Fighting Corruption in U.S. Civil Asset Forfeiture Requires State-by-State Reforms

Civil asset forfeiture is a judicial process through which law enforcement officials seize assets belonging to a person suspected of a crime. To be subject to forfeit, the assets in question must be either the proceeds of crime or were used to further that criminal activity, but in many jurisdictions, civil asset forfeiture does not require a criminal conviction, or even the formal filing of criminal charges, and the typical legal threshold is probable cause that the seized property is connected to criminal activity, rather than the “beyond a reasonable doubt” standard generally required for a criminal conviction.

In the international context, civil asset forfeiture is an integral component in the battle against corruption. Empowering law enforcement agencies to seize ill-gotten gains, without the need to first secure a criminal conviction, is one of the most effective methods of punishing corrupt actors and depriving them of the proceeds of their crimes. But civil asset forfeiture is not limited to seizing the proceeds of grand corruption, and in the United States, the civil asset forfeiture system, particularly at the state and local level, has itself has become a significant vector for corruption, albeit on a much smaller scale, with local officials taking advantage of lax oversight to use seized funds for their own personal benefit. For example, in March 2020, the Michigan State Attorney General’s Office brought charges against Macomb County Prosecutor Eric Smith, alleging that Smith and other county officials had misused forfeiture funds for things like personal home improvements (including a security system for Smith’s house and garden benches for several other employee’s homes), parties at country clubs, and campaign expenditures. Smith is far from the only public official accused of corruption relating to forfeiture funds. To take just a few other examples: State revenue investigators in Georgia used millions in forfeited assets to purchase travel and trinkets like engraved firearms; police officers in Hunt County, Texas awarded themselves personal bonuses of up to $26,000 from forfeiture accounts; and the District Attorney in Lancaster County, Pennsylvania leased a new personal car with forfeiture funds.

To be clear, there are concerns about the civil asset forfeiture system in the United States that run much deeper than the misappropriation of funds. Critics have vigorously attacked both the legal underpinnings of the civil forfeiture system as it currently exists in the U.S., as well the system’s implementation. But for the purposes of this post I want to bracket those larger issues to focus on the question of why the civil forfeiture systems at the state and local level in the United States pose especially high risks of corrupt misappropriation, and what might be done about this (assuming that the civil forfeiture system is here to stay, at least in the short term).

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Barring Corrupt Officials from Entering the United States: A Guide to the Process

Since 2004 it has been American policy to deny entry into the United States of corrupt foreign officials and their immediate families. President George W.  Bush initiated the policy by presidential order, and in 2008 Congress added its voice, enacting legislation barring “foreign kleptocrats involved in the extraction of natural resources” from entering the United States.  Beginning in 2012, the Congressional ban was extended to include all those involved in “significant corruption,” and in 2014 the provision was expanded again to cover foreign officials involved in “a gross violation of human rights.” The following year Congress clarified that designations may be made publicly or privately.

The first public designation was made in 2018 (Albanian judge and prosecutor Adriatik Llalla), and since then more than 150 individuals from over 30 countries have been publicly barred from entry — either for corruption or human rights violations.  Although the State Department web site does not keep a running list of those who have been barred, the NGO Human Rights First does. A spreadsheet available on its website can be sorted by country, crime, date, and other fields and includes links to each State Department sanctions announcement. It is updated whenever new sanctions are announced

The Department encourage civil society activists, foreign diplomats, and others with information relevant to the designation process to contact it. The best way is through its personnel in the field as designations typically arise from recommendations made by U.S. embassy staff.

Two excellent descriptions and discussions of the visa denial policy by analysts at the Library of Congress’ Congressional Research Service are here and here.

The Human Right First spreadsheet, “U.S. Government Public Section 7031(c) Sanctions Designations to Date,” can be accessed here.

GAB contributor Daniel Binette’s recommendations for greater clarity in how visa denial decisions are made is here.

