Small businesses need cash to grow. So North Carolina entrepreneur Jerry Johnson came prepared when he flew to Phoenix Sky Harbor International Airport in August 2020 during the COVID-19 pandemic.
He brought $39,500, which he had borrowed and saved from honest labor, to buy a third truck for his Charlotte transportation company. Carrying currency is legal in the United States, and no disclosure is necessary on domestic flights.
Johnson should have been fine. But an informant, possibly an airline employee, alerted the Phoenix Police Department to the presence of cash. When Johnson landed in Arizona, local officers intercepted him in the baggage claim area and took him to an interrogation room.
They did not arrest Johnson, but they seized his money on suspicion of a drug connection. The government then attempted to keep the money permanently using civil forfeiture. The process, which puts property on trial rather than people, allows the government to confiscate and keep cash, cars, and other assets without proving anything in criminal court.
Most civil forfeiture cases end without any type of hearing. Property owners must pay for their own defense, and many cannot afford the expense — especially when attorney fees exceed seizure amounts. So property owners often cut their losses and walk away. Once the process ends, many states allow law enforcement agencies to keep 100% of the proceeds for themselves.
Rather than accept the injustice, Johnson scraped together money to pay an attorney. His trucking enterprise depended on the outcome. Surviving in any economy is difficult, and the challenges increase when cash reserves suddenly disappear during a global pandemic.
Johnson needed a quick win. What he got was a prolonged legal battle.
At a probable-cause hearing in January 2021, a judge ruled that Johnson did not have standing to contest the forfeiture of cash taken from his luggage because he could not prove he was the innocent owner. Johnson appealed with representation from our public interest law firm, the Institute for Justice, and scored a reversal.
Back before the original judge, the state agreed to return Johnson’s money but insisted it should not have to pay his attorney fees or interest at the statutory rate. The judge disagreed and awarded Johnson 9% interest and attorney fees on April 6, 2023.
Civil forfeiture advocates might say the system worked. An innocent man recovered his property and suffered no permanent harm. What they overlook is more than two-and-half years of hardship. Interest payments can alleviate some of the pain, but no one can calculate the true cost of a delayed business investment.
Real justice would have required police and prosecutorial restraint. Civil forfeiture invites the opposite with perverse financial incentives for aggressive enforcement. Even when innocent people fight back and win, they lose months and sometimes years trapped in a rigged system.
Marine veteran Stephen Lara lost his life savings for more than 10 months following a traffic stop in Nevada. California residents Linda Martin and her husband, Reggie Wilder, lost the money they were saving for a home down payment in March 2021, when FBI agents raided the private vault company they were using. More than two years later, they remain in limbo.
The wait has been even longer for New York foster mom Cristal Starling. She lost $8,040 following an apartment raid in 2020 and is still fighting to recover her money. None of these people were arrested or prosecuted. But they suffered long ordeals just the same.
Civil forfeiture abuses will continue as long as state lawmakers tolerate the built-in constitutional violations. North Carolina goes part way. It bans civil forfeiture but provides a massive loophole for state and local agencies. All they have to do if they want to participate in the moneymaking scheme is outsource their cases to U.S. attorneys, who operate under federal laws. The prosecuting agencies take a cut for themselves and return the rest — up to 80% — to their North Carolina accomplices.
New Mexico goes further. It ended civil forfeiture and closed the federal loophole in 2015 — after police trainers were caught on camera teaching officers how to maximize revenue. Law enforcement agencies still can confiscate ill-gotten gains in New Mexico, but they must use criminal forfeiture, which safeguards property rights.
Alarmists predicted crime would rise in New Mexico following the reform. But a 2020 study shows no negative effects. Civil forfeiture does not actually reduce crime. All it does is raise revenue, using stall tactics and other methods to wear down resistance.
Even when innocent property owners win, they lose.