Amends the forfeiture statutes by adding provisions similar to the Civil Asset Forfeiture Reform Act of 2000 including provisions clarifying the burden of proof in forfeiture proceedings and the "innocent owner" defense, provisions for the release of seized property and establishing government liability for wrongful seizure. Allows removal of cases worth less than $3500 to small claims court. Requires moneys from the criminal forfeiture revolving fund to be used for drug treatment programs. (SD1)
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
relating to forfeitures.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that for at least the last two years, Hawaii’s law enforcement agencies have generated approximately $1,000,000 per year through the forfeiture of property under chapter 712A, Hawaii Revised Statutes. While these funds have been used productively by law enforcement for training and other purposes, it also appears that significant benefits could be achieved if effective drug treatment were funded and provided to the many people caught up in the criminal justice system principally because of drug abuse. For this reason, this Act dedicates one-quarter of the net proceeds generated by forfeiture to the support of drug treatment programs, especially those serving first-time offenders.
This Act also integrates many features of the federal Civil Asset Forfeiture Reform Act of 2000. These changes include adding the federal provision on the burden of proof that retains the current burden (preponderance of evidence) but makes the requirements clearer; the federal provision regarding the "innocent owner defense" which clarifies the circumstances in which it applies; federal provisions for the release of seized property, with safeguards, pending the outcome of forfeiture proceedings where continued detention of the property could work a substantial hardship; and federal provisions for the return of seized property, payment of costs to a successful claimant, and civil fines against claimants if the claim is found to be frivolous.
In addition, this bill provides that a claimant may elect to have the forfeiture case heard in the informal, inexpensive, non-lawyer setting of the small claims division of the district court because, in cases where the property is worth less than $3500, a lawyer’s fee will usually exceed the value of the property.
SECTION 2. Chapter 712A, Hawaii Revised Statutes, is amended by adding five new sections to be appropriately designated and to read as follows:
"§712A-A 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 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-B 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) 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:
(a) Did not know of the conduct giving rise to forfeiture; or
(b) Upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate the use of the property.
(3) For the purpose of subsection (2), a person may show that the person "did all that reasonably could be expected" by 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 the 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.
A person is not required 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 bodily injury.
(4) With respect to a property interest acquired after the conduct giving rise to forfeiture has taken place, the term "innocent owner" means a person who, at the time that person acquired the interest in the property:
(a) Was a bona fide purchaser or seller for value, including a purchaser or seller of goods or services for value; and
(b) Did not know and was reasonably without cause to believe that the property was subject to forfeiture.
(5) An otherwise valid claim under subsection (4)(a) shall not be denied on the ground that the claimant gave nothing of value in exchange for the property if:
(a) The property is the primary residence of the claimant;
(b) 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;
(c) The property is not, and is not traceable to, the proceeds of any criminal offense; and
(d) The claimant acquired his or her 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 subsection to the value necessary to maintain reasonable shelter in the community for such claimant and all dependents residing with the claimant.
(6) Notwithstanding any provision of this section to the contrary, no person may assert an ownership interest under this section in contraband or other property that is illegal to possess.
(7) 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 his or her 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.
(8) In this section, the term "owner" means:
(a) 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-C Release of Seized Property. (1) Upon motion made by the claimant in a judicial proceeding under this chapter, a court may order the return of property during the pendency of a proceeding if the claimant demonstrates that:
(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 (5) apply.
(2) In responding to a motion made pursuant to this section, the seizing agency may submit evidence to the court ex parte in order to avoid disclosing any matter that may adversely affect an ongoing criminal investigation or pending criminal proceeding.
(3) The court shall render a decision on a motion filed pursuant to this section not later than thirty days after the date of the filing, unless the thirty-day period is extended by consent of the parties or by the court for good cause shown.
(4) If the court grants a motion made pursuant to this section:
(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.
(5) The court shall not grant a motion made pursuant to this section if the property:
(a) Is contraband, currency, or other monetary instrument, or electronic funds unless such currency or other monetary instrument or electronic funds constitutes the assets of a legitimate business that 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-D Return of property to claimant; liability for wrongful seizure; attorney fees, costs, and interest; civil fine for frivolous claims. (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 the claimant's agent; and
(b) If it appears that there was reasonable cause for the seizure, the court shall cause a proper certificate thereof to be entered and, in that case, neither the person who made the seizure, nor the prosecutor who filed suit, shall be liable to suit or judgment on account of the seizure or suit, nor shall the claimant be entitled to costs, except as provided in subsection (2).
(2) Except as provided in subsections (3), (4) and (5), in any civil proceeding to forfeit property under this chapter in which the claimant substantially prevails, the government shall be liable for:
(a) Reasonable attorney fees and other litigation costs reasonably incurred by the claimant;
(b) Post-judgment interest; and
(c) In cases involving currency, other negotiable instruments, or the proceeds of an interlocutory sale:
(i) 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
(ii) An imputed amount of interest that such 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 state or county law enforcement agency by a federal law enforcement agency;
provided that the provisions of this subsection 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.
(3) If there are multiple claims to the same property, the State or county shall not be liable for costs and attorneys fees associated with any such claim if the State or county:
(a) Promptly recognizes such claim;
(b) 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;
(c) Does not cause the claimant to incur additional, reasonable costs or fees; and
(d) Prevails in obtaining forfeiture with respect to one or more of the other claims.
(4) If the court 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.
(5) 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 section.
(6) In any civil forfeiture proceeding under this chapter in which an agency of state or county government prevails, if the court 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.
§712A-E Removal to small claims division of the district court. Where the value of money or property subject to forfeiture under this chapter does not exceed the jurisdictional limit for the small claims division of the district court established by section 633-27(a)(1), a person with standing to contest the forfeiture of property in a proceeding under this chapter may remove the forfeiture action to the small claims division of the district court for hearing pursuant to section 633-27; provided that this section shall not apply to a criminal in personam proceeding brought by the State pursuant to section 712A-13."
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.
(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-E.
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 no marijuana permitted for medical purposes pursuant to chapter 329, shall 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;
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;] No property, or an interest in property, shall be forfeited under this chapter to the extent that the innocent owner defense is established pursuant to section 712A-B;
(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 under this chapter in a state court or agency of appropriate jurisdiction if the property was seized by a state or local 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, 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-11, Hawaii Revised Statutes, is amended by amending subsection (7) to read as follows:
"(7) 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] is on the claimant or party raising the defense to prove the defense by a preponderance of the evidence, and it is not necessary to negate the exemption in any petition, application, complaint, or indictment."
SECTION 7. Section 712A-12, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:
If] Subject only to section 712A-E 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 8. 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 and moneys transferred to a state or local law enforcement agency 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 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 per year, not previously transferred pursuant to [
subsection[ ]] (1)(a) [ of this section], shall, after payment of expenses of administration and sale, 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 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) After deduction of expenses paid under subsection 4(a), one-half of the remaining proceeds of forfeiture deposited into the fund in any given fiscal year shall be expended the following year for:
(i) Drug treatment programs for first-time drug offenders required to complete a drug treatment program pursuant to section 706-622.5 as a condition of probation;
(ii) Drug treatment programs provided within a correctional facility; and
(iii) 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 payments made pursuant to paragraphs (a) and (b) 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] adopt rules and regulations 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 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 10. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
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. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
SECTION 13. This Act shall take effect on July 1, 2003.