Report Title:

Asset Forfeiture; Drug Treatment

Description:

Amends forfeiture law to: allow 50% of proceeds to be used for drug treatment, eliminate the requirement of a bond for a claimant to recover seized property, allow the court or agency to impose fines if a claim is found to be frivolous, provides for representation by counsel.

HOUSE OF REPRESENTATIVES

H.B. NO.

1576

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to forfeiture.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that there has developed throughout the nation a growing consensus, based on scientific studies such as those conducted by the prestigious Rand Corporation, that treatment is as many as seven times more cost-effective than incarceration in dealing with the problem of drug abuse.

The legislature further finds that drug abuse, particularly the abuse of crystal methamphetamine, has become an increasingly serious problem, affecting an excessively high percentage of families, throughout the State of Hawai`i.

A survey of Hawai`i residents conducted in August 2002 by Ward Research, a distinguished survey research organization, for the Hawai`i Justice Foundation, to identify themes of justice in Hawai`i which resonate strongest among Hawai`i residents and O`ahu community leaders, found that the treating of drug offenders rather than incarcerating them was rated first (sixty-seven per cent) in Waimanalo, second (sixty-seven per cent) in Kalihi, fifth (sixty-one per cent) in Wai`anae, and sixth (fifty-three per cent) statewide among the issues rated from eight to ten, where ten is the most important. Indeed, untreated drug abuse has become a virtual plague in Hawai`i, even as recognized by national figures who recently conducted a program on the Big Island.

Although the legislature during the last session adopted section 706-622.5, Hawaii Revised Statutes, providing for treatment rather than imprisonment of first-time drug offenders, the current economic situation and deficit has prevented and will continue for the indefinite future to prevent adequate funding of drug abuse treatment programs both for first-time offenders and other incarcerated offenders, probationers, and parolees.

Each year, for at least the last two years, over $2,000,000 has been received by Hawai`i's law enforcement agencies as a result of forfeitures of property under chapter 712A, Hawaii Revised Statutes. These funds have been used productively for law enforcement and law enforcement education programs.

It also appears, however, in light of the enormous tragedy and problem of drug abuse in the State, that great long-term benefits for families and children of drug abusers and for the population at large could be achieved if effective drug treatment were funded and provided to the many people caught up in the justice system principally because of drug abuse.

There are sufficient funds made available by property forfeiture under chapter 712A to continue to reimburse law enforcement agencies for their work connected with forfeiture of property and other important work, and also to share, on roughly a fifty-fifty basis, the proceeds of property forfeiture under chapter 712A, Hawaii Revised Statutes, between law enforcement agencies and drug treatment programs. For these reasons, this Act continues and strengthens the drug forfeiture law but provides for use of up to fifty per cent of the proceeds for drug abuse treatment, giving first priority to treatment provided under section 706-622.5, Hawaii Revised Statutes.

Because it is vital that any program of property forfeiture, which involves the state or local government taking private personal and real property from its owners, comport with constitutional due process requirements and with fairness, this Act integrates many features of the federal Civil Asset Forfeiture Reform Act of 2000. Like the federal act, this Act eliminates the requirement of a bond in order for a claimant to recover seized property –- an onerous requirement that could prevent many ordinary citizens from seeking a return of their property. Instead, it allows the court or agency to impose a fine if the claim is found to be frivolous.

Other changes include adding the federal provisions for representation by counsel in appropriate cases; the federal provisions on the burden of proof that retain the current burden (preponderance of evidence) and does not include a more stringent standard (clear and convincing evidence); the federal "innocent owner defense"; provisions for the release of seized property, with safeguards, where the taking of the property pending the proceedings could work a substantial hardship; and federal provisions for the return of seized property and payment of costs to a successful claimant.

In addition, the notice provisions are strengthened to insure that notice of seizure to property owners is "reasonably calculated to come to the attention" of the owner of the seized property, in conformity to the requirements of the United States Constitution. Further, because of a serious problem involving the seizure of inexpensive property worth less than $3,500, where a lawyer's fee will usually exceed the value of the property and where the property owner cannot be expected to represent the property owner's own interest adequately in a forfeiture proceeding, this Act provides that a claimant who has not been appointed a lawyer to protect the claimant's property may elect to have the claim for forfeiture heard in the informal, inexpensive non-lawyer setting of the small claims division of the district court.

