Special report: Guilty until proven innocent

In October 2009, acting on a tip of “suspicious persons” from a neighbor, police were dispatched to a house in a gated community, surrounded by a sea of apartments and subdivisions, in north Euless.

Euless officers found three men in the house; they were nonchalant in responding to questions, and none of them said they lived there. Also in the house, officers discovered thousands of cartons of contraband cigarettes and counterfeit tax stamps.

Euless continued investigating and contacted federal authorities, and by 2010 an undercover sting, Operation Cowtown Tobacco, was underway.

“We kind of stumbled across it. We thought that there might possibly be some money going back to the Middle East,” Euless Police Chief Michael Brown said. “We thought that was worth our while.”

Indeed it was.

The money was seized as part of a little-known, confusing and often opaque part of the criminal justice system — civil asset forfeitures — one in which property is presumed guilty until proven innocent and millions of dollars flow into federal, state and local coffers from people who may or may not be convicted of a crime.

Last year, police and other law enforcement agencies in Tarrant County seized cash and items including cars, computers and cellphones totaling about $7.2 million from people suspected of crimes, according to an analysis of court cases. Typically, city and county law enforcers take about $2 million, but the 2013 total includes the $5.24 million seized in Euless.

While the Euless case was centered on cigarettes, most of the forfeitures come in drug cases, and suspects often lose their cars and cellphones.

Lawrence Brown, a Fort Worth defense attorney specializing in asset forfeiture, said his clients often feel shocked and violated by the process.

“The question is always, ‘Can they do this?’ ” said Brown, who previously worked for the Justice Department tax division. “Clients say, ‘It’s one thing to be investigated, but they just took all my stuff.’ ”

Nationally, the take through forfeitures has grown exponentially. In 2013, the federal government collected more than $2 billion in cash and other assets from suspects. That was down from the peak of $4.18 billion in 2012, but more than four times the $478.7 million seized in 2003.

A portion of the federal bounty is shared with state and local agencies collaborating with federal agencies. Last year, about $35 million was sent to Texas, including $2.9 million to a joint Drug Enforcement Administration/Tarrant County district attorney’s office task force, $394,856 to the Dallas/Fort Worth Airport Department of Public Safety and $57,942 to the Arlington Police Department, according to the Justice Department.

Perfectly legal

In Texas, Chapter 59 of the Code of Criminal Procedure allows law enforcement agencies to seize items believed to be used in committing a crime or bought with profits of a crime.

Police make the initial decision at the time of the arrest but can keep the items regardless of whether the suspect is charged or convicted later.

The practice has been around for many years but picked up dramatically in 1984 during the War on Drugs, when Congress allowed the federal government to take property — and keep the proceeds — even if the owner was never charged.

In 1989, Texas enacted its own law, which allows property such as homes, land, cars and cash to be taken for most felonies and some misdemeanors. Although criminal cases must be decided beyond a reasonable doubt, these seizures are civil cases and the state must prove only by a “preponderance of the evidence” that the goods had criminal ties.

In 2011, both Congress and the Texas Legislature enacted laws intended to improve transparency on how the seized funds are used. Texas put its reforms in place after a 2008 Senate Committee on Criminal Justice report said that seizures had become “a profit-making, personal account for some law-enforcement officials,” who allegedly used funds for alcohol at parties, campaign expenses and a training trip to Hawaii.

Now, each Texas agency is supposed to file a detailed report of all expenditures of seized funds to the state attorney general’s office. But a review of the 2013 Texas attorney general’s report appears to be woefully incomplete. For example, the listing for Tarrant County shows that only one agency, the White Settlement Police Department, seized assets in 2013, totaling about $14,000. There is no listing for the Tarrant County district attorney’s office.

But reports provided by the district attorney’s office say that about $3.5 million was seized in Tarrant County for the year ending Aug. 31, 2013, plus 246 cars and 440 computers. A total of $843,636 of that money was spent on salaries for 15 full-time employees and one part-timer.

The Tarrant County Narcotics unit seized 68 cars, 23 computers and 91 other electronics devices, along with $666,427 in cash, and it kept two cars, a computer and six electronic devices for its own use during the year ending Sept. 30, 2013. It also spent $426,058 on salaries.

Tracking the money

Trying to track seized money and assets turned out to be a lesson in frustration. Reporters working with the Star-Telegram filed more than 10 Freedom of Information Act requests with a number of agencies, including DFW Airport, to see how much was collected and where it went, but got few answers.

DFW provided a list of drug items seized but said it didn’t seize any cash. Calls to the DEA and the Justice and Homeland Security departments didn’t yield any more explanation.

