High Court Weighs Definition of ‘Excessive Fine’ in Customs Case

It sounds like a startling proposition: a $357,000 fine for failing to fill out a government report.

Nonetheless, a Justice Department lawyer defended the notion before the Supreme Court on Tuesday.

In 1994, U.S. customs officers found the cash, $357,144 in all, hidden in the suitcases of a Hollywood service station owner and his wife as they were boarding an international flight leaving Los Angeles International Airport. Although it is legal to take cash out of the United States, federal law requires travelers to declare amounts over $10,000.

The government’s seizure of the suitcase full of otherwise legal currency is a “permissible punishment for a serious criminal offense” of failing to file the required report declaring the cash, Assistant Solicitor Gen. Irving Gornstein told the high court. The fine, though large, does not violate the Constitution’s limit on “excessive fines,” he added.

Government lawyers maintain that the forfeiture laws permit them to seize an unlimited amount of unreported money, regardless of whether the owner is otherwise innocent of any wrongdoing.

“It seems a little odd” to say that unlimited amounts can be seized for even trivial offenses, said Justice Sandra Day O’Connor. “Suppose we don’t share your enthusiasm for this approach?” she asked.

The Constitution suggests that the punishment should fit the crime, she suggested.

If unlimited forfeitures are permitted, why cannot the government demand the total forfeiture of a taxpayer’s unreported income? asked Justice David H. Souter. Under current law, a taxpayer would pay a fine and a penalty for failing to disclose income. The money in dispute is not subject to forfeiture, he noted.

“Under your theory, we would be opening the door to a total forfeiture of unreported income,” Souter said.

Sitting in the court was Hosep K. Bajakajian, the Hollywood service station owner whose cash was seized three years ago and kept by the government. During a hearing before a federal judge in Los Angeles, Bajakajian provided proof that the cash had been earned or borrowed from friends.

He testified that he was taking it to Syria to repay relatives who helped him get started in business.

His attorney, James E. Blatt of Encino, agreed that Bajakajian was properly fined $5,000 for failing to file a report at the airport. He did not even object to a $15,000 forfeiture ordered by the judge.

But forfeiture of the entire amount is “grossly disproportionate” to his offense, Blatt argued.

“This money was lawfully obtained and it was being used for a lawful purpose,” he said. “If this was laundered money or he was trying to avoid taxes, the forfeiture would make sense.”

Four years ago, in something of a departure, the high court ruled for the first time that forfeitures could be limited by the 8th Amendment’s ban on “cruel and unusual punishment [and] excessive fines.”

Since then, however, the justices have not defined what is “excessive.” That is the question raised directly in the case (United States vs. Bajakajian, 96-1487) being argued Tuesday.

The justices appeared closely divided.

Chief Justice William H. Rehnquist and Justice Antonin Scalia agreed with the government lawyer that unlimited forfeitures were permitted. Under the long tradition of customs law, a dealer who ships a valuable diamond across the border without paying duties loses the diamond, Scalia said. It may sound unfair but that is the law, he asserted.

But O’Connor and Souter, joined by Justice Stephen G. Breyer, seemed determined to set a limit.

Breyer expressed amazement that the government was arguing for forfeitures “without limit. No matter how valuable the property, it can be forfeited regardless of how trivial the offense. So, you can forfeit the Taj Mahal if a teaspoon of marijuana is sold there,” he said.

The justices will meet privately to vote on the case and begin work on opinions. A ruling can be expected in several months.