SECTION 2. Chapter 712A, Hawaii Revised Statutes, is amended by adding five new sections to be appropriately designated and to read as follows:

"§712A- Representation. (1) If a person with standing to contest the forfeiture of money or property in any forfeiture proceeding under this chapter is financially unable to obtain representation by counsel, and the person is represented by counsel appointed under chapter 802 in connection with a related criminal case, the court may authorize counsel to represent that person with respect to the claim.

(2) In determining whether to authorize counsel to represent a person under subsection (1), the court shall take into account:

(a) The person’s standing to contest the forfeiture; and

(b) Whether the claim appears to be made in good faith.

(3) If a person with standing to contest the forfeiture of property in a forfeiture proceeding under this chapter is financially unable to obtain representation by counsel, and the property subject to forfeiture is real property that is being used by the person as a primary residence or a motor vehicle or other property the forfeiture of which will cause the person substantial hardship, the court or administrator, in the case of an administrative proceeding, shall ensure that the person is represented by an attorney under chapter 802 with respect to the claim; provided that this subsection shall not apply if the forfeiture is transferred to small claims court under subsection (4).

(4) Where the value of money or property subject to forfeiture under this chapter does not exceed $3,500, exclusive of interests and costs, a person with standing to contest the forfeiture of property in a forfeiture proceeding under this chapter may have the forfeiture action removed to the small claims division of the district court for hearing pursuant to section 633-27; provided that this subsection shall not apply to a criminal in personam proceeding brought by the State under section 712A-2(3).

§712A- Burden of proof. In a suit or action brought under this chapter for the civil forfeiture of any property:

(a) The burden of proof is on the governmental agency to establish, by a preponderance of the evidence, that the property is subject to forfeiture;

(b) The governmental agency may use evidence gathered after the filing of a complaint for forfeiture to establish, by a preponderance of the evidence, that property is subject to forfeiture; and

(c) If the government's agency’s theory of forfeiture is that the property subject to forfeiture under section 712A-5 was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the government shall establish that there was a substantial connection between the property and the offense.

§712A– Innocent owner defense. (1)  An innocent owner's interest in property shall not be forfeited under this chapter. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence.

(2) (a) With respect to a property interest in existence at the time the illegal conduct giving rise to forfeiture took place, the term "innocent owner" means an owner who:

(i) Did not know of the conduct giving rise to forfeiture; or

(ii) Upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.

(b) (i)  For the purposes of this paragraph, ways in which a person may show that the person did all that reasonably could be expected may include demonstrating that the person, to the extent permitted by law:

(A) Gave timely notice to an appropriate law enforcement agency of information that led the person to know the conduct giving rise to a forfeiture would occur or has occurred; and

(B) In a timely fashion revoked or made a good faith attempt to revoke permission for those engaging in such conduct to use the property or took reasonable actions in consultation with a law enforcement agency to discourage or prevent the illegal use of the property.

(ii) A person is not required by this subparagraph to take steps that the person reasonably believes would be likely to subject any person (other than the person whose conduct gave rise to the forfeiture) to physical danger.

(3) (a)  With respect to a property interest acquired after the conduct giving rise to the forfeiture has taken place, the term "innocent owner" means a person who, at the time that person acquired the interest in the property:

(i) Was a bona fide purchaser or seller for value (including a purchaser or seller of goods or services for value); and

(ii) Did not know and was reasonably without cause to believe that the property was subject to forfeiture.

(b) An otherwise valid claim under subparagraph (a) shall not be denied on the ground that the claimant gave nothing of value in exchange for the property if

(i) The property is the primary residence of the claimant;

(ii) Depriving the claimant of the property would deprive the claimant of the means to maintain reasonable shelter in the community for the claimant and all dependents residing with the claimant;

(iii) The property is not, and is not traceable to, the proceeds of any criminal offense; and

(iv) The claimant acquired the claimant's interest in the property through marriage, divorce, or legal separation, or the claimant was the spouse or legal dependent of a person whose death resulted in the transfer of the property to the claimant through inheritance or probate,

except that the court shall limit the value of any real property interest for which innocent ownership is recognized under this subparagraph to the value necessary to maintain reasonable shelter in the community for such claimant and all dependents residing with the claimant.

(4)  Notwithstanding this section, no person may assert an ownership interest under this section in contraband or other property that is illegal to possess.

