Special Report: Civil Forfeiture in Indiana

April 6, 2016

by John Kerr

It’s bad enough that police and prosecutors in Indianapolis pad their budgets with the proceeds generated by the cars, cash and other property they seize, often from people who are never charged with any crime. It’s even worse that they do so in defiance of Indiana law.

The wording is clear. Article 8, Section 2 of the Indiana Constitution requires that money from “all forfeitures which may accrue” belongs to the state’s Common School Fund, which provides grants and loans to help local school districts with construction costs, property tax shortfalls, technology programs, charter schools and other endeavors. But instead of adhering to the plain language of the state’s guiding document, for years Indianapolis law enforcement officials have been siphoning off millions of dollars in forfeiture revenue for themselves.

The unfortunate result is a system that shortchanges school budgets while encouraging police and prosecutors to pursue forfeiture cases at the expense of more urgent priorities.

But now a handful of Indiana citizens — two of whom found themselves ensnared in the state’s forfeiture machinery — have partnered with the Institute for Justice, a public-interest law firm based in Arlington, Va., to force Hoosier law enforcement officials to follow the state constitution and stop profiting from forfeited property. In February, they filed suit in Marion County Superior Court to ensure that the state’s schools receive the money to which they are entitled.

Under Indiana’s civil forfeiture statutes, police may seize property on a mere hunch that it is connected to a crime. The owner need never be charged with wrongdoing; instead, the asset itself is deemed “guilty.” Once the government confiscates property and initiates forfeiture proceedings, an innocent, third-party owner who seeks to recover his belongings must go to court and prove that the property in question was not involved in criminal activity—a complex and expensive task beyond the financial means of many innocent victims.

The practice of civil forfeiture dates to the 1600s and British maritime law, and was used in this country after the American Revolution to seize vessels seeking to dodge customs duties, which financed a majority of the federal budget at the time. Lawmakers expanded the application of such laws during Prohibition, but it was in the 1980s at the height of the Drug War that forfeiture statutes proliferated under the guise of ensuring that drug kingpins and other criminal overlords didn’t profit from illegal activity.

Although 43 states allow law enforcement agencies to share in the revenue generated by the sale of forfeited property (an obvious incentive to pursue seizures), Indiana does not. Well, at least in theory. In practice, police and prosecutors in the Indianapolis area routinely pocket a hefty portion of the cash produced through their seizure apparatus. In 2011 and 2012, the Marion County prosecutor’s office retained an average of almost $460,000 a year from the forfeiture pot, while the total amount awarded to law enforcement agencies in the county averaged about $1.5 million annually.

The Alice in Wonderland world of civil forfeiture is hardly limited to hardened criminals. Jeana and Jack Horner can attest to that.

The Horners live in Greenfield, a small town of 21,000 residents about 25 miles east of Indianapolis. In order to help Ms. Horner’s son keep his job as a carpenter on work release, they let him use their two vehicles for work. But when he was arrested on a marijuana charge in August 2013, police seized not only the married couple’s 2008 Jeep Grand Cherokee, which he was driving, but also their 2003 Ford F-150 pickup truck, parked at a friend’s house.

“When I went to try to find my vehicles, nobody knew anything,” Jeana Horner recounted, adding that she never would have allowed her son to borrow the vehicles if she had known he was carrying pot. Ms. Horner became so frustrated in her quest to find the trucks that at one point she asked a police representative if she needed to “file a theft report.” Meantime, her disabled husband was left without transportation and had to rely on friends to take him to appointments. He eventually purchased another car for $2,500. “It’s difficult to be stranded,” she said.

Ms. Horner said she never got any notice from law enforcement officials about the seizures and learned that her property had been targeted for forfeiture only when the family went to court in Marion County. “That was the first time anybody ever talked to me,” she said. “We couldn’t believe that we could get caught up in all that.”

The charges against her son were eventually dismissed. In April 2014—nine months after the vehicles were taken—a judge ruled in favor of the Horners. But it took another three weeks for the police to return both the Jeep and the Ford pickup, one of which had been drained of its oil. According to Ms. Horner, there was “no explanation.”

Unlike too many other Hoosier property owners, the Horners could actually fight for their property. Since the cost to hire an attorney is often greater than the value of the seized property, property owners typically are forced to walk away. Over the past five years, court records suggest that prosecutors in Marion County have initiated more than 2,700 civil forfeiture actions. The majority of cases were decided through default judgments, meaning the property owners did not contest the action, leaving the state to profit from the seized assets.

Would police dealing with a minor drug crime bother seizing vehicles from innocent owners absent a financial stake that lets them keep the proceeds? “That is a very interesting question,” said David Hennessy, the Indianapolis criminal defense attorney who represented Ms. Horner’s son. “Yes, it’s policing for profit. I think so.”

