BILL ANALYSIS Ó SB 443 Page A Date of Hearing: July 14, 2014 Counsel: David Billingsley ASSEMBLY COMMITTEE ON PUBLIC SAFETY Bill Quirk, Chair SB 443(Mitchell) - As Amended June 2, 2015 As Proposed to be Amended in Committee SUMMARY: Requires additional due process protection in cases where the State of California seeks to forfeit assets in connection with specified drug offenses. Changes the process concerning how money or property forfeited under federal forfeiture law is distributed to state or local law enforcement. SB 443 Page B Specifically, this bill: 1)States that it shall be necessary to obtain a criminal conviction for the unlawful manufacture or cultivation of any controlled substance or its precursors in order to recover law enforcement expenses related to the seizing or destroying of illegal drugs. 2)Specifies that state and local law enforcement authorities shall not refer, or otherwise transfer, property seized under state law to a federal agency seeking the adoption of the seized property. 3)Clarifies that language of this bill does not prohibit the federal government from seeking forfeiture under federal law, or sharing proceeds from federal forfeiture proceedings with state and local law enforcement in those situations where there are joint investigations. 4)States that all property, money, or other things of value received by any state or local law enforcement agency pursuant to any federal law that authorizes the sharing or transfer forfeited property to a state or local law enforcement agency shall be promptly transferred, sold, and distributed through the State Asset Forfeiture Fund for Law Enforcement Purposes. 5)Creates the State Asset Forfeiture Fund for Law Enforcement Purposes where money or property received by state or local law enforcement based on any federal law that authorizes sharing of forfeited property will be deposited. Money from the fund will be distributed primarily for criminal justice SB 443 Page C purposes and the courts. 6)Provides that the money in the State Asset Forfeiture Fund for Law Enforcement Purpose shall be distributed as follows: a) To the state agency or local government for costs incurred by it in connection with the sale of the property, including expenditures for any necessary costs for public notice, hearings, or for any necessary repairs, storage, or transportation of any property lawfully forfeited; b) The remaining funds shall be distributed as follows: i) Twenty four percent (24%) to the General Fund; and, ii) Seventy six percent (76%) to the State Asset Forfeiture Fund for Courts and Criminal Justice Purposes to be made available, upon appropriation by the Legislature, for purposes of criminal and civil court functions, prosecution, public defense and indigent defense, law enforcement, crime prevention including afterschool programs for adolescents and drug treatment for adolescents and adults, and victim services. 7)Provides that a state or local law enforcement agency may not receive forfeited property or proceeds from property forfeited pursuant to federal law unless a defendant is convicted in an underlying or related criminal action of a specified offense, or any offense under federal law that includes all of the elements of a specified California offense. SB 443 Page D 8)Requires a conviction on the related, specified criminal charge to forfeit property in every case in which a claim is filed to contest the forfeiture of property, unless the defendant in the related criminal case willfully fails to appear for court. 9)Requires proof beyond a reasonable doubt in all forfeiture cases which are contested. 10)States that if the defendant in the related criminal matter is represented by court-appointed counsel, the trial court shall appoint counsel for the defendant in the forfeiture proceeding. 11)Specifies that in any forfeiture proceeding in which the defendant or claimant substantially prevails, the defendant or claimant shall be entitled to recover reasonable attorneys' fees and other litigation costs reasonably incurred by the defendant or claimant. 12)Allows forfeiture of property less than $25,000 if notice of the forfeiture has been provided, as specified, and no claims have been made. 13)Specifies that property less than $25,000, which has been forfeited because no claim has been made on the property, will be disposed of in the manner required by State Asset Forfeiture Fund for Law Enforcement Purposes. SB 443 Page E 14)Allows more time to make a claim contesting forfeiture. 15)Allows property of $25,000 or more to be forfeited through a judicial process when no claim to the forfeited property has been made within the specified time. Requires property forfeited in this manner will be disposed as directed by State Asset Forfeiture Fund for Law Enforcement Purposes. 16)Any property forfeited after a contested forfeiture hearing with be disposed of with 40% going to state and local law enforcement groups that participated in the seizure, 24% to the general fund, 34% to the State Asset Forfeiture Fund for Courts and Criminal Justice Purposes, 1% to nonprofit group of prosecutors to provide forfeiture education, 1% to nonprofit group of criminal defense attorney to educate on forfeiture. 