.

37. Steven Meinrath, Lucrative Enforcement: Forfeiture Laws Turn Police Into Bounty Hunters, L.A. Daily J., Sept. 10, 1992, at 6.

38. 0. Titone, supra note 8, at 2.

39. Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 629-30 (1989). "[T]he Government's interest in using the profits of crime to fund [law enforcement] activities should not be discounted." Id. at 629.

However, the Supreme Court recently ruled that government reliance on forfeiture as a means of defraying law enforcement costs does not "justify the prehearing seizure of ... real property ...." United States v. James Daniel Good Real Property, 114 S. Ct. 492, 505 (1993).

40. Id.

41. Reed, supra note 1, at 2.

42. See, e.g., 28 U.S.C. § 524(c)(2) (1993) (allowing "awards" for information leading to forfeiture of up to 25% of value of property).

43. 0. For example, one Texas sheriff netted one million dollars for helping the DEA seize an airplane. Look Who's Warped by Drugs, N.Y. Times editorial, reprinted in L.A. Daily J., Mar. 14, 1990, at 6 (expressing concern about policy that creates incentives for law enforcement agencies to use forfeitures to raise money).

44. Reed, supra note 1, at 2.

45. Id. See also John Dillin, When Federal Drug Laws Create Havoc For Citizens, Christian Sci. Monitor, Sept. 28, 1993, at 10. The government seized the residence of Paul and Ruth Debacher after finding illegal drugs in the home which belonged to their grandson. Id. A state judge told the Derbachers: "You are probably only guilty of being too tolerant of a criminal grandson." Id.

46. Id. at 3 (quoting United States v. One 1976 Mercedes Benz 280S, 618 F.2d 453, 461 (7th Cir. 1980) (asserting that justification for forfeiture relies upon "old, forgotten, far-off things and battles long ago")).

47. Id. at 8-9. See also, United States v. Stowell, 133 U.S.1, 16-17 (1890) which held that title to forfeitable property vests in the United States at the time of the act triggering the forfeiture. Thereafter, title vests in the United States and no valid property interest can vest in any other party, regardless of subsequent transactions or events. Id. at 17.

48. United States v. 92 Buena Vista Ave., 113 S. Ct. 1126 (1993) (plurality opinion).

49. Id. at 1136-37 (plurality opinion).

50. Id. at 1143-44 (plurality opinion).

51. United States v. 785 St. Nicholas Ave., 983 F.2d 396, 401 (1993) (quoting: "When an ox gores a man or woman to death, the ox must be stoned, and its flesh shall not be eaten. The owner of the ox, however, shall go unpunished." Exodus 21:28).

52. 0. Id. Justice Holmes asserts that Greek and Roman law were based on a desire for "retaliation against the offending thing." Oliver W. Holmes, The Common Law 34 (1944). Justice Holmes further observed that "modern views of responsibility had not yet been attained, as the owner of the thing might very well not have been the person in fault." Id.

Many commentators criticize the current use of forfeiture because "civil forfeiture statutes that treat property itself as a wrongdoer are extensions of archaic concepts." Dennis R. Hewitt, Comment, Civil Forfeiture and Innocent Third Parties, 3 N. Ill. U. L. Rev. 323, 325 (1983).

53. 0. St. Nicholas Ave., 983 F.2d at 402. Justice Holmes said a "deodand was an accursed thing." Holmes, supra note 52, at 35; see also Black's Law Dictionary 436 (6th ed. 1990) (describing the derivation of deodand: "Deo dandum, a thing to be given to God"). Blackstone stated that during the period of high Papal power, ("the blind days of popery") a deodand was given to the church "as an expiation." 1 William Blackstone, Commentaries *300.

Justice Holmes described how a concept like forfeiture, which is based on ancient law, finds its way into the common law:

The customs, beliefs, or needs of a primitive time establish a rule or a formula. In the course of centuries the custom, belief, or necessity disappears, but the rule remains. The reason which gave rise to the rule has been forgotten, and ingenious minds set themselves to inquire how it is to be accounted for. Some ground of policy is thought of, which seems to explain it and to reconcile it with the present state of things; and then the rule adapts itself to the new reasons which have been found for it, and enters on a new career. The old form receives a new content, and in time even the form modifies itself to the fit the meaning which it has received.

Holmes, supra note 52, at 5.

