If it has not already happened, you may someday have a client who asks you for return of property seized by the federal government. The client might be an innocent owner who let someone borrow their property or an innocent lienholder who did not know the property was at risk of being seized. You could seek return of the property in the administrative forfeiture proceeding, but for the U.S. Department of Justice (DOJ) agency forfeitures, you should almost always pursue a judicial forfeiture proceeding by filing a claim.

            Federal forfeitures are complicated. Generally, there are three ways to forfeit property: administrative (non-judicial, in rem), civil (judicial, non-conviction, in rem) and criminal (judicial, post-conviction, in personam).[1] “No single law authorizes federal criminal forfeiture.”[2] Instead, there are multiple federal statutes, regulations and procedures applicable to forfeitures.[3] The DOJ Asset Forfeiture Policy Manual states, “The administrative forfeiture process promotes the efficient allocation of Department resources and discourages undue burdens on the federal judicial system while affording interested parties a prompt resolution through the remission process.”[4] Usually, federal forfeitures begin as an administrative proceeding.

ADMINISTRATIVE FORFEITURES

            The vast majority of all federal forfeitures begin and end as an administrative proceeding because they are uncontested.[5] In an administrative forfeiture, an individual may submit a “Petition for Remission or Mitigation” or file a “Claim.”[6] A petition offers an expedited administrative procedure to informally seek return of property without judicial action.[7] A petition does not contest the forfeiture, while a claim initiates the judicial process to decide whether the property should be forfeited.[8]

            The problem with administrative federal forfeitures arises because for some federal agencies, there is no right after denial to proceed in court or appeal. Petitions do not contest the forfeiture, but they are like pardons in that they are discretionary.[9] “Congress granted complete discretion to the Attorney General to remit or mitigate forfeitures as an ‘act of grace,’ and no judicial review of remission decisions is available.”[10] Courts “may only determine whether the agency followed the applicable procedural requirements prior to forfeiting the property.”[11] As a result, if the reviewing forfeiture officer denies the petition for an arbitrary or incorrect reason, there is little the claimant can do to contest the denial other than for improper notice.[12] Whether the discretionary treatment of administrative petitions is a problem depends on the seizing agency’s regulations. Under DOJ and its sub-agency[13] regulations, there is no right to proceed in court after a petition denial and no right to appeal like you can do in court. Conversely, U.S. Customs and Border Protection (CBP) regulations do allow the claimant to proceed in court after petition denial.[14]

COMPARING DOJ AND CBP ADMINISTRATIVE FORFEITURE PROCEDURES

            In both cases, after a seizure, DOJ and CBP will send a seizure notice that details the possible actions a claimant may take and that cites relevant statutes and regulations. DOJ seizures rely on 28 C.F.R. Parts 8 and 9. CBP seizures rely on 19 C.F.R. Parts 161 and 171.

            The DOJ’s seizure letter explains that a claimant may 1) “request a pardon of the property” by filing a petition for remission or mitigation, 2) “contest the forfeiture” by filing a claim or 3) request a hardship release of property.[15] In support, the FBI seizure letter cites 18 U.S.C. §§983, 1001, 1621; 19 U.S.C. §§1602-1619; 28 U.S.C. §1746; 28 C.F.R. Parts 8 and 9. The Drug Enforcement Administration seizure letters additionally cite 21 U.S.C. §881.[16] It is important to notice in the two pages of single-spaced, small text, the letter states, “If you do not file a claim, you will waive your right to contest the forfeiture of the asset. Additionally, if no other claims are filed, you may not be able to contest the forfeiture of this asset in any other proceeding, criminal or civil.”[17] Although the DOJ’s letter does not explicitly say a claimant has no right to appeal a petition denial, it does say the claimant cannot contest the forfeiture if the claimant does not file a claim. The deadline to file a petition is 30 days from receipt of the seizure letter while to file a claim is 35 days from the date of the seizure letter.[18] Under DOJ regulations, filing a claim requires the agency to stop the administrative forfeiture proceeding and either return the property or transmit the claim to the U.S. Attorney’s Office for judicial proceedings.[19] Because the deadlines to file a petition or claim end about the same time, it is not possible under DOJ regulations to wait for a decision on the petition before filing a claim to force judicial proceedings. This means the claimant must file a claim in order to protect their rights to judicial review and avoid a discretionary denial of the request to return property.