A North Texas Financial Crimes Task Force, led by the Internal Revenue Service’s criminal investigation unit and composed of officers from Arlington, Dallas, Fort Worth, Flower Mound, Collin County and Denton County, can also seize assets believed to be tied to money laundering and other crimes. But FOIA requests filed with at least five agencies have not yet resulted in any details.

Denise Corcoran, public information officer for the IRS-Criminal Investigation Unit in Fort Worth, said it is “impossible” to determine how much money the task force seized in the Tarrant County area last year because of the way IRS databases are structured.

Civil asset forfeiture allows law enforcement agencies to remove the “fruits of crime,” said Shamoil Shipchandler, a former assistant U.S. attorney for the Eastern District of Texas, who recently joined a Dallas law firm. “We are trying to attack the criminal retirement plan.”

Confusing process

Once assets have been seized, the process of getting property back is confusing and usually requires hiring a lawyer. Once cash or property is taken, the district attorney’s office files a civil suit against the property itself, accusing it of being part of the crime, though the case is completely separate from any criminal prosecution.

Since the property is being charged in a civil case, owners aren’t entitled to an attorney to fight the forfeiture if they can’t afford one.

Hiring a lawyer can be pricey. Steve Jumes, an attorney with Lawrence Brown’s law firm, said a retainer for complicated civil asset forfeiture cases can start at $25,000, although he said he has successfully litigated cases with fewer issues for less. Some defendants, he said, can find themselves entering a “full-blown civil fistfight” that may rack up six-figure legal fees. For most items, such as computers or cellphones or a few thousand dollars in cash, the fight simply isn’t worth the cost.

In addition, many clients “are scared they’ll look guilty, so they just walk away and cut their losses,” Jumes said.

Texas does have a provision for “innocent owners,” such as parents or friends who loan someone their car and then find it was used in a crime.

“If someone comes to me and says, ‘I bought this car, it was my separate property and I had no idea that my husband/boyfriend/whatever was going to be using my car in this drug deal,’ then we give it back,” said Ann Wright, assistant district attorney for Tarrant County, who oversees asset forfeiture cases. “Parents, same thing.”

How it works

Assets are most commonly seized in drug cases, so most police officers make seizure decisions only occasionally, said Michael Hughes, interim coordinator of the Tarrant County College Police Academy, which helps train new officers.

Hughes said police take lots of things as evidence, such as hand tools, TVs and video cameras, but will only file civil asset forfeiture paperwork on items that are tied to the alleged crime and that they can use for law enforcement purposes or can auction off.

“You aren’t going to seize someone’s car because they’ve got a little bit of marijuana in the car or even cocaine. It comes down to: Are they using something to facilitate a crime? You have to prove that,” Hughes said.

After local police decide to file for forfeiture of items, the paperwork goes to the DA’s office, which reviews it and decides whether to begin the court process. Last year, the DA’s office filed about 430 cases and declined to file suit 24 times.

Wright said the district attorney’s office and its narcotics unit “would like to target the mid- to higher-level drug dealers, but sometimes that also means bringing in some lower-level dealers.”

Those with lawyers may be able to settle their cases before court papers are filed. But others will receive notices of cases with titles such as “State of Texas v. $412.00 in US currency and Firearm” or “State of Texas v. Laptop computer and 1997 Chevrolet 1500.”

During the past five years, roughly half the county’s cases resulted in default judgments, meaning that people didn’t contest them, the Star-Telegram found.

Less than 10 percent of cases go to trial, with most contested cases resolved through negotiations, said Abe Factor, a Fort Worth criminal attorney who handles 20 to 30 asset-forfeiture cases a year. On average, recovering property takes six months, he said.

Those who lose property in a court hearing can appeal. But Wright said few people do.

If the federal government is involved, the forfeiture may become a federal case. The federal government has 90 days to file a case, versus 30 days in Texas, and the case can be moved to another state.

Sometimes, the process can drag on as the case bounces from federal court back to state district court.

Big bucks at stake

Though most seizures are relatively small, occasionally the government happens on a case that provides a big payout.

That’s what happened in Operation Cowtown Tobacco in Euless.

After officers investigated the house on Palomino Drive, a search warrant was issued and they confiscated 2,760 cartons of contraband cigarettes and 11,580 counterfeit Texas tax stamps. Officials subpoenaed financial records and found that one of the men at the house, Inayat Ishaak, processed $10 million through his bank account over a year.

Ishaak and another man were sending the money to various countries in Asia and the Middle East: Pakistan, India, Saudi Arabia, Turkey and Qatar, according to a police affidavit.

