Federal Asset Forfeiture Defense

The Government Sues Your Property, Not You

Before a conviction, before an indictment, before probable cause has been tested in any adversarial proceeding, the federal government can seize and retain everything a person owns. The mechanism is civil forfeiture, and its premise is older than the republic: the property itself is guilty. In the caption of a civil forfeiture action, you will find not a defendant’s name but a description of the thing taken. United States v. $124,700 in U.S. Currency. United States v. One 2003 Cadillac Escalade. The owner appears, if at all, as a claimant petitioning for the return of what was already theirs.

This distinction between civil and criminal forfeiture is not procedural ornamentation. It determines who bears the burden, what standard of proof applies, and whether the Constitution’s protections arrive before or after the loss has already been absorbed. In criminal forfeiture, the government must first obtain a conviction, then demonstrate by a preponderance of the evidence that specific assets constitute proceeds or instrumentalities of the offense. The property follows the person. In civil forfeiture, the government proceeds against the property directly, under a legal fiction that treats the asset as a party. No criminal charge is required. No conviction is necessary. The owner must come forward, file a verified claim within strict deadlines, and prove their own innocence.

In fiscal year 2024, the Treasury Forfeiture Fund alone collected $2.263 billion in forfeiture revenue. The Department of Justice’s Assets Forfeiture Fund held $5.99 billion in seized property as of September 2023. Between 2000 and 2019, seized property generated more than $45.6 billion for federal coffers. These are not figures drawn from the prosecution of convicted persons. A substantial portion represents property taken through civil proceedings in which guilt was never adjudicated at all.

Innocence as an Affirmative Defense

The Civil Asset Forfeiture Reform Act of 2000, known as CAFRA, was supposed to correct the most visible abuses. It shifted the burden of proof to the government in civil forfeiture cases, requiring the state to establish by a preponderance of the evidence that the property is subject to forfeiture. It created a statutory right for owners to assert what it calls the innocent owner defense. And it authorized courts to award attorney’s fees to claimants who substantially prevail.

But the architecture of CAFRA contains its own contradictions. The innocent owner defense is an affirmative defense, which means the claimant bears the burden of proving, also by a preponderance of the evidence, that they either had no knowledge of the conduct giving rise to forfeiture or took all reasonable steps to terminate the illegal use of their property. The government proves the property is tainted. The owner then proves they are not. Two competing preponderance standards, operating in the same proceeding, against a claimant who may lack the resources to retain counsel and who has already lost possession of the asset in question.

CAFRA distinguishes between owners who held an interest in the property at the time of the offense and those who acquired it afterward. For the first category, the claimant must demonstrate either a lack of knowledge or reasonable preventive action. For the second, good faith purchase without knowledge of the taint. A mother whose son stored drugs in her car. A landlord whose tenant conducted transactions on the premises. A business owner whose employee structured deposits without authorization. In each instance, the law assigns the burden of proving innocence to the person whose property was taken, not to the government that took it.

The forfeiture power has existed since the founding, but its modern exercise bears little resemblance to the seizure of pirate ships and contraband goods that the Founders would have recognized. When the Department of Justice budget projections include anticipated forfeiture revenue, the distinction between law enforcement and revenue generation ceases to be theoretical.

What the Supreme Court Has Refused to Require

In May 2024, the Supreme Court decided Culley v. Marshall and declined to impose a constitutional requirement for preliminary hearings in civil forfeiture cases. The question was narrow: whether the Due Process Clause demands that a court conduct a probable cause hearing shortly after the government seizes personal property. In a 6 to 3 decision, the Court held that it does not. A timely forfeiture hearing, the majority reasoned, satisfies due process without a separate preliminary proceeding.

The dissent is worth reading in its entirety, but so is Justice Gorsuch’s concurrence. Joined by Justice Thomas, Gorsuch wrote that the case “leaves many larger questions unresolved about whether, and to what extent, contemporary civil forfeiture practices can be squared with the Constitution’s promise of due process.” That two of the Court’s most committed originalists expressed open doubt about the constitutionality of modern forfeiture practice has not, as of this writing, produced a vehicle for resolution.

Five years earlier, in Timbs v. Indiana, the Court had taken a unanimous but more modest step. Tyson Timbs pleaded guilty to a drug offense carrying a maximum fine of $10,000. The State of Indiana then sought forfeiture of his $42,000 Land Rover, purchased with life insurance proceeds from his father’s death. The trial court found the forfeiture grossly disproportionate. The Indiana Supreme Court reversed, holding that the Eighth Amendment’s Excessive Fines Clause did not apply to the states. The Supreme Court disagreed, unanimously, and incorporated the Clause through the Fourteenth Amendment. The principle established was significant. Its application has been slow.

And between Timbs and Culley, between the recognition that forfeiture can constitute an excessive fine and the refusal to require a preliminary hearing before that fine is imposed, there exists a gap in which real property remains in government hands for months or years while the constitutional question waits.

Equitable Sharing and the Incentive Structure

The federal equitable sharing program permits state and local law enforcement agencies to transfer seized assets to federal authorities for forfeiture under federal law, then receive up to 80 percent of the proceeds. The program was established by the Comprehensive Crime Control Act of 1984 and has distributed more than $5 billion since inception. Its purpose, according to the Department of Justice, is to enhance cooperation among federal, state, local, and tribal law enforcement.