54. 0. Blackstone, supra note 53, at *300.

55. Id.

56. Blackstone, supra note 53, at *300. "[Property] forfeited to the king [was] to be applied to pious uses, and distributed in alms by his high almoner." Blackstone, supra note 53, at *300.

57. St. Nicholas Ave., 983 F.2d at 402.

58. Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 681 (1974); Blackstone, supra note 53, at *299.

59. Blackstone, supra note 53, at *299; see also Calero-Toledo, 416 U.S. at 682 ("[T]he convicted traitor forfeited all of his property, real and personal, to the Crown.").

60. 0. Patricia V. Canavan, Comment, Civil Forfeiture of Real Property: The Government's Weapon Against Drug Traffickers Injures Innocent Owners, 10 Pace L. Rev. 485, 489 n.21 (1990). Superstition supported forfeiture of deodand such as a cart which was the accidental cause of the owner's death. Id. The confiscated cart was then supposed to be used for "pious" uses. Id.

Needless to say, historians record that the "pious uses" under the control of the king and his almoner became a scandal which moderns would describe as being graft. ... To the credit of American jurisprudence, from the outset the doctrine was deemed to be so repugnant to our ideas of justice as not to be included as a part of the common law of this country.

Id. (quoting Parker-Harris Co. v. Tate, 188 S.W. 54, 55 (Tenn. 1916). The deodand institution was abolished in England in 1846. Calero-Toledo, 416 U.S. at 681 n.19.

61. Canavan, supra note 60, at 489 n.22 (noting that the "only exception" to constitutional prohibition on forfeiture "permitted forfeiture for treason, commonly considered the most heinous of crimes"). In pertinent part, article III, section 3 proclaims that "no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the life of the Person attained." U.S. Const. art. III, § 3.

Judge Politz made the following observations in a dissenting opinion: "[T]he framers of the Constitution demonstrated their repudiance of the harsh English tradition of criminal forfeiture, and our very first Congress forbade the forfeiture of an estate because of a criminal conviction." United States v. Reckmeyer, 628 F. Supp. 616, 619 (Politz, J., dissenting) (quoting United States v. Martino, 681 F.2d 952, 962 (5th cir. 1982)).

62. 0. Damon G. Saltzburg, Note, Real Property Forfeitures as a Weapon in the Government's War on Drugs: A Failure to Protect Innocent Ownership Rights, 72 B.U. L. Rev. 217, 220 (1992); see also United States v. Brig Malek Adhel, 43 U.S. (2 How.) 210, 233 (1844) (stating that admiralty law treats ships on which law is violated as offender without regard to the guilt or innocence of shipowners).

63. 0. Brad A. Chapman & Kenneth W. Pearson, The Drug War and Real Estate Forfeiture Under 21 U.S.C. § 881: The "Innocent" Lienholder's Rights, 21 Tex. Tech L. Rev., 2127, 2134 (1990).

64. 0. Ron Champoux, Note, Real Property Forfeiture Under Federal Drug Laws: Does the Punishment Outweigh the Crime?, 20 Hastings Const. L.Q., 247, 250 (1992) (quoting J. W. Goldsmith, Jr.-Grant Co. v. United States, 254 U.S. 505, 506 (1921)).

65. Id. The Supreme Court, as recently as 1974, upheld forfeiture in the face of an innocent owner protest "solely by reference to forfeiture's historical lineage." Reed, supra note 1, at 7; see also Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680-86 (1974) (justifying the forfeiture of yacht owned by innocent party by substantial references to historical precedent).

66. 0. Champoux, supra note 64, at 250.

67. Id. "[O]wners of property seized by the government through civil forfeitures are afforded far less legal protection and due process than are criminal or even civil defendants." Reed, supra note 1, at 7.

68. 25 U.S. (12 Wheat.) 1 (1827).

69. Chapman & Pearson, supra note 63, at 2134 (citing Palmyra, 25 U.S. (12 Wheat.) at 8-12).

70. Id. at 2134-35 (citing Palmyra, 25 U.S. (12 Wheat.) at 14-15).

71. Chapman & Pearson, supra note 63, at 2135.

72. 96 U.S. 395 (1878).

73. Id. at 396-97.

74. Id. at 399-400. "[U]nlawful acts of the [tenant committed on the premises] bind the owner of the property ... as if they were committed by the owner himself." Id. at 404.