(5)  If the court determines, in accordance with this section, that an innocent owner has a partial interest in property otherwise subject to forfeiture, or a joint tenancy or tenancy by the entirety in such property, the court may enter an appropriate order:

(a) Severing the property;

(b) Transferring the property to the government with a provision that the government compensate the innocent owner to the extent of the innocent owner's ownership interest once a final order of forfeiture has been entered and the property has been reduced to liquid assets; or

(c) Permitting the innocent owner to retain the property subject to a lien in favor of the government to the extent of the forfeitable interest in the property.

(6)  In this subsection, the term "owner":

(a) Means a person with an ownership interest in the specific property sought to be forfeited, including a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest; and

(b) Does not include:

(i) A person with only a general unsecured interest in, or claim against, the property or estate of another;

(ii) A bailee unless the bailor is identified and the bailee shows a colorable legitimate interest in the property seized; or

(iii) A nominee who exercises no dominion or control over the property.

§712A- Release of seized property. (1)  A person claiming an interest in seized property is entitled to immediate release of the property if:

(a) The claimant has a possessory interest in the property;

(b) The claimant has sufficient ties to the community to provide assurance that the property will be available at the time of the trial;

(c) The continued possession by the governmental or judicial agency pending the final disposition of forfeiture proceedings will cause substantial hardship to the claimant, such as preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless;

(d) The claimant's likely hardship from the continued possession by the agency of the seized property outweighs the risk that the property will be destroyed, damaged, lost, concealed, or transferred if it is returned to the claimant during the pendency of the proceeding; and

(e) None of the conditions set forth in subsection (8) applies.

(2)  A claimant seeking release of property under this subsection shall request possession of the property from the appropriate official. The request shall set forth the basis on which the requirements of subsection (1) are met.

(3) (a) If not later than fifteen days after the date of a request under subsection (2) the property has not been released, the claimant may file a petition in the court or agency in which the forfeiture complaint has been filed or, if no complaint has been filed, in the court or agency in which the seizure warrant was issued or in the district court for the district in which the property was seized.

(b) The petition described in subparagraph (a) shall set forth:

(i) The basis on which the requirements of subsection (1) are met; and

(ii) The steps the claimant has taken to secure release of the property from the appropriate official.

(4)  If the agency or court establishes that the claimant's claim is frivolous, the court shall deny the petition. In responding to a petition under this subsection on other grounds, the seizing official or agency may in appropriate cases submit evidence ex parte in order to avoid disclosing any matter that may adversely affect an ongoing criminal investigation or pending criminal trial.

(5)  The court shall render a decision on a petition filed under subsection (3) not later than thirty days after the date of the filing, unless the thirty-day limitation is extended by consent of the parties or by the court for good cause shown. (6) If:

(a) A petition is filed under subsection (3); and

(b) The claimant demonstrates that the requirements of subsection (1) have been met,

the court or agency shall order that the property be returned to the claimant, pending completion of proceedings to obtain forfeiture of the property.

(7)  If the court grants a petition under subsection (3):

(a) The court may enter any order necessary to ensure that the value of the property is maintained while the forfeiture action is pending, including

(i) Permitting the inspection, photographing, and inventory of the property;

(ii) Fixing a bond to secure the reasonable value of the property; and

(iii) Requiring the claimant to obtain or maintain insurance on the subject property; and

(b) The government may place a lien against the property or file a lis pendens to ensure that the property is not transferred to another person.

(8)  This subsection shall not apply if the seized property:

(a) Is contraband, currency, or other monetary instrument, or electronic funds unless the currency or other monetary instrument or electronic funds constitutes the assets of a legitimate business which has been seized;

(b) Is to be used as evidence of a violation of the law;

(c) By reason of design or other characteristic, is particularly suited for use in illegal activities; or

(d) Is likely to be used to commit additional criminal acts if returned to the claimant.

§712A- Return of property to claimant; liability for wrongful seizure; attorney fees, costs, and interest. (1)  Upon the entry of a judgment for the claimant in any proceeding to condemn or forfeit property seized or arrested under this chapter:

(a) The property shall be returned forthwith to the claimant or his agent; and

(b) If it appears that there was reasonable cause for the seizure or arrest, the court or agency shall cause a proper certificate thereof to be entered and, in that case, neither the person who made the seizure or arrest nor the prosecutor shall be liable to suit or judgment on account of such suit or prosecution, nor shall the claimant be entitled to costs, except as provided in subsection (2).

