Forfeiture
Few topics related to fines and/or criminal issues are more complex than the issue of forfeiture. Subject to the 8th Amendment's restriction on unreasonable fines and penalties, there is little restraint on the Government's ability to take property when Congress has found it appropriate to do so. Often it is "sold" to Congress as a way to take criminals' property and thus justified but it quickly becomes a basis to take property in situations that are hard to reconcile with the American justice system as most feel it should operate.
Adding to this complexity is the fact that there are civil forfeiture proceedings, criminal forfeiture proceedings (where perhaps the Government can use both approaches to try to get property) and Federal and State forfeiture proceedings. Forfeiture can be against just the "property" (a so called "in rem" proceeding) or against the individual that owned the property (a so called "in personam" forfeiture) and can be nonjudicial (summary and administrative forfeiture) or judicial (criminal and civil forfeiture).
The nonjudicial forfeiture occurs when some property is seized based on probable cause that it could be taken and then notice is served (by publication and, perhaps, by written notification to apparent owners) of the seizure and if a response (or legal action) is not undertaken, the property if forfeited after a period of time. If a claim is filed, the action turns into a judicial forfeiture.
Criminal forfeiture actions typically are included within an indictment of an individual for other charges (that include for the government a remedy of the forfeiture of property). As such it is an in personam forfeiture action (it is against the individual rather than directly against the property and thus the individual may remain in possession of the property and if the individual is not convicted of the related criminal charges there can be no criminal forfeiture). The trial is likely to be bifurcated with the forfeiture action only proceeding if a guilty verdict is obtained in the first part of the trial and since it is only against that individual, others claiming a right in that property may contest its forfeiture after the criminal trial ends. If the property is sold or disposed of the Government may be able to either go after that property from third parties or go after substitute property in the hands of the convicted defendant.
In contrast to the criminal forfeiture provisions, the Government can also bring civil forfeiture actions (even if it lost the criminal action that would have permitted criminal forfeiture as the burden of proof is by a lesser proof standard). As with criminal forfeiture, the action can be in rem or in personam.
While most people assume forfeiture is something that pretty much is restricted to drug dealers and the like (and thus of no importance in a business setting), the reality is considerably different. Among the "non-traditional" areas where forfeiture is available to the government are some of the following:
- Failure to disclose over $10,000 of currency when leaving the United States subjects the money to forfeiture even where there is no doubt the money is after tax funds unrelated to any crime.
- Depositing (or withdrawing) currency into your own bank account in denominations of under $10,000 where one of the purposes is to avoid a report being sent to the Government subjects all of the property so "structured" to forfeiture.
- RICO violations (RICO started out directed at so called criminal enterprises but now includes a possible "predicate acts" violations of things such as a company hiring undocumented workers (illegal aliens) to work).
- Copyright infringements can lead to forfeiture of the proceeds of sales of products determined to constitute an infringement of copyrights.
- Bank Fraud (convictions under 18 U.S.C. §1344 permits forfeiture under both civil and criminal forfeiture sections).
- Health Care Fraud convictions under 18 U.S.C. §1347 allows criminal forfeiture proceedings (under 18 U.S.C. §982(a)(7)).
- Theft of a trade secret (be careful in hiring employees from a competitor) can lead to forfeiture under 18 U.S.C. §1832.
- Wire or Mail Fraud convictions allow prosecution under both the civil and criminal forfeiture sections. Mail and Wire Fraud are typically the charges brought when the general activity is deemed to be fraudulent but the violations may be of state statutes (perhaps only civil statutes or regulations). Examples include fraudulent advertising or promotions for work at home businesses and the like.