75. Nevertheless, some courts, sensitive to the unfairness of innocent owners losing their property, have sought to read forfeiture statues narrowly. See, e.g., United States v. Reckmeyer, 628 F. Supp. 616, 619 (E.D. Va. 1989) (noting determination to proceed with caution in forfeiture case because of tendency of forfeitures "to inordinately punish both the guilty and the innocent").

76. Canavan, supra note 69, at 485.

77. Comprehensive Drug Abuse Prevention and Control Act of 1970, Pub. L. No. 91-513, 84 Stat. 1437 (codified as amended at 21 U.S.C. §§ 801-971 (1993)).

78. Canavan, supra note 60, at 490-91.

79. See Saltzburg, supra note 62, at 217 (citing S. Rep. No. 225, 98th Cong., 2d Sess. 191-97 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3374-80 (enumerating several reasons why forfeiture provision is limited in success, including ambiguities in the regulations, great expense of pursuing forfeiture cases, and limited scope of property subject to forfeiture)); see also Edith Landman & John Hieronymus, Civil Forfeiture of Real Property Under U.S.C. § 881(a)(7), 70 Mich. B.J., 174, 174 (1991) (noting that property covered in 1970 Act "limited primarily to vehicles, certain types of equipment, and raw materials ... used in illegal drug transactions").

80. Psychotropic Substances Act of 1978, Pub. L. No. 95-633, tit. III, § 301, 92 stat. 3777 (codified at 21 U.S.C. § 881(a)(6) (Supp. 1993)).

81. Canavan, supra note 60, at 486 n.4.

82. Smith, supra note 13, ¶ 4.03, at 4-66. Mr. Smith goes on to explain that "cash directly acquired in exchange for the drugs is not "proceeds." Id. Such cash is considered "moneys ... furnished ... in exchange for a controlled substance." Id. If, however, cash received in exchange for illegal drugs is used to purchase property, then the cash gleaned from the sale of that property is proceeds under section 881(a)(6). Id. Regardless of the number of times the property changes forms, it still constitutes proceeds, if the government can trace the connection to illegal drug trafficking. Id. (citing United States v. 116 Villa Rella Dr., 675 F. Supp. 645, 646 (S.D. Fla. 1987) (alleged drug dealers purchased real property in North Carolina with drug profits, transferred property to claimants for no consideration; claimants then sold the North Carolina property, using proceeds of that sale to buy defendant Florida property).

83. 0. Comprehensive Crime Control Act of 1984, Pub. L. No. 98-473, tit. II, § 306(a),(f), 98 Stat. 2050-51 (codified at 21 U.S.C. § 881(a)(7), (h) (Supp. 1993)). Congress expanded the reach of civil forfeiture recognizing that traditional fine and imprisonment sanctions are inadequate deterrents in the hugely profitable drug trade. H.R. Rep. No. 1030, 98th Cong., 2d Sess. 4, 191, reprinted in 1984 U.S.C.C.A.N. 3182, 3374. Thus, forfeiture mechanisms were viewed as an effective way to attack the economic power that sustains illegal drug operations. Id.

84. H.R. Rep. No. 1030, supra note 78, reprinted in U.S.C.C.A.N. at 3398.

85. 21 U.S.C. § 881(a)(7) (Supp. 1993).

86. 21 U.S.C. § 881(h) (Supp. 1993).

87. Id.

88. Canavan, supra note 60, at 492.

89. Drug Agent's Guide, supra note 2, at 3-4.

90. 0. Genson & Martin, A Guide to Handling Federal Narcotics Forfeiture Cases, 79 Ill. B.J., 180, 182 (1991); see also, Various Items of Personal Property v. United States, 282 U.S. 577, 581 (1931) ("It is the property which is proceeded against, and, by resort to a legal fiction, held guilty and condemned as though it were conscious instead of inanimate."). It makes no difference whether anyone is involved or convicted of a crime. Drug Agents' Guide, supra note 2, at 30.

91. Genson & Martin, supra note 90, at 182.

92. Id. at 181. Once the government gives notice of forfeiture proceedings, the claimant has a limited time to act. The DEA strictly enforces deadlines, and if a claimant does not file a timely claim, the forfeiture will be final, regardless of the merits of the defense. Id. In addition, there is no guarantee that a certified letter will reach a claimant before notice is published. Id. Accordingly, "to be on the safe side," a party who has had property seized should check USA Today for the published notice. Id.