(2) (a)  Except as provided in paragraph (b), in any civil proceeding to forfeit property under any provision of this chapter in which the claimant substantially prevails, the United States shall be liable for:

(i) Reasonable attorney fees and other litigation costs reasonably incurred by the claimant;

(ii) Post-judgment interest, and

(iii) In cases involving currency, other negotiable instruments, or the proceeds of an interlocutory sale:

(A) Interest actually paid to the State or county from the date of seizure or arrest of the property that resulted from the investment of the property in an interest-bearing account or instrument; and

(B) An imputed amount of interest that the currency, instruments, or proceeds would have earned at the rate applicable to the thirty-day treasury bill, for any period during which no interest was paid (not including any period when the property reasonably was in use as evidence in an official proceeding or in conducting scientific tests for the purpose of collecting evidence), commencing fifteen days after the property was seized by a state or county law enforcement agency, or was turned over to a sate or county law enforcement agency by a federal law enforcement agency.

(b) (i) The state or county shall not be required to disgorge the value of any intangible benefits nor make any other payments to the claimant not specifically authorized by this subsection;

(ii) Paragraph (a) shall not apply if the claimant is convicted of a crime for which the interest of the claimant in the property was subject to forfeiture under this chapter.

(c) If there are multiple claims to the same property, the State or county shall not be liable for costs and attorney's fees associated with any such claim if the State or county:

(i) Promptly recognizes the claim;

(ii) Promptly returns the interest of the claimant in the property to the claimant, if the property can be divided without difficulty and there are no competing claims to that portion of the property;

(iii) Does not cause the claimant to incur additional, reasonable costs or fees; and

(iv) Prevails in obtaining forfeiture with respect to one or more of the other claims.

(d) If the court or agency enters judgment in part for the claimant and in part for the state or county, the court or agency shall reduce the award of costs and attorney fees accordingly."

SECTION 3. Section 633-27, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) All district courts, except as otherwise provided, shall exercise jurisdiction conferred by this chapter, and while sitting in the exercise of that jurisdiction, shall be known and referred to as the small claims division of the district court; provided that the jurisdiction of the court when sitting as a small claims division of the district court shall be confined to:

(1) Cases for the recovery of money only where the amount claimed does not exceed $3,500 exclusive of interest and costs, except as provided by section 633-30;

(2) Cases involving disagreement between landlord and tenant about the security deposit in a residential landlord-tenant relationship; [and]

(3) Cases for the return of leased or rented personal property worth $3,500 or less where the amount claimed owed for that lease or rental does not exceed $3,500 exclusive of interest and costs[.]; and

(4) Cases for the forfeiture of money or property worth $3,500 or less, exclusive of interests and costs, removed to the small claims division pursuant to section 712A-__.

This chapter shall not abridge or affect the jurisdiction of the district courts under paragraphs (1) and (3) to determine cases under the ordinary procedures of the court, it being optional with the plaintiff in the cases to elect the procedure of the small claims division of the district court or the ordinary procedures, as provided by rule of court. No case filed in the small claims division after December 31, 1991, shall be removed from the small claims division to be heard under the ordinary procedures of the district court unless the removal is agreed to by the plaintiff. In cases arising under paragraph (2) the jurisdiction of the small claims division of the district court shall be exclusive. This subsection shall not abrogate nor supersede sections 604-5, 633-30, and 633-31."

SECTION 4. Section 712A-5, Hawaii Revised Statutes, is amended to read as follows:

"§712A-5 Property subject to forfeiture; exemption. (1) The following is subject to forfeiture:

(a) Property described in a statute authorizing forfeiture;

(b) Property used or intended for use in the commission of, attempt to commit, or conspiracy to commit a covered offense, or which facilitated or assisted such activity;

(c) Any firearm which is subject to forfeiture under any other subsection of this section or which is carried during, visible, or used in furtherance of the commission, attempt to commit, or conspiracy to commit a covered offense, or any firearm found in proximity to contraband or to instrumentalities of an offense;

(d) Contraband or untaxed cigarettes in violation of chapter 245, shall be seized and summarily forfeited to the State without regard to the procedures set forth in this chapter; provided that marijuana for medical purposes pursuant to chapter 329 shall not be deemed to be contraband;

(e) Any proceeds or other property acquired, maintained, or produced by means of or as a result of the commission of the covered offense;

(f) Any property derived from any proceeds which were obtained directly or indirectly from the commission of a covered offense;

(g) Any interest in, security of, claim against, or property or contractual right of any kind affording a source of influence over any enterprise which has been established, participated in, operated, controlled, or conducted in order to commit a covered offense;

(h) All books, records, bank statements, accounting records, microfilms, tapes, computer data, or other data which are used, intended for use, or which facilitated or assisted in the commission of a covered offense, or which document the use of the proceeds of a covered offense.

