BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON PUBLIC SAFETY
                             Senator Loni Hancock, Chair
                                2015 - 2016  Regular 

          Bill No:    SB 443        Hearing Date:    April 21, 2015    
          
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          |Author:    |Mitchell                                             |
          |-----------+-----------------------------------------------------|
          |Version:   |April 6, 2015                                        |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|JM                                                   |
          |           |                                                     |
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                    Subject:  Forfeiture:  Controlled Substances



          HISTORY

          Source:   Drug Policy Alliance; American Civil Liberties Union;  
          Institute for Justice

          Prior Legislation:AB 639 (Norby) - 2012, Died in Senate  
                         Appropriations 

          SB 1866 (Vasconcellos) - 2000, Vetoed
          SB 1255 (Hughes) - Ch. 1022, Stats. 1994
          AB 114 (Burton) - Ch. 664, Stats. 1994
          Support:  Unknown

          Opposition:California District Attorneys Association

                                                


          PURPOSE

          The purpose of this bill is to 1) require a criminal conviction  
          for forfeiture of alleged cash drug proceeds and assets in  
          excess of $25,000; 2) reduce the percentage of forfeiture  
          proceeds distributed to prosecutors, law enforcement and the  
          General Fund; 3) distribute 5% of forfeiture proceeds to each of  








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           the courts and public defense; 4) require that California  
          standards be met before federal forfeiture proceeds can be  
          distributed to a state of local law enforcement agency through  
          equitable sharing; 5) grant a right to counsel for indigent  
          defendants in civil drug forfeiture matters; 6) authorize  
          attorneys' fees and costs for prevailing defendants in  
          forfeiture cases; 7) prohibit adoption by federal authorities of  
          a state forfeiture matter; and 8) require the California  
          Department of Justice's annual asset forfeiture report to  
          include data on forfeitures initiated under California law,  
          federal adoptions, forfeiture case that were prosecuted under  
          federal law, the number of suspects charged with drug crimes,  
          the number of criminal charges brought under each of state and  
          federal law and the disposition of these cases.

          Existing law establishes an asset-forfeiture procedure for  
          drug-related cases.  (Health & Saf. Code  11469-11495.)

          Existing law provides that the principal objective of forfeiture  
          is law enforcement and that forfeiture shall be conducted with  
          due process.  (Health & Saf. Code  11469, subd. (a).)
          Existing law sets out detailed procedures for a drug forfeiture  
          action, including: the filing of a petition for forfeiture  
          within one year of seizure, notice of seizure, publication of  
          notice, the right to a jury trial, and a motion for return of  
          property.  (Health & Saf. Code  11488.4.)

          Existing law requires a conviction in an underlying criminal  
          case and provides that the burden of proof in the (civil)  
          judicial forfeiture action shall be beyond a reasonable doubt.   
          (Health & Saf. Code  11488.4, subd. (i)(3).)

          Existing law does not require a conviction on an underlying drug  
          offense where the property sought to be forfeited is cash or  
          negotiable securities over $25,000, and allows forfeiture upon a  
          burden of proof of "clear and convincing evidence" under these  
          circumstances.  (Health & Saf. Code  11488.4, subd. (i)(4).)

          Existing law allows for administrative (nonjudicial) forfeiture  
          for cases involving personal property worth $25,000 or less.  A  
          full hearing is required if a claim as to the property is filed,  
          as specified.  (Health & Saf. Code  11488.4, subd. (j).)










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          Existing law provides a scheme for the distribution of fund from  
          forfeitures and seizures.  Specifically, after distribution to  
          any bona fide innocent owners and reimbursement of expenses, 65%  
          of proceeds go to participating law enforcement agencies, 10% to  
          the prosecutorial agency, and 24% to the General Fund.  (Health  
          & Saf. Code  11489.)

          Existing law requires the Department of Justice (DOJ) to publish  
          an annual report detailing specified information on forfeiture  
          actions.  (Health & Saf. Code  11495, subd. (c).)

          This bill requires a conviction for cultivation or manufacture  
          of a controlled substance before judgment of forfeiture is  
          entered.

          This bill provides that a conviction is required before judgment  
          is entered in a forfeiture matter involving cash or negotiable  
          instruments of a value in of at least $25,000.

          This bill provides that the prosecutor shall prove beyond a  
          reasonable doubt that cash or negotiable instruments with a  
          value of at least $25,000 meet the requirement for forfeiture.
            
