Asset Forfeiture & The Fifth Amendment – Part I – Innocent Ownership

The fifth amendment to the Constitution guarantees due process. In the forfeiture context, two areas have arisen. The first is the constitutional question of innocent ownership. The second is whether the conduct of the government can deny due process rights. In 1968, President Richard Nixon, in his infinite wisdom, ushered in the "War on Drugs" adopting a "zero tolerance policy". One unfortunate recipient of this policy was the Pearson Yacht Leasing Company of Miami, Florida which had leased a $19,800 yacht to some residents of Puerto Rico. Unfortunately for these residents, they were discovered to have on board two marijuana cigarettes. . .

Under Puerto Rican law, this was sufficient to forfeit the vessel as being used to transport contraband. Of particular import, all parties to the proceeding agreed that Pearson Yacht had no knowledge that marijuana was being used or transported on the yacht, thus presenting the question of whether an "innocent owner" could lose his interest in property by reason of the actions of his lessee.

As we all know – or should know – the 5th Amendment states:

No person shall be held to answer for a capital, or otherwise infamous, crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service, in time of war, or public danger; nor shall any person be subject, for the same offense, to be twice put in jeopardy of life or limb; nor shall be compelled, in any criminal case, to be a witness against himself; nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Pearson's obviously overwhelmed attorney first raised procedural due process issues in the way the forfeiture was handled – no pre-seizure notice and no opportunity for a hearing – but was shot down. Next, he argued that such a taking of an innocent owner's property would violate constitutional guarantees. Though right, Pearson Yacht lost because its counsel forgot that it isn't enough to be right on the law, you also must be right on the facts. In recognizing this important constitutional limitation of forfeiture, the Court held:

It therefore has been implied that it would be difficult to reject the constitutional claim of an owner whose property subjected to forfeiture had been taken from him without his privity or consent. Similarly, the same might be said of an owner who proved 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 use of his property; for, in that circumstance, it would be difficult to conclude that forfeiture served legitimate purposes and was not unduly oppressive.

Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 689 (1974). Unfortunately, the record contained (and here read the attorney failed to develop) no facts to demonstrate that Pearson Yacht had done all it "reasonably" could to prevent the yacht from being used illegally. Indeed, the Supreme Court went on to hold that "But in this case appellee voluntarily entrusted the lessees with possession of the yacht, and no allegation has been made or proof offered that the company did all that it reasonably could to avoid having its property put to an unlawful use." Id. 690. Thus, the Pearson Yacht Leasing Co. lost their boat.

Another important holding of Calero-Toledo is that the governmental scheme of seize now without hearing and put the burden of proof of innocence on the claimant to the property met constitutional muster. Thus, under forfeiture, the rule was “guilty until proven innocent”. Who needs the criminal law anymore when under asset forfeiture that pesky notion of "proof beyond a reasonable doubt” can be dispensed with?

Smelling cash, the government would quickly move forward to start milking that cash cow.