17) Each year, the Attorney General shall publish a report which sets forth the following information for the state, each county, each city, and each city and county: a) The number of forfeiture actions initiated and administered by state or local agencies under California law, the number of cases adopted by the federal government, and the number of cases initiated by a joint federal-state action that were prosecuted under federal law; b) The number of cases and the administrative number or court docket number of each case for which forfeiture was ordered or declared; SB 443 Page F c) The number of suspects charged with a controlled substance violation; d) The number of alleged criminal offenses that were under federal or state law; e) The disposition of cases, including no charge, dropped charges, acquittal, plea agreement, jury conviction, or other; f) The value of the assets forfeited; and, g) The recipients of the forfeited assets, the amounts received, and the date of the disbursement. EXISTING LAW: 1)Establishes an asset-forfeiture procedure for drug-related cases. (Health & Saf. Code, §§ 11469-11495.) SB 443 Page G 2)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.) 3)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 in cases where the value of the forfeited property is under $25,000. (Health & Saf. Code, § 11488.4, subd. (i)(3).) 4)Specifies that forfeiture 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).) 5)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).) 6)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, 24% to the General Fund, and 1% to nonprofit group of prosecutors to provide forfeiture education. (Health & Saf. Code § 11489.) SB 443 Page H 7)Requires the Department of Justice (DOJ) to publish an annual report detailing specified information on forfeiture actions. (Health & Saf. Code, § 11495, subd. (c).) FISCAL EFFECT: Unknown. COMMENTS: 1)Author's Statement: According to the author, "SB 443 will reign in abuses surrounding the practice to civil asset forfeiture, and reestablish the most basic tenets of Constitutional law and values, requiring that in most cases, a defendant be convicted of an underlying crime before cash or property can be permanently seized. This bill will require that more drug asset forfeiture cases be handled under state law, rather than transferred to federal courts, and that seized assets are dispersed to local law enforcement agencies, courts, defenders, prosecutors and the General Fund, pursuant to state law." 2)Differences in California and Federal Forfeiture Law: Compared to California law, Federal law gives law enforcement more power and puts fewer burdens on the government before property is forfeited. Some ways in which California and federal provisions differ are: a) Administrative forfeiture: While state law limits cases involving personal property worth $25,000 or less, under federal law administrative forfeiture is available for any amount of currency and personal property valued at $500,000 SB 443 Page I or less, including cars, guns, and boats. [19 U.S.C. Section 1607(a).] b) Burden of proof: Under federal civil forfeiture law, the government's burden of proof is "preponderance of the evidence." [18 U.S.C. Section 983(c)(1).] This is a lower standard than the "beyond a reasonable doubt" standard used in California. c) Conviction: In contrast to California law, federal civil forfeiture law does not require a conviction in any cases. (18 U.S.C. Section 981.) d) Use of forfeited assets: Under federal law, a seizing agency can use the seized asset or transfer it to a state or local agency that participated in the proceedings. [18 U.S.C. Section 881(e)(1)(A).] Direct use of the forfeited asset is disallowed under state law. 3)Three Exceptions to the California Requirement that Forfeiture Action Must Have a Conviction: a) The forfeiture of cash or negotiable instruments whose value is at least $25,000. (Health & Saf. Code 11488.4, sud. (i)(4)-(5).) b) When the defendant in the underlying criminal case is also the claimant in the forfeiture action and willfully fails to appear in the criminal case. Application for forfeiture must be approved by a judge. The prosecution must provide notice of its application for entry of default to the defense attorney and make a showing of due diligence to locate the defendant. (Health & Saf. Code 11488.4, sud. (k).) c) When no one files a claim contesting the forfeiture. (Health & Saf. Code 11488.4, sud. (i)(1)-(3).) SB 443 Page J 4)Federal Law on Sharing Forfeiture Proceeds with State and Local Law Enforcement Agencies: Section 881(e)(3) of Title 21, United States Code, provides that: The Attorney General shall assure that any property transferred to a State or local law enforcement agency? (A) has a value that bears a reasonable relationship to the degree of direct participation of the State or local agency in the law enforcement effort resulting in the forfeiture, taking into account the total value of all property forfeited and the total law enforcement effort as a whole; and with respect to the violation of law on which the forfeiture is based; and (B) will serve to encourage further cooperation between the recipient State or local agency and Federal law enforcement agencies 5)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> --------------------------- <1> http://www.washingtonpost.com/news/the-watch/wp/2015/01/20/how-much-civil-asset-forfeiture-will-holders-new-policy-actually-preve nt/ SB 443 Page K 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. 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 -------------------------- <2> http://www.dea.gov/ops/taskforces.shtml SB 443 Page L 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.) 