New Colorado Law Takes On Federal Asset Forfeiture Loophole

By Michael Maharrey

Last week, Colorado Gov. John Hickenlooper signed a bill into law that will take a big step toward closing a federal asset forfeiture loophole.

A bipartisan coalition of two representatives and two senators introduced House Bill 1313 (HB1313) on April 3. The legislation primarily creates an extensive reporting system related to asset forfeiture that law enforcement agencies will have to follow.

But important provisions in the new law prohibit Colorado law enforcement agencies from transferring seized property to a federal agency unless it has a net value of more than $50,000. It also prohibits state and local police from accepting payment or distribution from a federal agency of all, or part of, any forfeiture proceeds resulting from the adoption, a joint task force, or other multijurisdictional collaboration, unless the aggregate net equity value of the property and currency seized in the case is in excess of $50,000, the case is commenced by the federal government, and it relates to a filed criminal case.

In most situations, passage of HB1313 slams closed a federal loophole that allowed state and local police to get around more strict state asset forfeiture laws.

In March, a similar Senate bill sponsored by the same coalition failed to move out of the Senate Committee on Judiciary by a vote of 2-3. The vote was along party lines, with two Democrats in favor and three Republicans opposing. With the setback in the Senate, the same coalition tweaked the language and reintroduced the legislation in the House.

This time, when the bill passed the House and went to the Senate, it was sent to a different committee. In a matter of days, as the legislative session wound down, two committees passed the bill, and the full Senate approved it with a 32-3 vote. Due to technical amendments in the Senate, it needed to go back to the House, where it garnered final approve approval by a vote of 49-16. With Hickenlooper’s signature, the new law will go into effect later this summer.

FEDERAL LOOPHOLE

While Colorado asset forfeiture laws don’t provide the level of protection they should, they are stricter than federal law. The Institute of Justice gives Colorado forfeiture laws a C. They do include a high bar to forfeit property, but they do not require a criminal conviction. They also provide relatively robust protections for innocent third-party property owners, and law enforcement can only keep up to 50 percent of proceeds.

With these relatively stringent policies in place, police have an incentive to pass cases to the feds in order to circumvent them. Unsurprisingly, the state ranks 15th in the country in the amount of federal asset forfeiture money it brings in.

The situation in California was similar until recently. The state has some of the strongest state-level restrictions on civil asset forfeiture in the country, but law enforcement would often bypass the state restrictions by partnering with a federal asset forfeiture program known as “equitable sharing.” Under these arrangements, state officials would simply hand over forfeiture prosecutions to the federal government and then receive up to 80 percent of the proceeds—even when state law banned or limited the practice.

According to a report by the Institute for Justice, Policing for Profit, California ranked dead last of all states in the country between 2000 and 2013 as the worst offender. In other words, California law enforcement was passing off a lot of cases to the feds and collecting the loot. During the 2016 legislative session, the state closed the loophole.

Passage of HB1313 would close the federal loophole in most situations and significantly increase protections for Colorado property owners.

As the Tenth Amendment Center previously reported the federal government inserted itself into the asset forfeiture debate in California. The feds clearly want the policy to continue.

Why?

We can only guess. But perhaps the feds recognize paying state and local police agencies directly in cash for handling their enforcement would reveal their weakness. After all, the federal government would find it nearly impossible to prosecute its unconstitutional “War on Drugs” without state and local assistance. Asset forfeiture “equitable sharing” provides a pipeline the feds use to incentivize state and local police to serve as de facto arms of the federal government by funneling billions of dollars into their budgets.

WHAT’S NEXT

HB1313 will go into effect at 12:01 a.m. Aug. 9, 2017.