93. Id. at 182. Not a complex document, the claim "must allege the claimant's interest in the property sought to be returned." Id.

Missing the deadline for filing a claim "can result in fatal default, although the district court has discretion to extend the time for filing." Id.

If personal property is involved, a claimant must post a cost bond, amounting to $5000 or 10% of the value of the property, whichever is less, but at least $250. Gary M. Maveal, The Unemployed Criminal Alternative in the Civil War of Drug Forfeitures, 30 Am. Crim. L. Rev., 35, 43 & n.30 (1992).

94. Genson & Martin supra note 90, at 182; Canavan, supra note 60, at 492. Section 881(d) incorporates the procedures outlined in United States Customs Laws, as spelled out at 19 U.S.C. §§ 1602-1618 (Supp. 1993).

95. Drug Agents' Guide, supra note 2, at 9; 19 U.S.C. § 1615 (Supp. 1993) ("In all [forfeiture actions], ... probable cause shall be shown first ....").

The probable cause standard of proof remain unchanged from when the first customs laws were enacted in 1790. Drug Agents' Guide, supra note 2, at 12.

96. Drug Agents' Guide, supra, note 2, at 12.

97. Champanoux, supra note 64, at 251. "Once the government has made its probable cause showing, [19 U.S.C.] § 1615 places upon the claimant the 'ultimate burden of proving that the factual predicates for forfeiture have not been met.'" United States v. 4492 S. Livonia Rd., 889 F.2d 1258, 1267 (2d Cir. 1989) reh'g denied, 897 F.2d 659 (1990) (quoting United States v. Banco Cafetero, 797 F.2d 1154, 1160 (2d Cir. 1986)).

98. Id. Section 881(a)(6) states that all proceeds traceable to an illegal narcotics transaction are forfeited to the United States "except that no property shall be forfeited ... to the extent of the interest of an owner, by reason of any act or omission ... committed or omitted without the knowledge or consent of that owner." 21 U.S.C. § 881(a)(6) (1981). For a full treatment of other available defenses, such as "undue delay in seeking forfeiture," see Smith, supra note 13, ¶ 12, at 12-1 to 12-130.

99. Livonia Rd., 889 F.2d at 1267 (citing United States v. One 56-Foot Motor Yacht Named Tahuna, 702 F.2d 1276, 1287 (9th Cir. 1983)).

100. Champoux, supra note 64, at 251. A remission proceeding assumes the property is forfeitable and merely is a request for pardon based on "peculiar facts of the case." Drug Agents' Guide, supra note 2, at 214; see also, infra Part V.B. and accompanying text (explaining remission and mitigation).

101. Champoux, supra note 64, at 251; see 21 U.S.C. § 881(e) (Supp. 1993); see also Smith, supra note 13, App. 7B, at 7-20 (giving Attorney General's guidelines on seized and forfeited property).

The Department of Justice asset forfeiture program has three primary goals: (1) to punish and deter criminal activity by depriving criminals of property used or acquired through illegal activities; (2) to enhance cooperation among foreign, federal, state and local law enforcement agencies through the equitable sharing of assets recovered through this program; and, as a by-product, (3) to produce revenues to enhance forfeitures and strengthen law enforcement.

Id.

102. Champanoux, supra note 64, at 251. Section 881(e) further states that the proceeds allocated to local agencies must bear "a reasonable relationship to the degree of direct participation of the state or local agency in the ... effort resulting in the forfeiture ...." 21 U.S.C. § 881(e)(3)(A) (Supp. 1993).

In 1990, $460 million in cash and property was seized and distributed in large part as follows: $200 million went to state and local law enforcement agencies; $116 million remained with federal law enforcement agencies with a similar amount spent on federal prison construction; Canada and Switzerland each received $1 million for their cooperation in a drug money-laundering case. Drug Money Bonanza, Wash. Post editorial, reprinted in L.A. Daily J., July 18, 1991, at 6. Between 1986 and 1992, the Justice Department paid over $972.3 million in cash and $103 million in tangible property to more than 3300 state and local law enforcement agencies. 1992 Annual Report, supra note 8, at 30.

103. 0. Ronald J. Fleury, Drug-Asset Forfeiture Takes a Setback, N.J. L.J., Aug. 29, 1991, at 1.