(2) Except that:

(a) Real property, or an interest therein, may be forfeited under the provisions of this chapter only in cases in which the covered offense is chargeable as a felony offense under state law;

(b) [No property shall be forfeited under this chapter to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge and consent of that owner;] Forfeiture of property or an interest in property under this chapter is subject to the innocent owner defense, as set forth in section 712A- ;

(c) No conveyance used by any person as a common carrier in the transaction of a business as a common carrier is subject to forfeiture under this section unless it appears that the owner or other person in charge of the conveyance is a consenting party or privy to a violation of this chapter[;

(d) No conveyance is subject to forfeiture under this section by reason of any act or omission established by the owner thereof to have been committed or omitted without the owner's knowledge or consent; and

(e) A forfeiture of a conveyance encumbered by a bona fide security interest is subject to the interest of the secured party if the secured party neither had knowledge of nor consented to the act or omission]."

SECTION 5. Section 712A-7, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) In the event of a seizure for forfeiture under section 712A-6, the property is not subject to replevin, conveyance, sequestration, or attachment but is deemed to be in the custody of the law enforcement agency making the seizure for forfeiture. The seizing agency or the prosecuting attorney may authorize the release of the seizure for forfeiture on the property if forfeiture or retention is unnecessary, may transfer the property to any other county, state, or federal agency or may transfer the action to another prosecuting attorney by discontinuing forfeiture proceedings in favor of forfeiture proceedings initiated by the other agency or prosecuting attorney[.]; provided that all forfeiture actions shall proceed in a state court or state agency of appropriate jurisdiction under this chapter if the property was seized by a local or state law enforcement agency as a result of a criminal investigation or prosecution under the laws of this State. Unless directed by an authorized agent of the federal government acting pursuant to federal law, and unless the property is subject to forfeiture under federal law because of its relation to a violation of federal law being prosecuted in federal court, no state or local law enforcement agency or officer may transfer any property seized by the state or local agency to a federal agency for forfeiture under federal law. An action pursuant to this chapter shall be consolidated with any other action or proceeding pursuant to this chapter relating to the same property upon motion by the prosecuting attorney in either action."

SECTION 6. Section 712A-8, Hawaii Revised Statutes, is amended to read as follows:

"§712A-8 Notice of forfeiture proceedings. [Unless otherwise provided, whenever] Whenever notice is required under this chapter it shall be given in one of the following ways:

(a) If the owner's or interest-holder's name and current address are known:

(i) By personal service; or

(ii) By certified mail[;], return receipt requested;

(b) If the owner's or interest-holder's interest is required by law to be on record with a state or federal agency in order to perfect an interest in the property, but the person's current address is not known, by mailing a copy of the notice by certified mail to any address on the record[;] and by publication in one issue of a newspaper of general circulation in the county in which the seizure occurs; or

(c) If the owner's or interest-holder's address is not known, and is not on record pursuant to paragraph (b), or if the person's interest is not known, by publication in [one issue] three issues of a newspaper of general circulation in the county in which the seizure occurs."

SECTION 7. Section 712A-10, Hawaii Revised Statutes, is amended to read as follows:

"§712A-10 Administrative forfeiture. The prosecuting attorney may initiate administrative forfeiture of property other than real property, the estimated value of which is less than $100,000, or of any vehicle or conveyance, regardless of value. Administrative forfeiture shall be processed in the following manner:

(1) The prosecuting attorney shall file a petition with the attorney general, pursuant to rules adopted by the attorney general.

(2) The prosecuting attorney shall give notice of pending forfeiture by making reasonable efforts to serve a copy of the petition in a manner provided in section 712A-8(a) or 712A-8(b) on all persons known to have an interest in the property, together with instructions for filing a claim [and cost or in pauperis bond,] or a petition for remission or mitigation.

(3) The attorney general shall give notice of intention to forfeit the property administratively by publication in the manner provided in section 712A-8(c). Notice by publication shall include:

(a) A description of the property;

(b) The estimated value of the property;

(c) The date and place of the seizure;

(d) The offense for which the property is subject to forfeiture;

(e) Instructions for filing a claim [and cost or in pauperis bond,] or a petition for remission or mitigation; and

(f) Notice that the property will be forfeited to the State if a claim [and cost or in pauperis bond] or a petition for remission or mitigation is not filed in substantial compliance with this section.