          This bill provides that if a defendant in the criminal case  
          associated with the forfeiture action is represented by  
          appointed counsel, counsel shall be appointed in the forfeiture  
          action.
            
          This bill provides that a defendant who prevails in a forfeiture  
          action shall be entitled to litigation costs and attorneys'  
          fees.

          This bill prohibits a state or local law enforcement agency from  
          transferring property seized under state law for adoption by a  
          federal agency.
             
          This bill provides that any forfeited property received by state  
          or local law enforcement agencies pursuant to federal equitable  
          sharing or adoption laws and rules shall be deposited and  
          distributed according to state law.

          This bill provides that a conviction is required before  
          forfeiture can be ordered if the defendant fails to appear in  









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          the underlying criminal action. 

          This bill provides that 60% of forfeiture proceeds shall be  
          distributed to each state or local agency that participated in a  
          forfeiture action, in proportion to the contribution of the  
          agency.
           
          This bill provides that 5% of forfeiture proceeds shall be  
          distributed to the prosecuting agency that processed the  
          forfeiture.
            
          This bill provides that 10% of forfeiture proceeds shall be  
          disbursed to the court where the forfeiture action occurred.   
          These funds shall be deposited to the newly created "Judicial  
          Asset Forfeiture Fund in the State Treasury and, upon  
          legislative appropriation, expended for court administration in  
          the county of forfeiture.
            
          This bill provides that 5% of forfeiture proceeds shall be  
          disbursed to the public defender's office or provider of  
          indigent defense services in the jurisdiction of the forfeiture  
          action.

          This bill strikes the provision in existing law under which 1%  
          of forfeiture proceeds are paid to a nonprofit organization of  
          prosecutors for use in training prosecutors and law enforcement  
          agencies in forfeiture laws and ethics.
            
          This bill provides that 20% of forfeiture proceeds shall be  
          deposited into the General Fund.
            
          This bill requires the Attorney General to annually report on  
          the following additional matters:

                 The number of forfeiture cases initiated under state  
               law;

                 The number of cases adopted by the federal government;

                 The number of cases initiated in joint federal-state  
               actions that were prosecuted under federal law;

                 The number of suspects charged  with a controlled  









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               substance violation; and

                 The disposition of cases.

                                      COMMENTS

          1.Need for This Bill

          The author's background information includes a summary of the  
          provisions in the bill.  The summary provides:


               Conviction Requirement for Seizure of Cash in Excess  
               of $25,000:  Under California's existing forfeiture  
               statute, the state can forfeit a person's cash or  
               other negotiable instruments in excess of $25,000  
               without first convicting the person of an underlying  
               or related criminal offense.  In contrast, a  
               conviction is required prior to forfeiture of cash  
               less than $25,000, real property, boats, cars,  
               airplanes, and other personal property.  This leaves  
               California's civil asset forfeiture law ripe for abuse  
               by law enforcement, and permits innocent Californians  
               to have their property taken by the government without  
               due process.  SB 443 would require a conviction as a  
               precondition to cash forfeitures both over and under  
               $25,000.  The bill would create uniformity in  
               California's drug-related asset forfeiture law and  
               ensure a more concrete connection between the  
               forfeited property and criminal activity.

               Right to Counsel in the Civil Asset Forfeiture  
               Proceeding: Property owners have the right to  
               challenge civil asset forfeiture actions, but indigent  
               defendants have no right to appointed counsel.   
               Forfeiture actions are complicated and costly to  
               challenge, and typically require an experienced  
               attorney.  Innocent property owners who can neither  
               afford counsel nor adequately represent themselves are  
               often forced to give up their property simply because  
               they cannot contend against the government.  To remedy  
               this problem, SB 443 would require the court to  
               appoint counsel for indigent property owners in  









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               forfeiture proceedings. 

               Attorneys 'Fees:  Current law does not provide for the  
               recovery of attorneys' fees for successful asset  
               forfeiture claimants.  SB 443 would allow them  
               claimants to recover reasonable costs and attorneys'  
               fees. 

               Expanded Reporting Requirements:  The Attorney General  
               must publish an annual asset forfeiture report.  To  
               provide greater transparency and help prevent abusive  
               practices, SB 443 would require that the report  
               include information about the number of forfeiture  
               actions initiated by state or local agencies under  
               California law, the number of cases adopted by the  
               federal government, the number of cases initiated by a  
               joint federal-state action that were prosecuted under  
               federal law, the number of suspects charged with a  
               controlled substance violation, the number of alleged  
               criminal offenses that were prosecuted under federal  
               or state law, and the disposition of cases. 