Are There Common Features of Dysfunctional Organizational Cultures? Corruption and Police Brutality

For the second time in the last several months, I’m finding it extremely difficult to blog about corruption due to a more urgent crisis. A few months ago, it was the Covid-19 pandemic, which is still very much with us. But now, in addition to the ongoing public health emergency, my home country (the United States) is in the midst of widespread social and political unrest triggered by the murder of an unarmed black citizen at the hands of police officers, as well as several other similar incidents. The underlying problems—systemic racism and misconduct by law enforcement agencies—are, sad to say, longstanding problems with deep roots. But the protests have given them new urgency and salience. And while there have been instances of rioting and looting—acts that the vast majority of peaceful protestors have roundly condemned—we have also seen what can only be described as a grossly disproportionate response by far too many law enforcement agencies and officers. In multiple cases, police have used unnecessary force not only against rioters and looters, but against peaceful protestors and members of the media who clearly identified themselves as such. And multiple senior elected officials, including President Trump and Senator Tom Cotton, have advocated the use of military force to suppress what they would characterize as civil unrest.

Suffice it to say that, given all this, it’s hard for me to think of something interesting or worthwhile to say about global corruption. But as I’ve been doing more to educate myself about the root causes of police misconduct (a mild term for a category that includes, among other things, brutality and racially discriminatory enforcement), I’ve noticed some intriguing similarities to some of the prevailing theories regarding the roots of organizational corruption (in both government agencies, including but not limited to police departments, and in private firms). Perhaps this shouldn’t be so surprising, because in both cases the ultimate issue concerns the reasons for widespread rule-breaking within an organization. To be clear, I don’t want to overstate the similarities, either with respect to the severity of the misconduct (I condemn bribery as strongly as anyone, but I wouldn’t dream of equating it with systemic racism or police brutality) or with respect to all of the causes and characteristics. I should also emphasize that I’m by no means an expert in police misconduct, and I suspect that many of my observations here will have already been made, or possibly already refuted, in the existing research literature with which I am not yet familiar. With those caveats, let me highlight some potentially intriguing similarities between the characteristics of police departments prone to racism and violence, on the one hand, and firms or divisions that engage in bribery, embezzlement, and other forms of financial malfeasance. These similarities may suggest some common features of ethically dysfunctional organizations. Continue reading

Adapting Anticorruption Enforcement to an Age of Populism and Polarization

Shortly after the U.S. Senate acquitted President Clinton in 1999, he apologized for triggering the impeachment process. President Trump, in contrast, declared that his acquittal called for “a day of celebration,” and immediately started firing White House employees who had testified before the House of Representatives. In 2008, then-Israeli Prime Minister Olmert resigned shortly after the police recommended that he should be indicted on corruption charges. In contrast, after Prime Minister Netanyahu was indicted on multiple bribery charges, he infamously said that Israeli citizens should “investigate the investigators,” and even with the trial approaching, Netanyahu shows no signs of considering resignation. Instead, he is currently fiercely promoting legislation to amend several of the Israeli Constitutional Basic Laws in ways that will allow him to remain in office for years to come. These troubling examples illustrate how the resurgence of populism, coupled with increasing polarization, are making it easier for corrupt politicians to evade accountability, even in countries with functional legal and judicial systems. Deep political divisions and strong partisan loyalty are not new, but in the past, it seems there was a degree of overlapping consensus on minimum standards of integrity and propriety, and enough citizens were willing to enforce these standards on a non-partisan basis that leaders would be restrained by political checks—enforced through things like elections and internal party discipline—that could complement judicial processes.