(4) Persons claiming an interest in the property may file either a petition for remission or mitigation of forfeiture, or a claim [and cost or in pauperis bond], but not both, with the attorney general, within thirty days of notice by publication or receipt of written notice, whichever is earlier. Notwithstanding section 1-29, the thirty-day time period prescribed herein is computed by excluding the first day and including the last day, unless the last day is a Saturday, Sunday, or holiday and then it is also excluded, and the thirty-day time period runs until the end of the next day which is not a Saturday, Sunday, or a holiday. "Holiday" includes any day designated as a holiday pursuant to section 8-1.

(5) Any person claiming seized property may seek remission or mitigation of the forfeiture by timely filing a petition with the attorney general. A petition for remission or mitigation shall not be used to challenge the sufficiency of the evidence to support the forfeiture or the actions of any government official but shall presume a valid forfeiture and ask the attorney general to invoke the executive power to pardon the property, in whole or in part. The petition shall be signed by the petitioner and sworn on oath before a notary public and shall contain the following:

(a) A reasonably complete description of the property;

(b) A statement of the interest of the petitioner in the property, as owner or interest-holder which may be supported by bills of sale, contracts, or mortgages, or other documentary evidence; and

(c) Facts and circumstances sufficient to show whether the petitioner:

(i) Owns or holds an interest in the seized property as defined by section 712A-1;

(ii) Had any knowledge that the property was or would be involved in any violation of the law;

(iii) Had any knowledge of the particular violation which subjected the property to seizure and forfeiture;

(iv) Had any knowledge that the user of the property had any record, including arrests, except when the person was acquitted or the charges dismissed due to lack of evidence, for the violation which subjected the property to seizure and forfeiture or for any crime which is similar in nature.

Any subsequent pleadings or written communications alleging matters pertaining to [[]subparagraph[]] (b) or (c) of this [[]paragraph[]] must also be signed by the petitioner and sworn on oath before a notary public.

(6) Any person may make a claim or a petition under paragraph (4) without posting bond with respect to the property which is the subject of the claim or petition.

[(6)] (7) If the attorney general, with sole discretion, determines that remission is not warranted, the attorney general may discretionarily mitigate the forfeiture where the petitioner has not met the minimum requirements for remission but where there are present other extenuating circumstances indicating that some relief should be granted to avoid extreme hardship. Mitigation may also be granted where the minimum requirements for remission have been met but the overall circumstances are such that the attorney general determines that complete relief is not warranted. Mitigation shall take the form of a money penalty imposed upon the petitioner which shall be deposited into the criminal forfeiture fund established under section 712A-16. Extenuating circumstances include:

(a) Language or culture barrier;

(b) Humanitarian factors such as youth or extreme age;

(c) Presence of physical or mental disease, disorder, or defect;

(d) Limited or peripheral criminal culpability;

(e) Cooperation with the seizing agency or the prosecuting attorney; and

(f) Any contributory error on the part of government officials.

[(7)] (8) It shall be the duty of the attorney general to inquire into the facts and circumstances alleged in a petition for remission or mitigation of forfeiture. However, no petitioner is entitled to a hearing on the petition for remission or mitigation. Hearings, if any, shall be held at the discretion of the attorney general.

[(8)] (9) The attorney general shall provide the seizing agency and the petitioner a written decision on each petition for remission or mitigation within sixty days of receipt of the petition unless the circumstances of the case require additional time, in which case the attorney general shall notify the petitioner in writing and with specificity within the sixty-day period that the circumstances of the case require additional time and further notify the petitioner of the expected decision date.

[(9)] (10) Any person claiming seized property may seek judicial review of the seizure and proposed forfeiture by timely filing a claim with the attorney general [a claim and bond to the State in the amount of ten per cent of the estimated value of the property or in the sum of $2,500, whichever is greater, with sureties to be approved by the attorney general, upon condition that if the claimant fails to prove that claimant's interest is exempt from forfeiture under section 712A-5, the claimant shall pay the State's costs and expenses, including reasonable attorneys fees incurred in connection with a judicial proceeding. In lieu of a cost bond, a claimant may file an in pauperis bond sworn on oath before a notary public. An in pauperis bond shall be in the form set out in the appendix to the rules of penal procedure.] The claim shall be signed by the claimant and sworn on oath before a notary public and shall comply with the requirements of section 712A-12(5). Upon receipt of the claim [and bond], the attorney general shall notify the prosecuting attorney who may discretionarily continue to seek forfeiture by petitioning the circuit court for forfeiture of the property within forty-five days of receipt of notice that a proper claim [and bond] has been filed. The prosecuting attorney may also elect to honor the claim in which case the prosecuting attorney shall notify the seizing agency and authorize the release of the seizure for forfeiture on the property or on any specified interest in it.

