Forfeiture of Cash at LAX Struck Down
Four years ago, a Hollywood service station owner went to Los Angeles International Airport with $357,144 hidden in his luggage--determined, he said, to prevent the money from being stolen by corrupt customs officials when he arrived in his native Syria. Instead, he has spent the years since fighting to get the money back from U.S. officials who seized and kept it.
On Monday, he triumphed before the nation’s highest court, winning a potentially landmark ruling that rebuked the government and ordered his money refunded.
The government’s claim to Hosep K. Bajakajian’s money, under currency forfeiture laws, amounts to a grossly excessive fine for a minor paperwork offense, said Justice Clarence Thomas for the court. The 5-4 ruling marked the first time the Supreme Court has struck down a forfeiture as unconstitutional.
Told of the news at his service station Monday morning, Bajakajian said it affirmed his faith in the U.S. justice system.
“This is great news. It makes my eyes fill up,” he said in a phone interview. “I believe in God, in justice and the United States.”
His attorney, James E. Blatt of Encino, was equally elated. “This has been a very long battle. The Customs Service went overboard in taking Mr. Bajakajian’s money and we’re thrilled the Supreme Court agreed.”
Bajakajian’s troubles are not over, however. A $5,000 fine and $15,000 forfeiture will be deducted before the money is returned, and the Internal Revenue Service has notified him that it thinks he underreported his income by an amount similar to that seized.
The ruling, however, may rein in the government’s heretofore unchecked power in forfeiture cases.
Over the last decade, forfeitures have become a powerful weapon in the war on drugs. Police and prosecutors have seized houses, boats, bank accounts and businesses owned by drug dealers.
But many others have loudly complained that these government seizures can be unfair and excessive. At times, people have lost a house or a business because they or friends or family members have been involved in minor drug offenses, such as growing marijuana in their backyards.
In the past, the Supreme Court has said a forfeiture might be so extreme as to violate the 8th Amendment ban on “cruel and unusual punishment and excessive fines.” But until Monday, the court had never declared a seizure unconstitutional.
The case of the Hollywood gas station owner seemed to illustrate a government zeal that offended, in turn, a federal judge in Los Angeles, the U.S. 9th Circuit Court of Appeals in San Francisco and now the Supreme Court.
It began on June 9, 1994, when Bajakajian went to the Los Angeles airport with his wife and two children and planned to fly to Syria. Family members had helped him get started in business in Los Angeles and, he said, he was taking money there to repay his debts.
A drug-sniffing dog detected the hidden currency, and customs agents stopped Bajakajian from boarding the flight. Though he denied having the money at first, he later admitted that it was his.
He was charged with violating the currency reporting law. People who move at least $10,000 of currency into or out of the United States must file a report. Passengers arriving on international flights are given reporting forms before landing. Those who are leaving the country are not similarly notified.
Congress passed the law in 1970 to try to nab organized crime bosses and drug traffickers who moved large amounts of cash. The law remains on the books and is not directly affected by the high court ruling, which pertained only to the “excessive” amount of the forfeiture in Bajakajian’s case.
Brought before U.S. District Judge John G. Davies in Los Angeles, Bajakajian was able to show that his money was obtained lawfully and was not tainted by crime. The judge imposed a $5,000 fine and a forfeiture of $15,000. Any further forfeiture would be “extraordinarily harsh,” Davies said. He ordered the rest of the money returned. It was not clear whether the government will pay Bajakajian interest, his lawyer said.
But the U.S. attorney’s office in Los Angeles appealed, arguing that the government was entitled to keep the entire amount. The 9th Circuit Court disagreed, but the Justice Department appealed again. All “undeclared cash that is brought into or taken out of the this country is subject to forfeiture,” the Clinton administration asserted in its appeal in the case (United States vs. Bajakajian, 96-1487).
Thomas, in Monday’s ruling, wrote that the gas station owner “is not a money launderer, a drug trafficker or a tax evader.” A “full forfeiture of [Bajakajian’s cash] would be grossly disproportional to the gravity of his offense” and, therefore, unconstitutional.
The ruling marked a rare instance in which Thomas joined with the court’s more liberal members--John Paul Stevens, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer--to rule against the government. At his nomination, friends said Thomas had a libertarian streak, but it had not been evident until Monday.
“Money launderers will rejoice” at the decision, Justice Anthony M. Kennedy said in dissent. He was joined by Chief Justice William H. Rehnquist and Justices Sandra Day O’Connor and Antonin Scalia.
Although the ruling returns Bajakajian’s money--minus the $5,000 fine and the $15,000 forfeiture ordered by the district court judge in Los Angeles--his legal fees have been “substantial,” according to Blatt, his lawyer. But Blatt declined to specify the exact costs.
Nor are Bajakajian’s tussles with the government over.
Soon after his case was argued in the Supreme Court, he received a notice from the Internal Revenue Service saying he owed $334,000 in back taxes and penalties for 1994.
Former Assistant U.S. Attorney Mark A. Byrne, who is representing him in the tax matter, said the IRS move is questionable. He added that it seemed “unbelievably coincidental” that the IRS was seeking roughly the same amount involved in the forfeiture case.