Moreover, leaders like Trump and Netanyahu have acted aggressively to undermine the institutions of justice in order to protect themselves. Both leaders have cavalierly attacked the professionalism and integrity of their country’s law enforcement agencies by suggesting that investigations targeting the leader or his associates are politically motivated “witch hunts.” And both have taken more concrete action to undermine the ordinary operation of the machinery of justice. In the U.S., after his Senate trial acquittal, President Trump intervened to help allies who had been found guilty in cases related to investigations of impropriety by Trump’s 2016 campaign. For example, Trump’s Attorney General ordered the Department of Justice to seek a more lenient sentence for Trump’s former consultant Roger Stone, and Trump pardoned or commuted the sentences of several others in a short and unorthodox process. Netanyahu has been even more aggressive in trying to weaken legal institutions in order to protect himself. After being indicted, Netanyahu fired the Minister of Justice and appointed in her place a low-ranking member of his party with no prior ministerial experience. The new Minister’s first action was to appoint a new Solicitor General—the immediate superior of the prosecution team in Netanyahu’s case–through an irregular process and against the recommendation of the non-partisan Attorney General. (Due to the political deadlock, the Minister is part of a caretaker government and could therefore appoint an interim Solicitor General without the approval of the public committee that the law would otherwise require.) On the eve of Israel’s third round of elections, the new Solicitor General decided—against the opinion of the Attorney General and many others—to launch a police investigation into a firm in which Netanyahu’s chief rival Benny Gantz served as a director (obscuring the fact that Gantz himself is not a suspect). More recently, the Minister of Justice gave the unprecedented order to freeze all non-urgent judicial procedures due to the Covid-19 outbreak—a move that indefinitely postpones Netanyahu’s trial. While the Covid-19 outbreak has disrupted or delayed judicial proceedings in many countries, there was no expert opinion supporting such drastic measures in Israel, especially given that Israel has more per capita testing and ventilators capacity than nearly any country on earth. Even now, when newly detected cases are close to zero, a new date for the trial has yet to be set. Moreover, to avoid a fourth round of elections, given the continued deadlock, Netanyahu is now fiercely and unprecedently promoting legislative amendments to Israel’s Constitutional Basic Laws that would allow him to hold onto office for years to come.

When professional, and traditionally non-partisan, law enforcement agencies find themselves under attack by corrupt populists, these agencies often do not respond, presumably due to the belief that the only way to maintain integrity, legitimacy, and professionalism in the face of such attacks is to refrain from commenting on unfounded claims meant to disparage state attorneys and police investigators. There is much to be said for that approach, but at the same time, the institutions of justice can and should do more to counter the attempts of corrupt populists to undermine those institutions in order to remain in power.

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Guest Post: What the U.S. Congress Must Do To Ensure Adequate Oversight of COVID-19 Relief Spending

Today’s guest post is by Shruti Shah, the President and CEO of the Coalition for Integrity, a civil society advocacy organization focused on corruption in the United States.

We are facing an unprecedented crisis, and governments around the world have responded with unprecedented actions. In the United States, Congress has responded to the economic disruption caused by the COVID-19 crisis with the $2 trillion CARES Act and the subsequent $484 billion replenishment; still more legislation, allocating even more money for crisis response, is under discussion. When this much money is in play, oversight and fraud prevention are essential. There are already reports of PPP loans meant for small businesses going to larger companies, scammers targeting small business owners, stimulus checks being sent to deceased people, and several other COVID 19 scams. But the current safeguards for preventing fraud, corruption, and abuse in COVID-19 relief spending are woefully insufficient. As negotiations over further relief packages continue, those in Congress who care about government integrity—and the effectiveness of these trillion-dollar programs in achieving their objectives—should insist on correcting these deficiencies. In particular, here are five crucial steps that Congress can and should take to ensure that COVID-19 relief spending helps its intended beneficiaries rather than lining the pockets of grifters and grafters: Continue reading

Law Profs: Stop the Overheated Rhetoric About Bridgegate

As Matthew explained yesterday, last Thursday the Supreme Court ruled that a political dirty trick, generating a traffic jam for a town’s residents after their mayor refused to support the reelection of the state’s governor, while an abuse of power, does not constitute fraud under federal criminal law. The Court’s unanimous decision in “Bridgegate,” so named because the traffic jam was created by closing two of the three lanes residents use to drive across the George Washington Bridge, was authored by former Harvard Law School Dean and Obama Solicitor General Justice Elena Kagan.  That the decision was unanimous and written by a member of the Court’s liberal wing are two of several clues in the Court’s opinion showing it is no part of a Trump-inspired plot to legalize public corruption. Washington Post readers, however, could be forgiven for thinking otherwise. For Michigan Law School Professor Leah Litman wrote in the paper’s March 10 edition that the Court’s decision is the latest in “a string of failed corruption cases” that has made it “almost impossible to put a crooked politician in jail.”