6)Proposed Amendments: The proposed amendments attempt to address some of the concerns that have been articulated by district attorney offices and other stakeholders. The proposed amendments permit forfeiture in cases where the defendant willfully fails to appear in his or her criminal court proceedings. The proposed amendments eliminate earlier language which would have provided that 5% of the proceeds of forfeited property go to the public defender office in county in which the forfeiture proceeding was initiated. Concerns had been articulated that if public defender offices received money directly connected to their defense of forfeiture actions, there would be a conflict of interest. The proposed amendments also eliminate money going directly to the district attorney offices that processes the forfeiture action, to remove any similar conflict of interest. Similar concerns have been raised regarding law enforcement agencies who are currently the direct beneficiary of any successful forfeiture action in which they are involved. As an alternative, the proposed amendments create the State Asset Forfeiture Fund for Law Enforcement Purposes. The proposed amendments direct that money and property forfeited through federal law which is shared with state and local law SB 443 Page M enforcement agencies be distributed through that fund. The proposed amendments also direct that money or property forfeited because no person makes a claim to challenge the forfeiture, will go through the same fund. Forfeited property and money received by state or local law enforcement from federal authorities as part of equitable sharing or other federal program will be deposited in the State Asset Forfeiture Fund for Law Enforcement Purposes to be distributed to law enforcement agencies statewide based on the population of the jurisdiction they serve. Forfeited property and proceeds obtained through California forfeiture process when no individual files a claim with distributed through the State Asset Forfeiture Fund for Law Enforcement Purposes in the following manner: Reimburse law enforcement agencies and local government for any costs related to the forfeited property; remaining money in the fund will to distributed to the General Fund (24%) and to the State Asset Forfeiture Fund for Courts and Criminal Justice Purposes (76%) to fund law enforcement, criminal and civil courts, prosecution and public defense, crime prevention, drug treatment and victim services. 7)Argument in Support: According to Drug Policy Alliance, "SB 443 would reestablish the most basic tenets of Constitutional law and values, requiring that in most cases, a defendant be convicted of an underlying crime before cash or property can be permanently seized. It will require that more drug asset forfeiture cases be handled under state law, rather than transferred to federal courts, and that seized assets are dispersed to local law enforcement agencies, courts, defenders, prosecutors and the General Fund, pursuant to state law. "From 2002 to 2013, the vast majority of assets seized by law enforcement agencies in California were steered into the federal courts. From 2002 to 2013, the annual revenue from asset forfeiture to law enforcement coffers in California SB 443 Page N pursuant to state actions, state laws and through state courts, remained stable at approximately 18.3 million dollars. However, assets seized from California residents and revenue provided to California law enforcement agencies through federal courts and pursuant to federal laws more than tripled from 2002 to over $100 million dollars per year in 2012 and 2013. SB 43 by Senator Mitchell will create conditions whereby most cases will remain in our state courts and be prosecuted according to the laws of California, which have superior due process standards and property rights protections, including protection of guiltless spouses and family members. And importantly, Senator Mitchell's bill provides that in state law, there will be no permanent loss of property or cash without a conviction for the underlying criminal case. "Furthermore, SB 443 will eliminate the current fiscal incentives offered by the federal government that rewards California law enforcement agencies for steering cases into the federal process. Under current law, the federal Department of Justice of Department of Treasury may seize property and cash, and force permanent forfeiture without charging a person with any crime, or seeking a conviction. And under federal law and so-called "equitable sharing," the local law enforcement gets an 80% slice of the forfeiture, even when there was no criminal conviction. Under Senator Mitchell's bill, local law enforcement entities will only receive revenue from seizure and forfeiture, if the federal government convicts the defendants. "Whatever its original intent, there is a growing bipartisan consensus that civil asset forfeiture has turned into government run amok and that reform is urgently needed to protect common people from unconstitutional overreach. Civil asset forfeiture was originally conceived as a way to drain resources away from drug 'kingpins', these programs have been perverted into an ongoing attack on low-income individuals and families who are unable to afford to fight the federal government in civil court. Furthermore, despite federal laws SB 443 Page O and guidelines that intended to insure