SACRAMENTO / BRADLEY INMAN : Commit a Crime, Lose Your Ox (Or, Perhaps, Some Other Asset)

Law enforcement officials sometimes turn to the Bible to defend the practice of seizing drug dealer’s assets.

A Federal Drug Enforcement Agency guide cites Exodus: “If an ox gore a man or a woman, that they die, then the ox shall be surely stoned and the owner of the ox shall be quit.”

The DEA’s interpretation is that the owner pays for the crime by losing the asset--in this case the ox.

The Legislature is using similar reasoning in passing laws that permit the state to seize property and assets from convicted white-collar criminals. Lawmakers have approved bills that would encourage asset forfeiture for computer virus perpetrators. They are considering similar legislation on health scam promoters and crooked thrift executives.

The legislative trend arouses concerns about civil liberties, raises questions about how the state funds its regulatory agencies and has prompted a passionate debate in Sacramento.

Even unlicensed taxicab drivers are the target of an asset-forfeiture bill that was approved in the Assembly and is pending in the Senate. Introduced by Assemblyman Steve Peace (D-Chula Vista), AB 3476 would permit the city to seize the driver’s automobile until the fine is paid. If the fine should go unpaid for six weeks the city could take action to sell the vehicle.

Last year, the Legislature approved a bill that would permit computers used in computer crimes to be confiscated. This year, AB 3642, authored by Assemblyman Pat Johnston (D-Stockton), would provide for asset forfeiture in cases of savings and loan fraud. The measure, part of a larger restructuring of the thrift industry, has been approved by the Senate and is pending in the Assembly.

“One reason that this legislature is turning to asset forfeiture in cases of white-collar crime is that the existing penalties aren’t sufficient to discourage the offense,” said Steve Suchil, consultant to the Assembly Finance and Insurance Committee. “A $10,000 fine isn’t anything to some of these people,” he said.

Some lawmakers view asset forfeiture as poetic justice--a fair way to force the black market economy to pay its share. They believe that, “if someone has made a tremendous amount of money from an illegal activity, then the state should step in to take those ill-gotten gains,” said James Provenza, counsel to the Senate Judiciary Committee.

But critics warn that the concept is being expanded in a way that gives powers to the state that it shouldn’t have.

“Asset forfeiture is a way to wipe out people’s rights, it has no place in a free society,” said Humboldt County defense attorney Ron Sinoway, who tries to help clients recover seized property.

Detractors also argue that the push for asset forfeiture does nothing to prevent the crime.

“Don’t you think going to state prison is more likely to deter a crime than seizing property?” asked Melissa Nappan, a lobbyist for California Attorneys for Criminal Justice, which represents criminal attorneys and opposes asset forfeiture bills.

Critics say property-seizure legislation is a ploy for financing under-funded government programs.

“The state government is not funding these agencies at a level necessary to do the proper oversight and licensing,” said San Jose attorney Philip Pennypacker, who has defended businesses that face asset forfeiture proceedings. “To make up for the deficit, they look to asset forfeiture.”

One example is SB 2872 introduced by Sen. Marian Bergeson (R-Newport Beach), which would enact a forfeiture scheme for companies that fraudulently promote drugs and devices, which, for example, might promise to cure cancer or AIDS.

The Bergeson bill would enable the State Department of Health Services to seize assets of companies that break specific laws regulating the promotion of health recovery drugs and programs. Fifty percent of the proceeds from sale of confiscated property would go to the health department and the rest would be turned over to the county prosecuting the case.

“In a strange sort of way, it’s a user fee,” said Mike Pinkerton, chief counsel to the Assembly Public Safety Committee. “The criminals create the mess so they are charged with cleaning it up.”

Though the Bergeson bill is stalled, large biotechnology firms such as Genentech are still concerned about the proposal.

“If any one of the 30 violations are alleged to have occurred, then the state could come in and seize a legitimate company’s entire manufacturing operation,” said Genentech lobbyist David Nagler. “Sure, it’s aimed at serious violations . . . but the way the bill is written, your assets could be seized for mislabeling violations and record-keeping problems,” he said.

A Bergeson spokesman said the bill is not directed at legitimate companies that violate minor health code infractions.

Moreover, supporters of asset forfeiture claim adequate protections are provided in the bills.

“The intent is not to clean out someone’s assets over and above what they stole,” said legislative consultant Suchil who helped craft the savings and loan bill. “A prosecutor must first establish beyond a reasonable doubt that the property being seized is derived from thrift fraud,” he said.

Asset seizure can be traced to the crackdown on drug dealers. The first law was part of the Federal Crime Control Act of 1984 and the statute was strengthened in 1988. The California Legislature approved its own asset forfeiture law the same year.

Pennypacker blames the trend on a lack of diligence on the part of federal and state lawmakers. “The Legislature didn’t do enough in the beginning to prevent these crimes so now they double punish the criminal to redeem themselves,” he said. This explains why asset forfeiture is often introduced with “trendy crimes” such as the thrift bill and the computer virus measure, according to Pennypacker.

But once the option is in place, law enforcement becomes “ecumenical” about defending asset seizure, says Pinkerton. “There is nothing more sensitive than legislation that proposes to change the asset forfeiture laws.”