This is plain nonsense. Continue reading

The U.S. Supreme Court’s Opinion in the “Bridgegate” Case: Some Quick Reactions

While I’m still finding it a bit difficult to think or write about anything other than the coronavirus pandemic, there have nevertheless been some other newsworthy corruption-related developments in recent weeks. One of them—perhaps, I admit, or more interest to our U.S. readers than to others—was the U.S. Supreme Court’s decision last week in United States v. Kelly, which overturned the federal criminal convictions of two close associates of former New Jersey Governor Chris Christie for their role in a scandal known as “Bridgegate.” Back in 2013, when then-Governor Christie (a Republican) was seeking re-election, he sought to bolster his candidacy by securing the endorsements of several Democratic mayors of New Jersey cities. When the mayor of the city of Fort Lee declined to endorse Governor Christie, several of Christie’s allies who worked for the Port Authority of New York and New Jersey (the entity that regulates transportation in the busy New York-New Jersey region) retaliated against the mayor by deliberately closing lanes on the busy George Washington Bridge, creating major traffic jams in Fort Lee for several days. They justified the closures with a “traffic study,” but this, the evidence adduced at trial clearly showed, was an utterly dishonest pretext for an act of political retribution. Nobody seriously contests that what these Port Authority officials (who were fired after the scandal was exposed) did was a corrupt abuse of power. But was it also a federal crime? U.S. federal prosecutors argued that it was, and convinced a jury to convict, but the Supreme Court unanimously disagreed and reversed the conviction.

There’s already been quite a bit of commentary on the Kelly decision. A number of critics argue that Kelly, together with several previous Supreme Court decisions, “opens the door to a distressing form of government corruption,” and has made federal prosecution of corruption “nearly impossible.” Other commentators asserted that not only did the Court reach the correct legal conclusion, but in fact the law properly does not criminalize the conduct of the officials in this case—because doing so, according to these commentators, would have sweeping and undesirable consequences, criminalizing a wide swath of garden-variety political conduct (such as using government power to benefit supporters and/or lying about the true motivations behind regulatory actions).

I should confess right now that I haven’t followed the legal arguments in this case very closely, nor am I an expert in the specific statutes at issue. With that important caveat, my own assessment is somewhere in the middle:

  • I think that, given the wording of the relevant statutes and prior Supreme Court precedent, the Court’s decision in Kelly is probably correct, and certainly defensible.
  • I don’t think the decision breaks that much new ground or makes it substantially harder for federal prosecutors to go after other forms of corruption, such as “garden variety” bribery or embezzlement.
  • That said, the decision does highlight an important gap in the coverage of existing federal anticorruption laws, and I tend to think that the sort of behavior at issue in this case—behavior that, in the Supreme Court’s words, amounted to “corruption [and] abuse of power”—can and should be criminalized (under federal as well as state law). Such criminalization, if accomplished through a sufficiently well-tailored statute, would not criminalize “ordinary politics,” at least not the sort of ordinary politics we ought to tolerate.

Let me elaborate a bit on each of these points: Continue reading

The Trilateral Nigeria-US-Jersey Agreement to Return Nigerian Dictator Abacha’s Assets: A Preliminary Assessment

This past February, the United States signed a trilateral agreement with Nigeria and the British dependency of Jersey to repatriate to Nigeria $308 million in funds that the late General Sani Abacha had stolen from the Nigerian government during his time as Head of State from 1993-1998. This enormous sum was a mere fraction of the estimated $2-5 billion that Abacha had laundered through the global banking system. Back in 2013, the U.S. Department of Justice (DOJ) filed a civil forfeiture complaint against more than $625 million that could be traced as proceeds from Abacha’s corruption. Shortly afterwards, in 2014, a U.S. federal court entered a forfeiture judgment against over $500 million of these assets, including the $308 million held in Jersey bank accounts. Appeals of the forfeiture judgment in the United States were finally exhausted in 2018, at which point the United States, Jersey, and Nigeria entered into negotiations to repatriate the recovered assets. The February 2020 trilateral agreement represents the culmination of those negotiations.