               Distribution of Forfeiture Proceeds:  Under existing  
               law, 65% of asset forfeiture proceeds are distributed  
               to law enforcement, 10% to the prosecuting agency, 24%  
               to the general fund and 1% for training of prosecutors  
               on asset forfeiture. (According the annual Attorney  
               General's Report, most counties give this money to  
               California District Attorneys Association).  Because  
               this bill could require more resources for courts and  
               indigent defense in forfeiture actions, this bill  
               would reallocate some forfeitures proceeds for these  
               purposes.  Specifically, the bill would reduce  
               proceeds to law enforcement and prosecutors to 60% and  
               5% respectively, reduce the General Fund allocation to  
               20%, eliminate the 1% to a nonprofit association of  
               prosecuting attorneys, and allocate 10% to the courts  
               and 5% to the public defender's office in the  
               jurisdiction where the forfeitures occur.  

               Prohibits "Adoptive Forfeitures":   Pursuant to  
               so-called "equitable sharing" of assets transferred to  
               federal control, local and state law enforcement may  









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               circumvent California's more stringent asset  
               forfeiture laws, take advantage of more lenient  
               federal law, and receive up to 80% of the proceeds  
               from the forfeiture action.  Through this procedure,  
               local law enforcement officers who seize property  
               pursuant to an alleged state law violation apply to a  
               federal agency to "adopt" the property and initiate  
               federal forfeiture proceedings.  This bill would  
               prohibit local and state law enforcement from seeking  
               federal adoption of seized property for federal  
               forfeiture.  It would neither affect the ability of  
               the federal government to take possession of property  
               or California law enforcement to engage in truly joint  
               operations with federal agencies/

               Limits Equitable Sharing in Joint Investigations:   
               This bill provides that local and state law  
               enforcement can only receive forfeiture proceeds  
               pursuant to joint federal- state investigations where  
               there is a conviction in an underlying or related  
               criminal action for an offense that authorizes  
               forfeiture under California law.  SB 443 requires that  
               any forfeiture proceeds paid to local and state law  
               enforcement pursuant to joint investigations with  
               federal agencies be distributed according to state  
               law.  SB 443 further states that, to the extent that  
               federal law does not permit such a distribution, state  
               and local law enforcement agencies are prohibited from  
               receiving such funds.

          2.The Major Differences Between California and Federal  
            Forfeiture Law


          Federal forfeiture law is less burdensome for law enforcement  
          and gives law enforcement more benefits than state law.  Some  
          ways in which California and federal provisions differ are:


           Conviction: 


                  o         California: Conviction generally required,  









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                    except where the property seized was cash in excess of  
                    $25,000.  (Health & Saf. Code 11488.4, subd. (i)(3)


                  o         Federal:  No conviction required. (18 U.S.C.   
                    981.)

           Burden of proof:


                  o         California: Beyond a reasonable doubt for most  
                    cases.  The burden is clear and convincing evidence  
                    (with no underlying conviction) in cases involving at  
                    least $25,000 in cash.  (Health & Saf. Code 11488.4,  
                    subd. (i)(4).)


                  o         Federal: Preponderance of the evidence.  (18  
                    U.S.C.  983 (c)(1).) 


           Administrative forfeiture (limited or no court hearings):


                  o         California: Only available for cases involving  
                    personal property worth $25,000 or less.  (Health &  
                    Saf. Code 11488.4, subd. (i)(4).)


                  o         Federal: Available for any amount of currency  
                    and personal property valued at $500,000 or less,  
                    including cars, guns, and boats.  (19 U.S.C.  1607  
                    (a).)


           Use of forfeited assets:


                  o         California: No direct use of seized assets,  
                    such as vehicles or planes.  (Health & Saf. Code   
                    11489.)











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                  o         Federal: Seizing agency can use the asset or  
                    transfer it to a state or local agency that  
                    participated in the proceedings.  (18 U.S.C.  881  
                    (e)(1)(A).)  


