Challenging Disproportionate Forfeitures

An increasing emphasis on revenue generation through forfeiture brings with it a heightened risk of inconsistent enforcement and disparate punishment. Decisions to target individuals for arrest and prosecution may be driven by the value of the assets to be seized, and the use of forfeiture to punish criminal behavior gives rise to the danger that individuals will be forced to pay penalties that are disproportionate to the gravity of their offenses. In one much-publicized case, for example, law enforcement seized the home of a couple whose son was accused of selling $40 worth of heroin out of the house. See, Pamela Brown, “Parents' House Seized After Son's Drug Bust,” CNN (Sept. 8, 2014).

In this article, we suggest that it is time for the Supreme Court to revisit a question that it has not addressed for many years: When is the property to be forfeited in a criminal or civil proceeding disproportionate to the underlying offense that gives rise to the forfeiture? In the landmark case of United States v. Bajakajian, 524 U.S. 321 (1998), the Supreme Court outlined a standard of “gross disproportionality,” but the decision is rarely invoked to block forfeiture. The lower courts that have addressed the issue in the years since Bajakajian have proposed a variety of different proportionality factors, resulting in what one scholar recently described as a “patchwork of inconsistent tests that have … only muddled the issue.” David Pimentel, “Forfeitures and the Eighth Amendment: A Practical Approach to the Excessive Fines Clause as a Check on Government Seizures,” 11 Harv. L. & Pol. Rev. 541, 543-44 (2017) (Pimentel). We will review the current state of the law and suggest possible reforms that would hold the government to a more demanding standard with respect to proportionality.

Limitations on Grossly Disproportionate Forfeitures

In Bajakajian, the Supreme Court located a constitutional limit on asset forfeitures in the Excessive Fines Clause of the Eighth Amendment. U.S. Const. amend. VIII (“Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”). There, the defendant pleaded guilty to failing to file a report that he was transporting more than $10,000 in currency out of the country, in violation of 31 U.S.C. §5316(a). The district court imposed an order of criminal forfeiture pursuant to 18 U.S.C. §982(a)(1) in the amount of the entire sum of money the defendant was transporting — $357,144.

The Supreme Court reversed, finding that this forfeiture was unduly punitive under the Excessive Fines Clause. The Court first explained that an order of forfeiture constituted a “fine” within the meaning of the Eighth Amendment whenever the forfeiture functions as the punishment for an offense — i.e., where the forfeiture is imposed “at the culmination of a criminal proceeding and requires conviction of an underlying felony.” Id. at 328. The Court discussed the constitutional boundaries limiting such forfeitures, stating that “[t]he touchstone of the constitutional inquiry under the Excessive Fines Clause is the principle of proportionality ….” Id. at 334. Therefore, “[t]he amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish.” Id. The Court rejected a strict proportionality requirement and instead borrowed from its Cruel and Unusual Punishments Clause jurisprudence to hold that “a punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant's offense.” Id.

The Supreme Court did not set forth a list of mandatory factors to assist lower courts but identified some relevant considerations. First: “In considering an offense's gravity, the other penalties that the Legislature has authorized are certainly relevant evidence.” Id. at 339 n.14. Thus, the Court looked to the maximum fine and guidelines sentence for the offense as a part of its analysis, finding that the proposed forfeiture was larger “by many orders of magnitude” than the statutory fine for the offense. Id. at 340. The Court also considered the nature of the defendant's offense, whether the offense was related to other criminal activities, whether the defendant fit into the class of persons for whom the statute was principally designed, and the nature of the harm caused by the defendant's conduct in evaluating the proportionality of the forfeiture. The Court noted that the crime at issue was a mere “reporting offense” unrelated to any other unlawful activity; the money forfeited was the proceeds of legal activity and was being transported to satisfy a lawful debt. Id. at 337–38. Based on this analysis, the Court concluded that forfeiture of the full sum of $357,144 violated the Excessive Fines Clause. Id. at 344.

The Proportionality Test After Bajakajian

Bajakajian was the first instance in which the Supreme Court struck down a criminal forfeiture as excessive under the Eighth Amendment, id. (Kennedy, J., dissenting), and in the 15 years after the Bajakajian decision, only four courts of appeals have found a forfeiture to be excessive, despite the civil forfeiture statute's requirement that federal courts “reduce or eliminate the forfeiture as necessary to avoid a violation of the Excessive Fines Clause of the Eighth Amendment of the Constitution.” 18 U.S.C. §983(g); see also, Yan Slavinskiy, “Protecting the Family Home by Reunderstanding United States v. Bajakajian,” 35 Cardozo L. Rev. 1619, 1634 n.117, 1637 (2014). Two of those cases were virtually identical to Bajakajian on their facts; two others have been superseded by statute. See, Pimentel, at 544 n. 25. More recently, the Seventh Circuit expressed “serious doubts” about a forfeiture of an entire home based on the defendant's single illegal act of structuring, unconnected to other criminal activity, but remanded the case for retrial on other grounds and therefore did not decide the Bajakajian issue. See, United States v. Abair, 746 F.3d 260, 268 (7th Cir. 2014). Overall, the enforcement of the Excessive Fines Clause in forfeiture matters has been nearly limited to the facts of Bajakajian.

Without a specific standard, the circuit courts have been left to their own devices and have applied inconsistent or overlapping tests when conducting the analysis envisioned by Bajakajian. Some courts have applied a four-factor test closely based on the types of factors identified in Bajakajian. See, e.g., United States v. George, 779 F.3d 113, 122 (2d Cir. 2015) (“(1) the essence of the crime of the defendant and its relation to other criminal activity, (2) whether the defendant fits into the class of persons for whom the statute was principally designed, (3) the maximum sentence and fine that could have been imposed, and (4) the nature of the harm caused by the defendant's conduct.” (internal citations and quotation marks omitted)). Others have employed a three-factor test. See, e.g., United States v. Browne, 505 F.3d 1229, 1281 (11th Cir. 2007) (“(1) whether the defendant falls into the class of persons at whom the criminal statute was principally directed; (2) other penalties authorized by the legislature (or the Sentencing Commission); and (3) the harm caused by the defendant”). Still others have added several factors to those identified in Bajakajian, to create broader and more complicated multi-factor tests. See, e.g., United States v. Wagoner Cty. Real Estate, 278 F.3d 1091, 1101 (10th Cir. 2002) (“[W]e must supplement the factors discussed [in Bajakajian],” to include “the general use of the forfeited property, any previously imposed federal sanctions, the benefit to the claimant, the value of seized contraband, and the property's connection with the offense.”). But whatever the particular formulation, the result seems to be the same: The challenge fails.

Next month we will explore several proposals for reforms that might curb the imposition of forfeitures disproportionate to alleged crimes.

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Harry Sandick, a member of Business Crimes Bulletin's Board of Editors, and Daniel Ruzumna are both partners in the Litigation Department of Patterson Belknap and members of the firm's White Collar Defense and Investigations team. Jacqueline Bonneau is a litigation associate at the firm.