104. United States v. 92 Buena Vista Ave., 113 S. Ct. 1126, 1130 (1993). Goodwin entered into an agreement with the United States Marshal's Service which allows her to remain in possession of the home pending a final outcome of the litigation. Id. at 1130 n.3.

105. Id. at 3.

106. 0. Brief for Respondent at 2, Buena Vista, 113 S. Ct. 1126 (No. 91-781). Goodwin's boyfriend, Joseph Brenna, furnished $216,000. Id. Appraisers valued the house at $1.1 million in 1989 when forfeiture proceedings started. Fleury, supra note 98, at 29.

107. David F. B. Smith, High Court Ruling Will Have Wide-Randing Implications For Innocent Owner Defense, Title News, Sept.-Oct., 1992, at 5.

108. Brief for the United States at 3, Buena Vista (No. 91-781). When Goodwin ended the relationship she barred Brenna from the property. Brief for Respondent at 2. In 1988, Goodwin testified, in connection with the criminal investigation of Brenna, that she believed Brenna derived the money he used to support her from a boat business he owned. Brief for

Respondent at 3, Buena Vista (No. 91-781).

109. Buena Vista, 113 S. Ct. at 1130.

110. Id.

111. United States v. 92 Buena Vista Ave., 937 F.2d 98, 100 (3d Cir. 1991), aff'd, 113 S. Ct. 1126 (1993).

112. United States v. 92 Buena Vista Ave., 738 F. Supp. 854, 859 rev'd, 937 F.2d 98 (3d Cir. 1991), aff'd 113 S. Ct. 1126 (1993) (citing to 21 U.S.C 881(h) (the relation-back statute)).

113. Id.

114. Id. at 860.

115. Buena Vista, 937 F.2d, at 102.

116. Id.

117. United States v. United States Coin & Currency, 401 U.S. 715, 720-21 (1971).

118. Reed, supra note 1, at 7; see also Smith, supra note 107, at 5 ("It seems fundamental to our American legal system that only those guilty of illegal conduct can be punished, and one naturally expects this principle to hold true for forfeiture law.").

119. Chapman & Pearson, supra note 63, at 2139; see supra, Part II.A.2 and accompanying text (discussing American common law development of forfeiture and absence of protection for innocent owners of seized property).

120. Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 661 (1974).

121. Morris & Kessler, supra note 7, at 37.

122. Calero-Toledo, 416 U.S. at 690. The Court upheld the constitutionality of the law under which the yacht was forfeited despite the fact that the statute provided no protection to innocent owners. Id. at 686. In dicta, however, the Court acknowledged the need to carve out an innocent owner exception to laws which subjected property to forfeiture simply because of a nexus with criminal activity. Id. at 889. Thus, the Court enunciated a defense to forfeiture where a claimant proved: first, noninvolvement in, and no knowledge of, the illegal activity; and second, that the claimant had done all that could reasonably be expected to prevent the illicit use of the property. Id. at 688-90. Accordingly, Pearson Leasing Co. lost its yacht because it did not present evidence that it had done all it reasonably could to avoid the wrongful use of the boat. Id. at 690.

123. See Calero-Toledo, 416 U.S. at 665-67 nn.1-2.

124. Smith, supra note 13, ¶ 4.03, at 4-70.

125. 124 Cong. Rec. 23,056 (daily ed. July 27, 1978) (statement of Sen. John Culver).

126. Id. at 23057 (statement of Sen. Sam Nunn).

127. 21 U.S.C. § 881(a)(6) (1981) (emphasis added). An issue concerning the meaning of "knowledge or consent" has arisen when courts interpret section 881(a)(7), which also includes this phrase. Smith, supra note 13, ¶ 4.03, at 4-70 n.59. Courts struggle with the issue of whether an innocent owner defense can be established if the claimant had knowledge of illegal drug activity on the property, but did not consent to that activity. Id. This issue does not arise under section 881(a)(6), which is concerned with property which can be traced to proceeds of illicit drug operations. Id.
 
 
 

128. Joint Explanatory Statement of Titles II and III, Publ. L. No. 95-633, 95th Cong., 2d Sess., reprinted in 1978 U.S.C.C.A.N. 9518, 9522 (emphasis added).