Its effect is different. A Washington Post investigation found that $2.5 billion had been seized through equitable sharing since 2001 without search warrants or indictments. The program creates a financial incentive for local agencies to route seizures through federal channels, particularly in states where state forfeiture law imposes higher evidentiary standards or directs proceeds to general funds rather than law enforcement budgets. A local department operating under state law that requires a conviction before forfeiture can bypass that requirement entirely by involving a federal partner. The property is forfeited under federal standards, and the local agency receives the majority of the proceeds.

The FAIR Act of 2025, introduced by Senators Rand Paul and Cory Booker in the 119th Congress, would eliminate equitable sharing. It would raise the government’s burden of proof to clear and convincing evidence, direct all forfeiture proceeds to the Treasury’s General Fund rather than to seizing agencies, and require the IRS to demonstrate knowing criminal intent before seizing funds for alleged structuring violations. The bill has been introduced in various forms since 2014. It has not become law.

Structuring and the Problem of Legal Money

The IRS seized more than $242 million in over 2,500 cases between 2005 and 2012 for alleged structuring offenses. Structuring, under 31 U.S.C. Section 5324, is the practice of conducting financial transactions in amounts designed to avoid the $10,000 currency reporting threshold imposed by the Bank Secrecy Act. The offense does not require that the underlying funds be illegal. A convenience store owner who deposits daily receipts in amounts below the reporting threshold, a restaurant operator who withdraws cash in increments that happen to fall under $10,000, each can be subject to seizure even when every dollar is lawfully earned.

A government report found that most IRS seizures for structuring involved legal source funds from businesses. In 2014, the IRS adopted a policy change stating that it would no longer pursue seizures in legal source structuring cases absent exceptional circumstances and approval at the Director level. That policy is an internal guideline, not a statutory protection. It can be revised without notice.

I want to be precise about what this means for someone who has not committed a crime. The government can seize a business account based on the pattern of deposits, without alleging that the money was earned illegally, without filing criminal charges, and without obtaining a conviction. The account holder must then hire an attorney, file a verified claim, and prove that the money is clean. During the pendency of those proceedings, the funds remain in government custody. For a small business, the seizure itself can be the sentence.

What a Defense Requires

The timeline in a federal forfeiture proceeding is punishing by design. In an administrative forfeiture, the government sends written notice to interested parties and publishes notice on an official government internet site. The claimant has 35 days from the date of the mailing of the notice to file a claim. Failure to file converts the seizure into a forfeiture by default. In a judicial forfeiture, the deadlines are governed by the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, and they are not generous.

Effective defense in a forfeiture proceeding begins with the recognition that the claimant is operating within a system that presumes the legitimacy of the seizure. The government has already taken possession. The claimant must affirmatively intervene to recover what was taken. This requires, at minimum, establishing standing, which means demonstrating a sufficient ownership interest in the seized property. It requires asserting the innocent owner defense where applicable and meeting its burden. It requires challenging the proportionality of the forfeiture under the Excessive Fines Clause, a doctrine that Timbs incorporated but that lower courts have applied with significant variation. And it may require challenging the constitutionality of the seizure itself, including Fourth Amendment violations in the initial search or seizure that produced the government’s evidence.

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In criminal forfeiture, the defense operates within the criminal case itself. A defendant convicted of a federal offense faces a forfeiture order as part of sentencing, under statutes including 18 U.S.C. Section 982 and 21 U.S.C. Section 853. Third parties with an interest in the property may petition the court under Section 853(n), asserting either a superior legal interest or a bona fide purchase. The window for third party petitions is 30 days after the preliminary order of forfeiture. Miss it, and the claim is extinguished.

There is a moment in every forfeiture case when the outcome turns on preparation that occurred before the seizure. Documentation of the lawful source of funds. Records establishing ownership and the timeline of acquisition. Evidence that the claimant had no knowledge of, or took reasonable steps to prevent, the illegal conduct alleged. The government prepares its forfeiture actions with access to grand jury subpoenas, financial records, and surveillance evidence accumulated over months or years. The claimant responds within weeks, often without access to the government’s evidence and without the funds, now seized, that would pay for representation.

The Constitutional Tension That Remains

The Eighth Amendment prohibits excessive fines. The Fifth Amendment prohibits the taking of property without due process. The Fourth Amendment prohibits unreasonable seizures. Each of these provisions applies to forfeiture, and in each instance the Court has recognized the application without requiring the remedy that would make the protection meaningful before the harm occurs. Timbs incorporated the Excessive Fines Clause but did not define the proportionality standard for forfeiture. Culley declined to require a preliminary hearing. Bajakajian limited criminal forfeiture that is grossly disproportional but left the determination to case by case analysis.

The FAIR Act would address some of these gaps legislatively. Whether Congress acts on forfeiture reform in 2025 or 2026 remains an open question, and the history of the bill provides its own answer.

What does not remain open is the need for counsel at the earliest possible moment after a seizure. The deadlines are short. The burdens are real. The government has both the property and the procedural advantage, and it does not wait.

Spodek Law Group represents individuals and businesses facing federal civil and criminal forfeiture proceedings. If your assets have been seized, or if you have received notice of a pending forfeiture action, contact the firm for a consultation.