Maryland Reforms Asset Forfeiture Laws, But Federal Loophole Added

ANNAPOLIS, Md. (June 9, 2016) – Maryland Gov. Larry Hogan has signed a bill into law that significantly reforms asset forfeiture laws. But an amendment approved during the process creates a loophole that could allow law enforcement to work with the feds to skirt the more stringent state law.

Joseph F. Vallario, Jr. (D-Prince George’s County) sponsored House Bill 336 (HB336). Sen. Michael Hough (R-D4) sponsored the companion Senate Bill 161 (SB161). The legislation reforms Maryland law and creates important protections for Marylanders.

According to the Institute for Justice, the new law makes the following changes:

  • Raises the standard of proof to forfeit property to “clear and convincing evidence;”
  • Establishes new reporting requirements for seizures and forfeitures, which oblige agencies to report how they spent forfeiture funds, whether or not criminal charges or convictions accompanied a forfeiture case, and the race and gender of property owners affected by a seizure;
  • Requires a criminal conviction to forfeit an owner’s principal family home;
  • Repeals a provision that allowed money to be forfeited in relation to drug possession. (Forfeiting money related to the unlawful manufacture, distribution or dispensing of controlled substances would still be authorized.);
  • Requires that property owners be given a receipt when their property is seized;
  • Institutes new deadlines for agencies to file forfeiture complaints. (Failing to file would mean the government would have to promptly return seized property);
  • Directs 20 percent of forfeiture proceeds from the general fund to the Department of Health and Mental Hygiene to fund drug treatment and education programs

HB336 initially passed the House 85-48 and cleared the Senate 46-0. The House gave final approval to Senate amendment 121-18. With Gov. Hogan’s signature, the law will go into effect in October.

The original version of the bill would have required a criminal conviction before prosecutors could complete forfeiture in most situations. The bill was significantly weakened during the process, but is a major improvement over the status quo. Even so, a potential loophole made its  way into the bill during the process.

FEDERAL LOOPHOLE

As introduced, HB336 closed a loophole that allows prosecutors to bypass more stringent state asset forfeiture laws by passing cases off to the federal government under its Equitable Sharing forfeiture program.

"A LAW ENFORCEMENT AGENCY OR PROSECUTING AUTHORITY MAY NOT DIRECTLY OR INDIRECTLY TRANSFER
OR REFER SEIZED PROPERTY TO A FEDERAL GOVERNMENT AGENCY OR LAW ENFORCEMENT AUTHORITY FOR FORFEITURE UNDER FEDERAL LAW UNLESS

1. THE PROPERTY  INCLUDES  SEIZED  CASH  IN  EXCESS OF $50,000;

AND

2. A  CRIMINAL CASE RELATED TO THE SEIZURE IS PROSECUTED IN THE FEDERAL COURT SYSTEM UNDER FEDERAL LAW."

But the amendment added an additional mechanism opening up that loophole to allow transfer to federal authority if:

"A STATE OR LOCAL LAW ENFORCEMENT AGENCY TRANSFERS THE PROPERTY TO A FEDERAL AUTHORITY UNDER A FEDERAL SEIZURE WARRANT ISSUED TO TAKE CUSTODY OF ASSETS ORIGINALLY SEIZED UNDER STATE LAW."

This provision would allow state law enforcement and feds to intentionally collaborate using the loophole to get federal warrants to bypass the state law. This is how it would likely play out in practice. Maryland law enforcement makes an arrest. They go to their federal partners and let them know they want to proceed with forfeiture under federal law. The feds go get a federal warrant and the forfeiture proceeds through the federal process.

This provision would allow state and local law enforcement to circumvent the more stringent state law and collect proceeds from the federal equitable sharing program. One IJ lawyer put it this way, “I think the addition of the new section would basically gut the other requirements in the original language.”

The inclusion of provisions barring state and local law enforcement agencies from passing off cases to the feds is particularly important. In several states with strict asset forfeiture laws, prosecutors have done just that. By placing the case under federal jurisdiction, law enforcement can bypass the need for a conviction under state law and collect up to 80 percent of the proceeds from forfeited assets via the federal Equitable Sharing Program.

Late last December the U.S. Department of Justice suspended the Equitable Sharing Program due to budget cuts. But as the Washington Post reported, the suspension won’t likely be permanent.

“In its letter, the DOJ hints that it may be able to restart payments later: ‘By deferring equitable sharing payments now, we preserve our ability to resume equitable sharing payments at a later date should the budget picture improve.’ The DOJ hopes to ‘reinstate sharing distributions as soon as practical and financially feasible,’ the letter concludes.”

Even with the program suspension in place for now, the prohibition from passing off cases remains an important provision.

California prosecutors and law enforcement agencies have regularly utilized this loophole. As previously reported by the Tenth Amendment Center, the federal government has inserted itself into the California’s asset forfeiture debate. The feds clearly want the policy to continue.

Why?

We can only guess. But perhaps the feds recognize paying state and local police agencies directly in cash for handling their enforcement would reveal their weakness. After all, the federal government would find it nearly impossible to prosecute its deplorable “War on Drugs” without state and local assistance. Asset forfeiture “equitable sharing” provides a pipeline the feds use to incentivize state and local police to serve as de facto arms of the federal government by funneling billions of dollars into their budgets.

Asset forfeiture laws incentivize “policing for profit” on one hand, and dubious state-federal partnerships on the other.