129. Buena Vista, 738 F. Supp. at 860. Cases prior to Buena Vista had applied the bona fide purchaser requirement. See, e.g., United States v. One Single Family Residence, 683 F. Supp. 783, 788 (S.D. Fla. 1988) (ruling that section 881(a)(6) innocent owner exception applies to bona fide purchasers for value).

130. Buena Vista, 738 F. Supp. at 860.

131. Buena Vista, 937 F.2d at 101. The Court of Appeals also reversed on the relation-back issue. Id. at 102.

132. Id. at 102. For Congressional intent, see supra note 128 and accompanying text.

133. Buena Vista, 937 F.2d at 102.

134. Id.

135. Buena Vista, 113 S. Ct. at 1134 (plurality opinion). The concurring opinion did not differ with the plurality on this issue. Id. at 1138 (Scalia, and Thomas, JJ., concurring).

136. Id. (plurality opinion) ("Such language is sufficiently unambiguous to foreclose any contention that it applies only to bona fide purchaser.").

137. Id. (plurality opinion) (noting that plain language of statute probably led government to concede this issue).

138. Buena Vista, 113 S. Ct. at 1143-46 (Kennedy, J. dissenting).

139. Id. at 1143-46 (Kennedy, J., dissenting). Justice Kennedy contended that rules of voidable title codified in the Uniform Commercial Code apply and that "one who acquires property from a holder of voidable title other than by a good faith purchase for value obtains nothing beyond what the transferor held." Id. at 1144 (Kennedy, J., dissenting).

140. Id. at 1143 (Kennedy, J., dissenting).

141. Id. (Kennedy, J., dissenting).

142. Id. at 1145 (Kennedy, J., dissenting).

143. Id. at 1146 (Kennedy, J., dissenting).

144. United States v. Forty-Four Thousand Dollars, 596 F. Supp. 1308 (E.D. Mo. 1984) demonstrates the difficulties encountered by the wife of a drug trafficker in asserting the innocent owner defense. The woman's husband offered money the woman received from a personal injury lawsuit to an undercover detective in exchange for marijuana. Id. at 1309. The wife claimed ignorance of her husband's drug trafficking activities and proved the legitimate source of the funds. Id. at 1309-10. She failed, however, to convince the court which could not believe she would leave her money in a safe at home instead of putting it in the bank to earn interest. Id. at 1310-11.

145. Drug Agents' Guide, supra note 2, at 224-25, 232-33. Where a known drug trafficker gives forfeitable property to close family or business associates, the Justice Department imputes to such donees knowledge of the tainted character of the gift. Id. Thus, close relatives or associates of drug dealers bear a heavier burden of proof in establishing an innocent owner defense in a forfeiture proceeding. Id. "If the petitioner lives with, or is an immediate family member of, the drug violator, an extended explanation is required concerning the ignorance of the petitioner of the violator's activities, record or reputation." Id. at 232-33. For a full discussion of how the Drug Enforcement Administration ("DEA") evaluates a claim for remission see id. at 217-26. Courts could apply DEA guidelines by analogy to claimants seeking to assert the innocent owner defense in forfeiture proceedings.

146. Smith, supra note 13, ¶ 3.05[2], at 3-29.

147. Id.

148. Id.

149. Id. (citing Henderson's Distilled Spirits, 81 U.S. (14 Wall.) 44, 57 (1871)). Henderson's Distilled Spirits also asserts that relation-back rules originate "in the early history of the common law." 81 U.S. (14 Wall.) at 61.

150. Smith, supra note 13, ¶ 3.05[2], at 3-29 n.3 (noting that modern cases always seem to cite Stowell even though it is neither source of rule nor leading case).

151. 133 U.S. 1 (1890).

152. Id. at 16-17 (emphasis added).

153. United States v. 1960 Bags of Coffee, 12 U.S. (Cranch) 398, 416 (1814) (Story, J., dissenting).

154. Id. at 414 (Story, J., dissenting).

155. Id. (Story, J., dissenting).

156. Id. at 406 (Story, J., dissenting).

157. Smith, supra note 10, at 512.

158. See Stowell, 133 U.S. at 16-17; United States v. 1413 Whiterock, 571 F. Supp. 723, 725 (W.D. Tex. 1983).

159. United States v. Rod and Reel Fish Camp, 660 F. Supp 483, 487 (S.D. Miss. 1987).

160. Smith, supra note 13, ¶ 3.05[2], at 3-30.

161. Id. (citing United States v. Monkey, 725 F.2d 1007, 1012 (5th Cir. 1984)).

162. Id. ("[I]t is not in the power of the offender as former owner to defeat the forfeiture by any subsequent transfer of the property even to a bona fide purchaser for value without notice of the wrongful acts done ... by the former owner."). Id. (quoting Henderson's Distilled Spirits, 81 U.S. at 57).