            In contrast to DOJ procedures, CBP seizure letters use a different form than DOJ letters but explain a similar procedure.[20] CBP letters also provide for filing a petition or claim but also suggest a compromise offer, abandonment or taking no action at all.[21] In support, CBP letters cite 18 U.S.C. §983; 19 U.S.C. §§1614, 1617, 1618; 19 C.F.R. Parts 161 and 171.[22] The deadline to file a petition with CBP is 30 days from the date of the seizure letter.[23] However, the CBP letter states the claimant can file a claim requesting referral to the U.S. attorney within 60 days after a petition denial.[24] The CBP regulations do not actually provide a claim deadline expiring after petition denial, but 18 U.S.C. §983(a)(2)(B) provides that the claim deadline is the date set forth in the seizure letter.[25] Therefore, a claimant of property seized by the CBP does not have to immediately file a claim in order to preserve the right to judicial review of the forfeiture and related appeal.

JUDICIAL FORFEITURES

            A claim forces the seizing agency to refer the matter for civil or criminal judicial forfeiture proceedings, and failure to do so after a certain time requires releasing the property.[26] Specifically, 18 U.S.C. §983(a)(3) provides that the government must release the property unless it files a civil complaint, obtains a criminal indictment containing forfeiture allegations or otherwise takes appropriate steps to preserve its right to maintain custody of the property per the applicable criminal forfeiture statute.[27] Civil judicial forfeiture proceeds according to the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions and the Federal Rules of Civil Procedure.[28] Criminal judicial forfeiture proceeds under 21 U.S.C. §853 and Federal Rule of Criminal Procedure 32.2, and third parties may assert interests under §853(n).[29] In a criminal forfeiture, the forfeiture determination is not made until after the verdict or plea of guilty, and the determination of third-party interests are deferred until even later.[30] Thus, while filing a claim may be necessary to protect the right of judicial review, resolution and return of property will likely take longer in a judicial forfeiture proceeding than an administrative proceeding.

CONCLUSION

            In certain situations, such as for innocent lienholders, the government does not usually deny administrative petitions for remission. But because there is no right to review petition denial or for subsequent judicial proceedings in DOJ forfeitures, claimants should always file claims after DOJ seizures. It is just good business (and a way to avoid a potential malpractice claim). The claim forces the forfeiture into court, giving the claimant the opportunity for judicial review by law instead of discretionary administrative review.

            The contents of a petition and a claim are sufficiently similar that they can be drafted in tandem. The DOJ may still consider remission or settlement concurrently with a judicial proceeding, so it is still worth filing both a petition and a claim.[31] The additional time to prepare both documents is relatively short as the claimant can utilize similar answers in both documents. However, with CBP, there is no need to file a claim unless the petition is denied because the CBP letter currently allows for filing a claim after denial of the petition.

            While the government’s desire to avoid unnecessarily burdening the courts or wasting resources is admirable, claimants must be aware that the DOJ’s rules make administrative forfeitures a potentially risky proposition. Failing to pursue judicial forfeiture means the claimant is ultimately trusting an unknown agency employee to exercise discretion in the claimant’s favor.[32] Additionally, sometimes pursuing judicial forfeiture can make the government view the proceeding as more trouble than it is worth. For example, in one instance after a lienholder filed a claim, the DOJ withdrew its interest in the property even though there was substantial positive equity available to the DOJ after satisfying the lien. If the DOJ really does desire to save time and avoid judicial forfeiture proceedings, then all the DOJ has to do is change the seizure notice letter form to provide a claim deadline after petition denial similar to the CBP’s seizure notice letter.[33] Until then, when in doubt, file a claim.