Mr. Hennessy said his secretary spent 40 hours trying to find the Horners’ cars, and that he’d been involved in a handful of other cases in which law enforcement officials seized and held for weeks vehicles owned by parents whose children had been accused of minor offenses. “I think what they do to people is wrong,” he said.
His assessment rings true on a couple of levels. Not only is it wrong that innocent people can lose homes, cars, cash and other valuables without ever being criminally charged, but it compounds the injustice when Indiana law enforcement officials thumb their noses at state law and help themselves to the proceeds generated by their forfeiture activity.

As cover for ignoring the constitutional mandate directing forfeiture funds to state schools, law enforcement officials hold up a 1984 state law that allows the police to deduct “law enforcement costs” before forwarding money to the Common School Fund. In addition, they cite a 2011 advisory opinion written by Attorney General Greg Zoeller concluding that the directive in Article 8, Section 2 of the state Constitution applies only to funds derived from criminal forfeitures, which involve property seized from someone who has been convicted of a crime.
Neither defense holds up under even the most cursory scrutiny.

The language in the 165-year-old Indiana Constitution makes no distinction between criminal and civil forfeiture. Meanwhile, the 1984 law does not override it — and even if it did, Indianapolis law enforcement has misconstrued the “law enforcement costs” provision to justify keeping every penny of civil forfeiture proceeds. The “memorandum of understanding” between Marion County prosecutors and police agencies on this issue calls for a 70-30 split of forfeiture proceeds, with police pocketing the larger share. In every case, the Common School Fund gets nothing.

Marion County officials defend this approach, arguing that breaking down costs would be inconvenient and fail to reflect their overall efforts. This “cumulative” interpretation of the forfeiture statute means that in Marion County, law enforcement agencies maintain that the costs associated with civil forfeiture always exceed the proceeds it generates from the practice—leaving police and prosecutors free to retain the revenue without turning over a penny to the Common School Fund.

To highlight the absurdity of this, consider State v. Escuder, a 2012 forfeiture case pursued by the Marion County prosecutor’s office. After police seized $40,000 in cash from an in-transit package at a local shipping facility, prosecutors filed a three-paragraph court complaint. When nobody bothered to show up to contest the forfeiture, the court granted a default judgment. The prosecutor’s office asserted $12,000 in costs, while Indianapolis police claimed the case cost them more than the remaining $28,000. Both agencies got their money along the 70-30 split. As usual, the School Fund received nothing.

Not all Indiana officials have turned a blind eye to this charade. In 2011, then-Gov. Mitch Daniels vetoed a bill meant to rework the state law regarding forfeiture proceeds and law enforcement costs, saying that diverting money from the Common School Fund “is unwarranted as policy and constitutionally unacceptable.” That came just a few weeks after the

To what extent are law enforcement agencies willing to risk eroding the public trust for the sake of padding their own budgets? Indiana Supreme Court, while adjudicating an unrelated forfeiture issue, noted in passing that it was of dubious constitutionality for police and prosecutors to keep any forfeiture revenue, regardless of costs, and that the issue “invite[d] further scrutiny.”

Officials with the Indiana Association of Public School Superintendents certainly agree. John Ellis, the group’s former executive director, applauded the governor’s comments in 2011. “I really appreciate that the governor recognizes the purpose of the dedicated fund,” he told the Star. “It’s just fantastic.” He called the Common School Fund “a saving grace for poorer districts.”

Indiana law-enforcement officials, however, are more focused on their own budgets. Losing forfeiture revenue would strain their ability to fight crime and prosecute wrongdoers, they argue. But that concern pales against the harm inflicted on the state by police and prosecutors disregarding the Indiana Constitution in pursuit of their agencies’ financial gain. To what extent are law enforcement agencies willing to risk eroding the public trust for the sake of padding their own budgets? Good intentions cannot justify the law’s willful subversion, particularly by those sworn to defend it.

If forcing law enforcement to turn over forfeiture revenue to the school fund as directed by the state Constitution creates a fiscal dilemma for the agencies involved, they must either re-examine their priorities or plead their case to the elected officials, policymakers and taxpayers who allocate and pay for police budgets.

In the meantime, the Indiana judicial system now has the opportunity to correct this ongoing injustice. The state Constitution is unambiguous: “All” funds — not “some” or “a small percentage after law enforcement takes its cut” — generated through forfeitures in Indiana must be channeled to the Common School Fund. The courts should hold once and for all that Indiana’s charter means what it says and henceforth all funds that accumulate from the sale of seized property must be directed to benefit Indiana’s school children.

John Kerr is a communications fellow with the Institute for Justice, a public-interest law firm. He wrote this at the request of the foundation.


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