Supreme Court to Consider Forfeiture Case

IN THE COURTS July 1997

The Supreme Court has agreed to consider whether the law that customs officials used to seize all of $357,144 in cash from a man traveling to Syria is constitutional. The man failed to file with the Customs Service a required report declaring the cash prior to attempting to leave the country through Los Angeles International Airport (U.S. v. Bajakajian, 96-1487; WestLaw 1997-WL-134399; Linda Greenhouse, "Court agrees to decide if U.S. Customs can seize all undeclared money," New York Times, May 28, 1997, p. A17; David Savage, "U.S. High Court to hear case of confiscated cash," Los Angeles Times (Washington Edition), May 28, 1997, p. B3).

The law in question, 31 U.S.C. 5324, an amendment to the Bank Secrecy Act, was intended in part to prevent and trace the money laundering of drug profits. It is illegal to export more than $10,000 in cash or other monetary instrument without filing a declaration. The law carries a penalty consisting of a fine of up to $250,000, a prison term of up to 5 years, and the forfeiture of all money involved in the offense. Hosep K. Bajakajian, who has said he was carrying the money to Syria to repay a business debt, pled guilty to failing to report the transaction, but he has fought the law that caused him to forfeit his entire sum.

Both the U.S. District Court in Los Angeles and the 9th Circuit U.S. Court of Appeals have found the law to be unconstitutional. In 1995, U.S. District Court Judge John Davies ruled that the forfeiture of all Bajakajian's cash would be "extraordinarily harsh" and would violate the Eighth Amendment's prohibition against "cruel and unusual punishment and excessive fines." The 9th Circuit ruled that any forfeiture, merely for "failure to report," was unconstitutional (59 CrL 1187). These cases rely on the U.S. Supreme Court precedent of Austin v. U.S., -- U.S. -- ,113 S.Ct. 2801, 53 CrL 2274, US Sup Ct 1993.

In its appeal to the Supreme Court, the Government warned the Justices of the danger of allowing the current ruling to stand. The nine Western states under the jurisdiction of the 9th Circuit could become "a haven for drug dealers, money launderers and tax evaders intent on conducting non-traceable currency transactions."

The Court is scheduled to hear the appeal in the fall, and a decision is expected in early 1998. Although the Court agreed to hear the appeal, Bajakajian's money has not been returned to him.