           Disbursement of Forfeited Assets:


                  o         California: 65% to law enforcement agency, 10%  
                    to prosecuting agency, 24% to general fund, 1% to law  
                    enforcement training.  (Health & Saf. Code  11489,  
                    subd. (b).)


                  o         Federal:  80% (maximum) of seized proceeds to  
                    the agency or agencies involved in the seizure of the  
                    assets.  (21 U.S.C.  881 (e); U.S. DOJ, Guide to  
                    Equitable Sharing, p. 12.) 


           Exemptions for Family Property, other Limitations:


                  o         California: No forfeiture of family residence  
                    partly owned by innocent party and no forfeiture of  
                    vehicle necessary for family transportation. (Health &  
                    Saf. Code 11470, subds. (e) and (g).


                  o         Federal: No family exemption 


                  o         California: If property subject to seizure is  
                    a boat, vehicle or other conveyance, the drugs  
                    associated with the vehicle must be of a specified  
                    weight or volume.  (Health & Saf. Code 1147, subd.  
                    (e).


                  o         Federal law: No weight or volume limits apply  
                    under federal law.  (21 U.S.C.  881 (a)(4).)










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          3."Equitable Sharing" by State and Local Law Enforcement of  
            Federal Forfeiture Proceeds, including Adoption of State  
            Forfeitures by Federal Authorities


          Because there is overlapping jurisdiction in drug-related  
          crimes, California law enforcement agencies can avoid relatively  
          stringent state forfeiture laws by participating in joint  
          federal-state investigations or by transferring assets seized  
          pursuant to state law to federal authorities.  This entire  
          process is referred to as "equitable sharing."  Equitable  
          sharing includes "adoption," through which the U.S. Attorney  
          essentially processes a state forfeiture under federal law.


          To participate in equitable sharing, a California law  
          enforcement agency must execute an agreement with U.S. DOJ.  DOJ  
          has promulgated guidelines for forfeiture adoption, including  
          that the district attorney must consent to the transfer.   
          Procedurally, the local or state agency files a request to  
          federal authorities to adopt a state seizure.  Minimum value  
          amounts apply and vary by federal court district.  The amount of  
          money and property disbursed to local or state law enforcement  
          is based on "the degree of direct law enforcement effort" by the  
          state or local agency.  (21 U.S.C. 881 (e)(3).)  State and  
          local and agencies can receive up to 80% of the proceeds of an  
          adopted forfeiture case. 


          As explained in Comment # 4, United States Attorney General  
          Holder has recently issued an order that prohibits adoption of  
          local and state forfeitures, except in a case where US DOJ  
          specifically approves the adoption.  The order is administration  
          policy and does not have the force of law.  Because adoption  
          cases involve a small percentage of equitable sharing, the new  
          policy will have limited effects.  Further, agencies may seek to  
          make more seizures under the umbrella of joint federal-state  
          task forces so that equitable sharing rule, not state law,  
          applies.  Given the much stricter standards for California  
          forfeiture, it can be argued that state and local agencies have  
          substantial incentives to avoid California law and work with  
          federal agencies instead.  









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          4.The New Federal Policy on Adoption of State Forfeiture Actions  
            will have Limited Effects


          On January 16, 2015, United States Attorney General Holder  
          issued a new policy order for all United States Attorney  
          offices.  The policy was widely described as effectively ending  
          equitable sharing of federal forfeiture proceeds with local law  
          enforcement agencies.  However, the order did not limit  
          equitable sharing in cases involving a joint federal-state task  
          forces or investigations.  The policy prohibits wholesale  
          "adoption" of what would otherwise solely be a state or local  
          seizure and forfeiture.  Adoptions - counted as a subset of  
          equitable sharing - account for about 3% of forfeiture deposits.  
           Total equitable sharing amounts to about 22% of forfeiture  
          deposits.  Thus, approximately 85% of the proceeds of federal  
          forfeiture that goes to state and local agencies is unaffected  
          by the new policy.<1>  


          The policy provides: 


               Federal adoption of property seized by state or local  
               law enforcement under state law is prohibited, except  
               for property that directly relates to public safety  
               concerns, including firearms. Ammunition, explosives  
               and property associated with child pornography.  To  
               the extent that seizures of property other than  
               these?categories are ? considered for federal  
               adoption?such seizures [must be approved by] the  
               Assistant Attorney General for the Criminal Division.   
               ----------------------
          <1>  
          http://www.washingtonpost.com/news/the-watch/wp/2015/01/20/how-mu 
          ch-civil-asset-forfeiture-will-holders-new-policy-actually-preven 
          t/










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               The prohibition ? includes?seizures by state or local  
               law enforcement of vehicles, valuable, and cash,  
               [including currency, checks] stored value cards" and  
               specified other categories

          The policy order allows equitable sharing as follows:   


               This order does not apply to (1) seizures by state and  
               local authorities working together with federal  
               authorities in a joint task force; (2) seizures?that  
               are the result of joint federal-state investigations  
               or that are coordinated with federal authorities as  
               part of ongoing federal investigations; or (3)  
               seizures pursuant to federal search warrant, obtained  
               from federal courts to take custody of assets  
               originally seized under state law.  