Back in 2014, when DOJ first froze Abacha’s assets, Raj Banerjee asked on this blog an important question, one that has come up in several other asset recovery cases too: Who will get Abacha’s assets? Would the United States simply give the money back to the Nigerian government? Or would the United States, out of concerns that the repatriated assets would be stolen again, insist on attaching conditions to the returned funds, or even create or empower a non-governmental nonprofit entity to allocate the funds (as the United States has done in some other cases)? Now, six years later, we finally have an answer. Under the terms of the trilateral agreement, the repatriated funds will be used to help finance three infrastructure projects that had already been approved by the Nigerian legislature and President Muhammadu Buhari: the construction of the Second Niger Bridge, the Lagos-Ibadan Expressway, and the Abuja-Kano road. These projects aim to better connect people and supply chains in Nigeria’s impoverished Eastern and Northern regions to the developed Western region. Additionally, the agreement declares that the Nigeria Sovereign Investment Authority (NSIA) will oversee the funds, that a yet-to-be-determined independent auditor will conduct a financial review, and that a yet-to-be-determined independent civil society organization with expertise in engineering, among other areas, will have a monitoring role.

There is much to admire about the agreement. Using these assets to fund critical infrastructure projects that Nigeria’s legislative and executive branches had already approved demonstrates a respect for Nigerian sovereignty and democratic institutions, while at the same time directing the money to projects that would tangibly benefit the Nigerian people, particularly in some of the country’s poorest areas—the people who were most victimized by Abacha’s looting of the national treasury. Yet while the governments of the United States, Nigeria, and Jersey all heralded the trilateral agreement has a landmark, some voices, particularly in the United States, have expressed skepticism. Most notably, U.S. Senator Chuck Grassley sent a letter to DOJ questioning whether the returned funds will truly be protected from misuse. Senator Grassley suggested that senior officials in the Buhari Administration, including the Attorney General, could not be trusted to ensure that the Nigerian government would face consequences if it misappropriated the returned funds, and he questioned why DOJ would return the money without “proper safeguards” to prevent misuse a second time. Unsurprisingly, Nigeria took issue with Grassley’s accusations. But his concerns have some merit.

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Guest Post: Ensuring Adequate Anticorruption, Accountability, and Transparency Measures During the Pandemic

Today’s guest post is from Shruti Shah and Alex Amico from the Coalition for Integrity:

We are living through an emergency more severe than anything in recent memory. The COVID-19 public health crisis has triggered an associated economic crisis, and both will require a dramatic government response. But the fact that we are dealing with an emergency situation—in which swift and drastic government action is essential—does not mean that we should put aside our concerns about government corruption, or relax our vigilance about demands for transparency and accountability in government programs. Quite the opposite: In order to respond effectively, and to demonstrate that they can be trusted, governments other institutions need to demonstrate that they are committed to honest oversight of the extraordinary actions necessary to combat this pandemic. The need to act swiftly does not abrogate the government’s responsibility to adhere to principles of anticorruption, accountability, and transparency.

There is no better illustration of this than the stimulus package being negotiated (at the time of writing) in the U.S. Congress. This stimulus will result in a flow of an enormous amount of money, and the risks of corruption, fraud, and misappropriation or diversion are extremely high. It is therefore essential that the stimulus bill incorporate meaningful transparency, oversight, and anticorruption provisions. For example: Continue reading

High Costs: Corruption Scandals in America’s Legal Marijuana Industry

The movement to legalize marijuana in the United States has been gaining momentum. Thirty-three states and the District of Columbia have currently legalized marijuana to some degree, and of those, eleven states and D.C. have legalized recreational use of marijuana.  (Selling, possessing, consuming marijuana remains illegal under federal law, but the federal laws against marijuana are rarely enforced, which creates a rather odd situation in the states that have legalized marijuana: those who participate in the marijuana market are still technically engaged in illegal activity, even though that market operates out in the open.) In the absence of uniform federal regulation, those states that have legalized marijuana have adopted different regulatory approaches; most states issue a limited number of licenses to sell or supply marijuana, but have capped the number of licenses in order to limit the amount of marijuana on the market. This makes each license extremely valuable, given that the total value of the marijuana market is estimated to be somewhere in the neighborhood of $52 billion. Additionally, in most states the license evaluation criteria, and the evaluation process, are extremely opaque, and local government officials frequently have substantial discretion regarding who receives these licenses.

Given this combination of factors—state and local officials with the power to issue a small number of extremely valuable licenses through an opaque process—it should come as no surprise that the legal marijuana market has become a hotbed for corruption. Consider just a few examples: Continue reading