[(10)] (11) If a judicial forfeiture proceeding is instituted subsequent to notice of administrative forfeiture pursuant to paragraph [(9),] (10), no duplicate or repetitive notice shall be required. The judicial proceeding, if any, shall adjudicate all timely filed claims. At the judicial proceeding, the claimant may testify, present evidence and witnesses on the claimant's behalf, and cross-examine witnesses who appear at the hearing. The State may present evidence and witnesses in rebuttal and in defense of its claim to the property and cross-examine witnesses who appear at the hearing. The State has the initial burden of showing by a preponderance of the evidence that the claimant's interest in the property is subject to forfeiture. On such a showing by the State, the claimant has the burden of showing by a preponderance of the evidence that the claimant's interest in the property is not subject to forfeiture.

[(11)] (12) In the event a claim [and bond] has not been filed in substantial compliance with this section, or if the attorney general, with sole discretion, determines that remission or mitigation is not warranted, the attorney general shall order forfeited all property seized for forfeiture. In the event the attorney general, with sole discretion, determines that remission or mitigation is warranted, the attorney general shall notify the seizing agency and the prosecuting attorney and order the release of the seizure for forfeiture on the property or on any specified interest in it. There shall be no appeal from the attorney general's decision or order of forfeiture or remission or mitigation.

[(12) Administrative proceedings and the adoption of rules under this section are exempt from the requirements of chapter 91, the Hawaii administrative procedure act, and are adjudicatory functions for the purposes of applicable sections of the Hawaii Revised Statutes.]

(13) In any civil forfeiture proceeding under this chapter in which an agency of state or county government prevails, if the court or administrative agency finds that the claimant’s assertion of an interest in the property was frivolous, the court may impose a civil fine on the claimant in an amount equal to ten per cent of the value of the forfeited property, but in no event shall the fine be less than $250 or greater than $5,000."

SECTION 8. Section 712A-11, Hawaii Revised Statutes, is amended by amending subsections (6) and (7) to read as follows:

"(6) An acquittal or dismissal of a covered offense in a criminal proceeding shall [not] preclude civil proceedings under this chapter[.] with regard to property associated with that covered offense under section 712A-5(b),(e),(f),(g), and (h).

(7) [In] Subject to the innocent owner defense set forth in section 712A- , in any judicial forfeiture proceeding pursuant to this chapter, if a defense is based on an exemption provided for in this chapter, the burden of proving the existence of the exemption by a preponderance of the evidence is on the claimant or party raising the defense, and it is not necessary to negate the exemption in any petition, application, complaint, or indictment."

SECTION 9. Section 712A-12, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) [If] Subject only to section 712A- relating to removal to the small claims division of the district court, if a forfeiture is authorized by law, it shall be ordered by a court on an action in rem brought by the prosecuting attorney on a verified petition for forfeiture filed in the criminal or civil division of the circuit court."

SECTION 10. Section 712A-16, Hawaii Revised Statutes, is amended to read as follows:

"§712A-16 Disposition of property forfeited. (1) All property and moneys forfeited to the State under this chapter and, to the extent permitted by federal law, all property transferred to the State by the federal government as a result of civil or criminal asset forfeiture under federal law, shall be transferred to the attorney general who:

(a) [May] Subject to the priorities set forth in subsections (2),(3), and (4), may transfer property, other than currency, which shall be distributed in accordance with subsection (2), to any local or state government entity, municipality, or law enforcement agency within the State;

(b) May sell forfeited property to the public by public sale; provided that for leasehold real property:

(i) The attorney general shall first offer the holder of the immediate reversionary interest the right to acquire the leasehold interest and any improvements built or paid for by the lessee for the then fair market value of the leasehold interest and improvements. The holder of the immediate reversionary interest shall have thirty days after receiving written notice within which to accept or reject the offer in writing; provided that the offer shall be deemed to be rejected if the holder of the immediate reversionary interest has not communicated acceptance to the attorney general within the thirty-day period. The holder of the immediate reversionary interest shall have thirty days after acceptance to tender to the attorney general the purchase price for the leasehold interest and any improvements, upon which tender the leasehold interest and improvements shall be conveyed to the holder of the immediate reversionary interest.

