On January 3, 2017, Governor Snyder repealed the law that requires Claimants to post a bond to contest the civil forfeiture of property seized by a state agency. This is a dramatic change from the State’s previous law requiring Claimants to post a bond of 10% of the value of the property seized to contest its forfeiture. The repeal of the bond requirement comes after Shantrese Kinnon successfully challenged Michigan’s law in the Court of Appeals. The Court held that the requirement for a bond was unconstitutional and a violation of Ms. Kinnon’s due process rights because she could not afford to pay the full bond amount to challenge the forfeiture of all of the assets the police seized from her. (In Re: Forfeiture of 2000 GMC Denali, et. al., COA No. 328547 (August 2, 2016)).
The repeal of the bond requirement supplements the other civil forfeiture reform laws in Michigan passed in October 2015 that require local police departments to disclose annually the assets they seize and forfeit, the violations related to the assets forfeited, and, the ultimate disposition of the assets. The October laws also raised the prosecution’s burden of proof to forfeit assets from preponderance of the evidence to clear and convincing evidence. All of these reforms are good for Claimants in a civil forfeiture and a good start to 2017!
On October 17, 2014, the IRS Criminal Investigation Division, the agency involved in investigating forfeiture structuring cases, changed its policy. Its new policy states that the IRS will no longer pursue the forfeiture of funds where structuring is the only alleged illegal activity, unless there are exceptional circumstances.
Structuring occurs when an individual makes bank account deposits in amounts just below $10,000, to avoid the government reporting requirements. Regulations were developed to deter cash transactions from criminal conduct, however the IRS has proven to be hypersensitive in administering this law, and countless innocent people’s bank accounts have been seized simply because of the amounts of their deposits.
Shockingly, several weeks ago, the IRS sent notices to people who had an interest in seized property due to structuring between October 1, 2009 and October 17, 2014 telling the individuals that they may be entitled to the return of property. In addition, people whose assets were seized before October, 2009 can also contact the IRS to see if they are eligible for return of their seized property. If you believe you may be entitled to a refund under these circumstances, please contact me at (248) 799-9100, or email me at JORINRUBIN@COMCAST.NET
In 2012, Sila Luis was charged with healthcare fraud. Before the trial even began, the government froze all of her assets, including $2 million of untainted funds to pay for future debt to the government related to the crime if she were to be convicted. Luis sought release of the untainted funds because they were necessary to pay for her attorney fees. She argued that by denying her access to these untainted funds, the government violated her Sixth Amendment right “to the assistance of counsel for his defense.”
The Supreme Court agreed with Luis. It stated that her fundamental right to hire a lawyer outweighed the government’s interest in guaranteeing that the defendant’s funds are available to pay restitution and fines to the government which may follow her criminal conviction. The Court said that allowing the government to seize innocent assets “would have no obvious stopping place” to allow defendants to hire counsel and therefore, was in violation of the Sixth Amendment.
Luis created an important “constitutional line” “between criminal defendant’s (1) tainted funds and (2) innocent funds needed to pay for counsel.” It prevented the government from freezing a defendant’s assets not linked to the crime and needed to retain legal counsel. Luis is a step in the direction for citizens’ rights. It limits the government’s overreaching pretrial seizure of assets and protects the defendant’s right to retain counsel.