163. Smith, supra note 13, ¶ 3.05, at 3-36. For discussion of remission and mitigation, see infra part V.B. and accompanying text.

164. Comprehensive Crime Control Act of 1984, Pub. L. No. 98-473, tit. II, § 306(f), 98 Stat. 2051 (currently codified at 21 U.S.C. § 881(h) (Supp. 1993)).

165. U.S.C. § 881(a)(6) (1981).

166. 21 U.S.C. § 881(h) (Supp. 1993); see also Jankowski, supra note 4, at 177 (noting lack of innocent owner protection under § 881(h) and possible inequitable results).

167. See, e.g., Eggleston v. State, 873 F.2d 242, 247-48 (10th Cir. 1989), cert. denied sub nom. Colorado Dep't of Revenue v. United States, 110 S. Ct. 1112 (1990) (ruling that innocent owner defense is available only to owners whose interest vests before the illicit act). The Eggleston court failed to appreciate that its theory, applied to cases under section 881(a)(6), "would render the innocent owner provision nugatory." Smith, supra note 13, ¶ 4.03, at 4-72.

168. Smith, supra note 13, ¶ 4.03 at 4-72.

169. Id. at 4-72 to 4-74. The Senate Report on the Comprehensive Crime Control Act of 1984 contains over 30 pages explaining the forfeiture amendments included in the Act. Id. at 4-74 (citing S. Rep. No. 98-225, 98th Cong., 1st Sess. 191-221 (1983)). The Senate Report "scarcely even mentioned" the relation-back provision, merely noting that it is "well-established in current law." Id. (citing S. Rep. No. 98-225, 98th Cong., 1st Sess. at 215, reprinted in 1984 U.S.C.C.A.N. 3398). Thus, concludes Smith, had Congress intended for the relation-back provision to create an implied repeal of the innocent owner protection in section 881(a)(6), it would have said so. Id.

Congress added relation-back provisions to three different forfeiture statutes in the same Congressional Act, Pub. L. No. 98-973. Brief of Dade County Tax Collector, The Dade County Property Appraiser, and Dade County as Amici Curiae in Support of Respondents at 24 n.4, Buena Vista (No. 91-781). The amended statutes included 18 U.S.C. § 1963(c), 21 U.S.C. § 853, and § 881(h). Id. The Senate Report's discussion of § 881(h) refers the reader back to its previous discussion of the relation back doctrine contained in the same Senate Report. Id. That section contains the following explanation of the relation-back doctrine:

Under this [relation back] theory, forfeiture relates back to the time of the acts which give rise to the forfeiture. The interest of the United States in the property is to vest at that time, and is not necessarily extinguished simply because the defendant subsequently transfers his interest to another. Absent application of this principle a defendant could attempt to avoid criminal forfeiture by transferring his property to another person prior to conviction.

The purpose of this provision is to permit the voiding of certain pre-conviction transfers and so close a potential loophole in current law whereby the criminal forfeiture sanction could be avoided by transfers that were not "arms' length" transactions.

S. Rep. No. 98-225, 98th Cong., 1st Sess., reprinted in 1984 U.S.C.C.A.N. 3383-84 (emphasis added).

This legislative history makes clear that Congress did not intend the relation-back doctrine to void "all" subsequent transfers, but only those "certain" transfers criminals might make in order to fraudulently avoid forfeiture. Brief for Dade County, supra at 25.

170. Smith, supra note 13, ¶ 4.03, at 4-73.

171. Buena Vista, 937 F.2d at 98, 102 (3d Cir. 1991) aff'd, 113 S. Ct. 1126 (plurality opinion).

172. Uniform Commercial Code § 2-403(1); see also James H. White & Robert S. Summers, Uniform Commercial Code, §24-13 at 1165-71 (3d ed. 1988) (explaining U.C.C. § 307 provision which protects buyers in ordinary course).