Property Owners Prevail in Important Asset Forfeiture Case

A federal district court in Massachusetts has ruled in favor of the property owners in United States v. 434 Main Street, Tewksbury, an important asset forfeiture case. This is the case where the federal government sought the forfeiture of a motel on the grounds that a few of the motel’s customers had bought or sold illegal drugs on the premises – even though there was no evidence that the owners knew about the sales or facilitated them in any way. I previously discussed the case in this post, and it was also the focus of a Washington Post column by George Will.

Magistrate Judge Judith Dein’s opinion emphasizes the unusually extreme facts of this case as a basis for ruling that the motel was not eligible for forfeiture:

After reviewing the scores of cases cited by the parties, I find this case to be notable in several critical respects, including (1) the Government has identified only a limited number of isolated qualifying drug-related incidents spread out over the course of more than a decade, none of which involve the Motel owner or employees; and (2) the witnesses unanimously confirmed that no efforts were undertaken to work with the Motel owner to try and reduce drug crimes at the Property prior to the institution of the forfeiture action, nor was any warning given as to the possibility of forfeiture prior to suit being filed. As a result, the instant case is easily distinguishable from other cases where the “draconian” result of forfeiture was found to be appropriate.

The decision is based on statutory grounds and does not address the constitutional issues raised by takings targeting innocent property owners. Indeed, Judge Dein reiterates the longstanding, but in my view dubious, doctrine that “it is not necessary that the forfeited property be owned by a culpable person.”

Although the case is a significant victory for property owners, it also highlights the difficult of combating asset forfeiture abuse. The motel owners won only after extensive litigation. And even then, they might not have succeeded but for the efforts of the Institute for Justice, the prominent libertarian public interest law firm specializing in property rights issues that represented them pro bono, and helped attract national attention to the case. And the case may not be over yet, since federal prosecutors could decide to appeal. Most owners of property targeted for asset forfeiture do not have the resources for a prolonged legal battle. Asset forfeiture abuse remains a serious problem in many states. The struggle over this issue will continue.

As the Boston Business Journal points out, the case is also notable as “a high-profile loss for U.S. Attorney Carmen Ortiz, whose office has been besieged by criticism in recent weeks over her handling of the prosecution of Internet activist Aaron Swartz.” It will be interesting to see whether Ortiz decides to appeal this decision to the US Court of Appeals for the First Circuit.

CONFLICT OF INTEREST WATCH: I have worked with the Institute for Justice on several other property rights cases, but had no involvement in this one.

UPDATE: I should emphasize that, whatever one thinks of Carmen Ortiz, the problem of asset forfeiture abuse is not limited to this one controversial prosecutor. The practice of targeting innocent property owners and then making it difficult or impossible for them to challenge the seizure of their assets is common in many states. The real tragedy here is that Ortiz’s actions were probably only modestly more egregious than what has become standard practice in many jurisdictions.