          It thus appears that many seizures of property by state and  
          local authorities are still subject to forfeiture under federal  
          law through the equitable sharing process.  It appears that  
          joint task forces and federal-state cooperation in  
          investigations is relatively common.  Just concerning joint task  
          force operations, the Drug Enforcement Administration website<2>  
          explains:
   
               In 2013, the DEA State and Local Task Force Program  
               managed 259 state and local task forces, which  
               included Program Funded, Provisional, HIDTA, and  
               Tactical Diversion Squads. The difference between  
               funded and provisional state and local task forces is  
               that the financial support for funded task forces is  
               provided by DEA headquarters and includes additional  
               resources for state and local overtime. Provisional  
               task forces are supported by the operating budgets of  
               DEA field division offices, without resources from DEA  
               headquarters, and do not include state and local  
               overtime. These task forces are staffed by over 2,190  
               DEA special agents and over 2,556 state and local  
               officers. Participating state and local task force  
               officers are deputized to perform the same functions  
               as DEA special agents.  (Italics added.)



               ----------------------
          <2> http://www.dea.gov/ops/taskforces.shtml








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          5.Federal Asset Forfeiture Proceeds Disbursed to California  
            Agencies 

          The use of federal asset forfeiture - through adoption and  
          equitable sharing - has increased substantially over the past 15  
          years, as demonstrated by the following table.

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          |FEDERAL FORFEITURE DISBURSED    |STATE FORFEITURE DISBURSED      |
          |--------------------------------+--------------------------------|
          |2014 - $77 million              |Data unavailable                |
          |--------------------------------+--------------------------------|
          |2013 - $86                      |2013 - $28 million              |
          |--------------------------------+--------------------------------|
          |2012 - $83                      |2012 - $15                      |
          |--------------------------------+--------------------------------|
          |2011 - $79                      |2011 - $18                      |
          |--------------------------------+--------------------------------|
          |2010 - $76                      |2010 - $16 million              |
          |--------------------------------+--------------------------------|
          |2009 - $60                      |2009 - $38.8                    |
          |--------------------------------+--------------------------------|
          |2008 - $52.4                    |2008 - $25.5                    |
          |--------------------------------+--------------------------------|
          |2007 - $ 42.8                   |2007 - $27.6                    |
          |--------------------------------+--------------------------------|
          |2006 - $42.3                    |2006 - $25.6                    |
          |--------------------------------+--------------------------------|
          |2005 - $26.7                    |2005 - $19.9                    |
          |--------------------------------+--------------------------------|
          |2004 - $31.3                    |2004 - $22.5                    |
          |--------------------------------+--------------------------------|
          |2003 - $24.5                    |2003 - $26.6                    |
          |--------------------------------+--------------------------------|
          |2002 - $24                      |2002 - $25.6                    |
          |--------------------------------+--------------------------------|
          |2001 - $32.8                    |2001 - $25.7                    |
          |--------------------------------+--------------------------------|
          |2000 - $30                      |2000 -                          |
          |                                |$21                             |
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          6.  Argument in Opposition


          The California District Attorneys Association argues in  
          opposition:


               One of our primary missions as an association is to  
               provide training for prosecutors and law enforcement  
               on the ethics and proper use of forfeiture laws.   
               Funding for those trainings comes from Health and  
               Safety Code Section 11489(b)(2)(D), which gives us  
               one-percent distribution of proceeds from forfeiture  
               actions in the state.  SB 443 eliminates that  
               distribution.


               Making sure that those law enforcement officials and  
               prosecutors who engage in the forfeiture process are  
               well trained and ethically prepared to handle  
               forfeiture cases is of great benefit to the public.   
               We fail to see how getting rid of the funding  
               mechanism for those training would be beneficial to  
               anyone involved in forfeiture proceedings.





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