In 2010, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives set up a sting, working with Euless police and the state comptroller’s office, which oversees cigarette taxes. A bank account was opened under a fake name, Joseph Henry Reeder, and a warehouse was leased to sell cigarettes without tax stamps.

“The suspects bought the cigarettes knowing they were evading the lawful tax on the cigarettes sold,” the seizing officer wrote in the sworn statement.

The investigation resulted in 11 convictions for trafficking in contraband cigarettes and using counterfeit stamps. Four people were sentenced to prison terms of nine to 18 months, and the other seven received probation. Ishaak received two years’ probation and was ordered to pay $271,566 restitution.

Euless police seized the money in the Reeder bank account and the warehouse contents, clearing $5.24 million. Of that, $350,000 went to the Tarrant County DA’s office and $2.44 million went to Euless police.

Of the Euless amount, $1,446,000 was used to buy a new radio system and $999,000 will be used to fund three police officer positions for at least two years.

“That’s a sizable chunk of money for the city of Euless. It was great tax relief,” Chief Brown said. “I would say anytime you cross a million-dollar threshold, that’s a big deal. I don’t care who you are.”

The remaining $2.44 million went to the Texas comptroller’s office and is designated to be spent on law enforcement, officials said.

Separately, the federal government seized about $600,000 from individual defendants. Assistant U.S. Attorney John de la Garza of Texas’ Northern District said 20 percent of that went to the Justice Department’s Asset Forfeiture Fund.

Where the remaining funds will go hasn’t been decided, but de la Garza said, “It appears likely that the Euless Police Department and the Criminal Investigation Division of the Texas comptroller will receive it.”

Two SUVs were also seized and will go to the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The potential for large windfalls has raised concerns that some law enforcement agencies may take advantage of the law.

“I’m not for a minute saying the federal government is the former Soviet Union and they’re shaking down their citizens,” said Lawrence Brown, the Dallas attorney. “But I think a number of factors are at play right now to create the potential for abuse.”

In 2012, officials in the Texas town of Tenaha and Shelby County settled a class-action lawsuit alleging that they stopped at least 140 drivers, mostly black and Latino, and threatened them with criminal charges before seizing an estimated $3 million in cash, according to the American Civil Liberties Union.

None of the plaintiffs was arrested or charged.

Defense attorneys say one potential solution is to share the money with local charities, removing the incentive to enrich a police department or prosecutor’s office.

Recent changes in state law allow funds to go to charities, and last year, the Tarrant County district attorney’s office donated $53,000 in surplus funds to six nonprofits that benefit victims or prosecution efforts.

More attention

As the dollars seized have increased, civil asset forfeiture has come under increasing scrutiny.

“Some believe there shouldn’t be civil asset forfeiture at all,” says Louis Rulli, a forfeiture expert and law professor at the University of Pennsylvania.

He said some people believe that it violates the Fourth Amendment ban on unreasonable search and seizure, as well as the Fifth Amendment right to due process. Rulli said he believes the issue will soon make its way to the U.S. Supreme Court for re-examination.

That could happen in Texas as well. The Texas Supreme Court recently declined to hear a civil asset forfeiture case in which a truck owner who was receiving loan payments on his vehicle argued that he shouldn’t have to prove that his truck was innocent after his buyer was arrested for DWI and possessing cocaine.

In a pointed dissent, Justice Don R. Willett, joined by two other justices, argued that the practice of civil asset forfeiture has changed dramatically since the court last visited the subject in 1957 and that today, “it has a distinctive ‘Alice in Wonderland’ flavor, victimizing innocent citizens who’ve done nothing wrong.”

Although criminals have a presumption of innocence, he wrote, property owners are “presumed guilty and required to prove their innocence.”

Noting that “the intersection of power and profit is a troubling one,” he wrote that when agency budgets become dependent on funds from seized assets, “constitutional liberties are unavoidably imperiled.”

He called on the Legislature to look at the practice again and on his court colleagues to give the subject more scrutiny.

In a response, Justice Jeffrey S. Boyd said the court studied the issue and concluded that its 1957 decision still applied, even though Texas law has changed. Boyd said the property owner’s argument was inconsistent, and that the court was trying to resolve the case, not the issue itself.

TCU STUDENTS EMILY ATTEBERRY, MICHELLE BURDEN, LAUREN CUMMINS, TORI CUMMINGS, SARAH GREUFE, JAKE HARRIS, LILIANA LAMAS, RYAN OSBORNE AND BETHANY PETERSON CONTRIBUTED TO THIS REPORT.