(ii) If the holder of the immediate reversionary interest fails to exercise the right of first refusal provided in subparagraph (i), the attorney general may proceed to sell the leasehold interest and any improvements by public sale.

(iii) Any dispute between the attorney general and the holder of the immediate reversionary interest as to the fair market value of the leasehold interest and improvements shall be settled by arbitration pursuant to chapter 658A;

(c) May sell or destroy all raw materials, products, and equipment of any kind used or intended for use in manufacturing, compounding, or processing a controlled substance or any untaxed cigarettes in violation of chapter 245;

(d) May compromise and pay valid claims against property forfeited pursuant to this chapter; or

(e) May make any other disposition of forfeited property authorized by law.

(2) All forfeited property and the sale proceeds thereof, up to a maximum of [three million dollars] $3,000,000 per year, not previously transferred pursuant to [[]subsection[]] (1)(a) [of this section, shall], after payment of expenses of administration and sale, shall be distributed as follows:

(a) One quarter shall be distributed pro rata to the unit or units of state or local government [[]whose[]] officers or employees conducted the investigation and caused the arrest of the person whose property was forfeited or seizure of the property for forfeiture;

(b) One quarter shall be distributed to the prosecuting attorney who instituted the action producing the forfeiture; and

(c) One half shall be deposited into the criminal forfeiture fund established by this chapter.

(3) Property and money distributed to units of state and local government shall be used for law enforcement and drug abuse treatment purposes, and shall complement but not supplant the funds regularly appropriated for such purposes.

(4) There is established in the department of the attorney general a revolving fund to be known as the criminal forfeiture fund, hereinafter referred to as the "fund" in which shall be deposited one-half of the proceeds of a forfeiture and any penalties paid pursuant to section 712A-10(6). All moneys in the fund shall be expended by the attorney general and are hereby appropriated for the following purposes:

(a) The payment of any expenses necessary to seize, detain, appraise, inventory, safeguard, maintain, advertise, or sell property seized, detained, or forfeited pursuant to this chapter or of any other necessary expenses incident to the seizure, detention, or forfeiture of such property and such contract services and payments to reimburse any federal, state, or county agency for any expenditures made to perform the foregoing functions;

(b) The payment:

(i) For drug treatment programs for first-time drug offenders sentenced to probation to undergo and complete a drug treatment program pursuant to section 706-622.5;

(ii) For drug treatment programs provided within a correctional facility; and

(iii) For drug treatment programs provided outside a correctional facility for persons who are on probation or parole but do not qualify for the programs pursuant to section 706-622.5.

Priority shall be given to programs conducted pursuant to section 706-622.5;

(c) Funds remaining in the fund after all justifiable claims made under paragraphs (a) and (b) have been paid shall be awarded for the following purposes:

[(b)] (i) The payment of awards for information or assistance leading to a civil or criminal proceeding;

[(c)] (ii) The payment of supplemental sums to state and county agencies for law enforcement purposes; and

[(d)] (iii) The payment of expenses arising in connection with programs for training and education of law enforcement officers.

(5) The attorney general may[, without regard to the requirements of chapter 91, promulgate rules and regulations] adopt rules concerning the disposition of property, the use of the fund, and compromising and paying valid claims against property forfeited pursuant to this chapter.

(6) Not less than twenty days prior to the convening of each regular session, the attorney general shall provide to the legislature a report on the use of the Hawaii omnibus criminal forfeiture act during the fiscal year preceding the legislative session. The report shall include:

(a) The total amount and type of property seized by law enforcement agencies;

(b) The total number of administrative and judicial actions filed by prosecuting attorneys and the disposition thereof;

(c) The total number of claims or petitions for remission or mitigation filed in administrative actions and the dispositions thereof;

(d) The total amount and type of property forfeited and the sale proceeds thereof;

(e) The total amount and type of property distributed to units of state and local government;

(f) The amount of money deposited into the criminal forfeiture fund; and

(g) The amount of money expended by the attorney general from the criminal forfeiture fund under subsection (5) and the reason for the expenditures."

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect upon its approval.

INTRODUCED BY:

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