non-supplantation, civil asset forfeiture has become a relied upon source of funding for law enforcement agencies all across the state. Civil asset seizure was never intended to be a primary funding source for law enforcement, and the fact that it has evolved into such has not only led to greater abuses, but also an unhealthy and growing overreliance on it." 8)Argument in Opposition: According to the Los Angeles County District Attorney's Office, "SB 443 would require that federally received asset forfeiture monies be distributed according to state rather than federal law. The language contradicts federal law and policy relative to the US Department of Justice (DOJ) Equitable Sharing Program. Our county participates in numerous coordinated efforts to address large scale unlawful narcotics operations. These efforts involve federal, state and local law enforcement. We believe that the conflict of law created by SB 443 may jeopardize our ability to share in the proceeds of recovered assets and to participate in these important anti-drug task forces. "Current law does not require a criminal conviction for drug asset forfeiture where the property to be forfeited is cash or a negotiable instrument worth $25,000 or more. SB 443 would require a criminal conviction in these cases. This is problematic as many criminals fail to file a claim for large amounts of drug money in order to avoid criminal prosecution. In these cases, it is fairly clear that the seized asset is drug money but asset forfeiture would no longer be available in cases where the defendant cannot be prosecuted (possibly because he or she has fled the jurisdiction or witnesses are unavailable to testify). "SB 443 reduces the amount of forfeited assets that may be distributed to law enforcement and prosecutors, thus hurting our ability to fund future anti-drug efforts. Loss of these funds could make it difficult to investigate and prosecute major illicit drug operations in California. SB 443 Page P "SB 443 provides for a portion of asset forfeiture proceeds to go to public defenders offices and provides for the appointment of the public defender to represent the claimants when they have been appointed in the related criminal case. This will create a conflict for public defenders as they will financially benefit from forfeitures that they will now be tasked with opposing. "SB 443 provides for payment of attorney fees to the prevailing party in asset forfeiture cases. However, there is no source of revenue identified to pay these fees. This could result in a drain upon county general funds or, alternatively, result in a reluctance to pursue valid cases, due to the risk to the county budget." 9)Prior Legislation: a) AB 639 (Norby), Legislative Session of 2011-2012, would have changed drug asset forfeiture law to discourage federal adoption of such cases. AB 639 died in Senate Appropriations Committee. b) SB 1866 (Vasconcellos), Legislative Session of 1999-2000, would have made changes in asset forfeiture transfers, shifts distribution of money from forfeited property and required the Attorney General to publish electronic reports. SB 1866 was vetoed. c) AB 114 (Burton), Chapter 314, Statutes of 1994, provided guidelines for the use of asset forfeiture. REGISTERED SUPPORT / OPPOSITION: SB 443 Page Q Support American Civil Liberties Union of California (Co-Sponsor) Drug Policy Alliance (Co-Sponsor) Institute for Justice (Co-Sponsor) A New Path Alpha Project Americans for SafeAccess Amity Foundation Asian Americans Advancing Justice Asian American Drug Abuse Program Broken No More California State Conference of the NAACP California Prison Focus California Public Defenders Association Californians United for a Responsible Budget Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA) Courage Campaign Dignity and Power Now FACTS Education Fund Friends Committee on Legislation of California Further The Work Immigrant Legal Resource Center Inland Empire Immigrant Youth Coalition Justice Fellowship Justice Not Jails Law Enforcement Against Prohibition Lawyers Committee for Civil Rights of the San Francisco Bay Area SB 443 Page R Legal Services for Prisoners with Children LIUNA Locals 777 & 792 Los Angeles Regional reentry Partnership Marijuana Policy Project National Organization for the Reform of Marijuana Laws New Way of Life Re-Entry Project R Street Insitute San Diego Organizing Project Tarzana Treatment Centers, Inc. Western Center on Law and Poverty Westward Liberty William C. Velasquez Institute 20 Law Professors Opposition Association of Deputy District Attorneys Association of Los Angeles Deputy Sheriffs California Association of Code Enforcement Officers California College and University Police Chiefs Association California District Attorneys Association California Police Chiefs Association California Narcotic Officers Association California State Lodge, Fraternal Order of Police California State Sheriffs' Association George Gascon, District Attorney, City and County of San Francisco Nancy O'Malley, District Attorney, Alameda County Los Angeles County District Attorney's Office Los Angeles County Professional Police Officer Association Los Angeles Police Protective League Long Beach Police Officers Association Riverside Sheriff's Association SB 443 Page S Sacramento County Deputy Sheriffs' Association San Diego County District Attorney Ventura County District Attorney Analysis Prepared by:David Billingsley / PUB. S. / (916) 319-3744