Justices Curb Asset Seizures Tied to Drugs

The Supreme Court reined in one of the federal government’s favorite weapons in the war on drugs, ruling Wednesday that officials may not seize a person’s home or property unless they can show that the owner knew it was tainted by drug profits.

The high court decisively rejected the government’s sweeping claim that it was entitled to seize any property that was linked to illegal drug sales, regardless of how long it had been held or whether the current owner knew of the drug connection.

The 6-3 decision does not shield drug dealers from having all their assets seized. It may, however, protect their relatives, friends and business associates. It will certainly shield persons who buy a house, car or boat from someone they do not know is a drug dealer.

From now on, in federal forfeiture hearings, the key question will be whether the owner of the property had “knowledge” that it was purchased with illegal drug profits.

Defense lawyers, bankers and mortgage lenders, among others, applauded Wednesday’s decision, saying it will ensure that the law punishes only criminals, not those who unwittingly deal with them.

“This is not a victory for drug dealers. It is a victory for property owners,” said Richard Troberman, a Seattle attorney who co-chaired a task force on forfeitures for the National Assn. of Criminal Defense Lawyers.

Although Wednesday’s ruling applies to federal law, state judges are likely to follow it too, Troberman said, because state forfeiture laws were patterned after the federal model.

Justice Anthony M. Kennedy, speaking for the dissenters, derided the ruling and said that it “rips out the most effective enforcement provisions in all of the drug forfeiture laws.”

In the last seven years, federal agents have seized more than $2 billion worth of money and property as part of the war on drugs. This bonanza stemmed from 1978 amendments to the federal anti-drug laws that greatly expanded the government’s power to seize property.

Throughout American history, it has been clear that federal agents could seize money or property from an owner who violated the law. For example, a violation of the Customs Act could result in agents seizing a merchant’s warehouse of imported goods.

But the 1978 drug law also gave U.S. prosecutors the power to seize “all proceeds traceable to” an illegal drug transaction. Thereafter, federal agents could lay claim not only to the drug dealer’s home, bank account and car but also to a home, car or boat that he sold or gave to someone else.

Prosecutors and police praised the law for giving them the power to deal a knockout blow to drug kingpins by seizing all their profits, no matter where they were hidden. Moreover, money from the forfeitures is recycled into the war on drugs.

Officials from several Orange County law enforcement agencies said the court’s decision will have little effect on their operations.

“I don’t really see much impact,” said Orange County Sheriff Brad Gates. “What we will do now is adjust our process of seizure to make sure we can prove that they do in fact know. With the cases we deal with locally, we already do a pretty thorough job on that.”

Ralph Lochridge, spokesman for the Drug Enforcement Agency’s Orange County office, said the federal agency already complies with the guidelines approved by the court.

“It really doesn’t change the actual working rules that we’ve been under,” Lochridge said. “We are not in the business of taking property from people who are innocent or ignorant of the fact that money came from drugs, we are in the business of taking assets away from drug traffickers so they can’t operate any longer.”

Garden Grove Police Chief Stanley L. Knee said, “I think in the last several years, we have become conscious of doing the right thing and have been meeting a higher standard than what the law requires.”

California has its own forfeiture law, which has brought in more than $130 million since 1988.

In recent years, however, a chorus of complaints has arisen from landlords, homeowners and others who had their property seized.

Criminal defense lawyers charged that prosecutors were abusing their power by seizing the property of innocent people. Even the American Bankers Assn. and the Mortgage Bankers Assn. joined in the complaints because U.S. prosecutors were asserting that the government--rather than the legal deed holder--held title to any property whose purchase was “traceable” at some time to illegal drugs.

Times staff writer Greg Hernandez contributed to this story.