Supreme Court Limits Federal Power to Seize Property in Drug Cases

FORFEITURE March 1993

In an important step restraining the power of the federal government to seize property alleged to have been derived from drug transactions, the U.S. Supreme Court ruled 6 to 3 on February 24 that a New Jersey woman was entitled to an "innocent owner" defense against the Government's efforts to seize her home under a 1978 forfeiture amendment to the 1970 Controlled Substances Act. (Linda Greenhouse, "Court Limits U.S. Power to Confiscate Property in Drug Cases," New York Times, 2/25/93, A17).

The woman, Beth Ann Goodwin, said she did not know that a $240,000 gift she received from her boyfriend was from profits he made selling marijuana. She used the money to purchase the home.

In its ruling, United States v. A Parcel of Land, known as 92 Buena Vista Avenue, No. 91-781, the high court affirmed a 1991 ruling by the U.S. Court of Appeals for the Third Circuit. In that case, the Third Circuit found the Justice Department asserted its forfeiture authority in a manner contrary to the intent of Congress when Congress provided for an innocent owner defense in the 1978 drug forfeiture amendment. The Justice Department had argued that any proceeds of illegal drug transactions automatically belong to the Government at the time of the crime -- "the relation back" doctrine -- and that any property subsequently acquired with such proceeds was therefore also Government property. The Justice Department has argued that since Goodwin acquired the property after the drug transaction, she was barred by the "relation back" doctrine from asserting the "innocent owner" defense.

Justice John Paul Stevens was joined by Justices Harry Blackmun, Sandra Day O'Connor, and David Souter in the plurality opinion. They held that the homeowner should have an opportunity to convince the trial court that she did not know the source of the money she received from her boyfriend as a gift. The plurality were joined in a separate concurring opinion by Justice Antonin Scalia and signed by Justice Clarence Thomas.

Although the ruling reins in the application of federal forfeiture authority, it does not limit the Government's ability to seize assets directly from drug dealers. Various business interests were among those filing amicus briefs opposing Government forfeiture practice. These included the American Bankers Association, the Mortgage Bankers Association, and the Federal Home Loan Mortgage Corporation. All expressed concern that the Government's sweeping use of forfeiture and narrow view of the innocent owner defense was jeopardizing legitimate businesses that have interests in property that may be subject to forfeiture.

The decision is an indication that the high court may be troubled by the Government's increasingly aggressive use of forfeiture, according to the New York Times. It recently agreed to hear two other cases challenging forfeiture. In one, Alexander v. United States, No. 91-1526, argued in January, a First Amendment challenge was made to Government authority under federal racketeering law applied to obscenity to demand forfeiture of an entire inventory of adult bookstores including non-obscene materials. Another case, Austin v. United States, No. 92-6073, argued in April, poses a question deemed crucial by forfeiture critics: whether there need be proportionality between the severity of the offense and the value of property forfeited. In that case, a North Dakota man lost his entire car repair business and his mobile home after selling two grams of cocaine to a narcotics agent.