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ABOUT THE AUTHOR

Spencer T. Habluetzel is an attorney at the Oklahoma City law firm of Hall & Ludlam PLLC. He practices compliance along with general civil trial and appellate litigation, including in commercial, consumer, personal injury and business litigation. He can be contacted at spencer@okcfirm.com.

 

 

 

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ENDNOTES

[1] Stefan D. Cassella, Asset Forfeiture Law in the United States §1-4, at 9 (2016); “Types of Federal Forfeiture,” justice.gov, available at www.justice.gov/afms/types-federal-forfeiture.

[2] Heather J. Garretson, “Federal Criminal Forfeiture: A Royal Pain in the Assets,” 18 S. Cal. Rev. L. & Soc. Just. 45, 48 (2008).

[3] An in-depth discussion of all the various laws relating to federal forfeitures and distinctions between them is beyond the scope of this article. However, a great resource is Cassella’s Asset Forfeiture Law in the United States, supra.

[4] Asset Forfeiture Policy Manual at 68 (2021).

[5] Cassella, supra §1-4, at 10.

[6] 37 C.J.S. Forfeitures §35.

[7] United States v. Von Neumann, 474 U.S. 242, 250 (1986); 37 C.J.S. Forfeitures §35.

[8] 18 U.S.C. §983(a)(3); Cassella, supra §4-6, at 144. Criminal forfeitures are handled in 21 U.S.C. §853(n); 37 C.J.S. Forfeitures §35.

[9] 37 C.J.S. Forfeitures §35.

[10] Asset Forfeiture Policy Manual at 155 (2021).

[11] United States v. Shigemura, 664 F.3d 310, 312 (10th Cir. 2011).

[12] Cassella, supra §5-2, at 179-183; 18 U.S.C. §983(e)(5).

[13] For example, DOJ subagencies include the Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA) and Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE). See www.justice.gov/agencies/chart.

[14] The CBP is a sub-agency of the Department of Homeland Security. See https://bit.ly/40TcDAM.

[15] An example of an FBI seizure notice is available here: https://bit.ly/3jPDCMW.

[16] An example of a DEA seizure notice is available here: https://bit.ly/3jMZZmd.

[17] Id. at 2 ¶II.

[18] Id. at 1 ¶I. B., 2 ¶II. B.; 28 C.F.R. §8.10(a); 18 U.S.C. §983(a)(2)(B).

[19] Id. at 2 ¶II. G; 28 C.F.R. §8.10(e); 18 U.S.C. §983(a)(3).

[20] An example of a CBP seizure notice is available here: https://bit.ly/3YqDe6l.

[21] Id. at 1-3.

[22] Id. at 1-5.

[23] Id. at 1.

[24] Id. at 2, 5; 19 C.F.R. §162.94(b); 18 U.S.C. §983(a)(2)(B).

[25] 19 C.F.R. §162.94(b); 18 U.S.C. §983(a)(2)(B).

[26] 18 U.S.C. §983(a)(3); Cassella, supra §4-6, at 144. Criminal forfeitures are handled in 21 U.S.C. §853(n).

[27] 18 U.S.C. §983(a)(3).

[28] Id.; Fed. R. Civ. P. tit. XIII, R. A.

[29] 21 U.S.C. §853; Fed. R. Crim. P. 32.2.

[30] Fed. R. Crim. P. 32.2(b).

[31] Supra, note 16 at 2 ¶II. G.; 28 C.F.R. §9.4.

[32] See 28 C.F.R. §9.1(b) (describing who has authority to grant remission and mitigation).

[33] 18 U.S.C. §983(a)(2)(B) (stating the claim deadline is based on the deadline in the personal notice letter); 28 C.F.R. §8.10(a).