Bill Would Limit Asset Forfeiture In Michigan Without Criminal Conviction

Jacque Sutton didn’t commit any crime but police impounded his 1989 Mustang GT and charged him $900 to get it back.

His offense was attending a party in 2009 at an art gallery in Detroit which didn't have a permit to hold an event with dancing and DJs. Police raided the place and gave everyone tickets for illegal occupation, which were later waived. But Sutton's car was seized and he couldn't get his property back until he paid the money as a result of Michigan's asset forfeiture law. 

He's not alone. Since 2001, Michigan agencies have seized at least $250 million worth of property and money from citizens. While much of what's seized comes from criminals, a significant amount of assets and a number of cases involve people like Sutton.

A newly introduced bill would prevent many of those situations. House Bill 5212, sponsored by Rep. Jeff Irwin, D-Ann Arbor, would prohibit civil asset forfeiture in Michigan unless a person is convicted of a crime.

"I do agree with [the bill]," Sutton said. "This was basically a money grab for the city."

Rep. Irwin said forfeiture, which is a way for the government to seize or confiscate assets, has "spun out of control."

"Asset forfeiture was sold as a needed tool for law enforcement to attack drug kingpins and gang leaders," Rep. Irwin said. "[But] too often, law enforcement uses the current asset forfeiture law to take tens of millions of dollars every year, mostly from low-level users and small-time dealers. We need to change how asset forfeiture works. By requiring a person be convicted of a crime before their seized property is subject to forfeiture, we will stop the worst abuses and curtail the insidious incentives that lead some law enforcement to short circuit due process and the fundamental principle that a person is innocent until proven guilty."

According to the Michigan State Police, the primary goal of asset forfeiture is "to deter and punish drug criminals by taking away the goods, property, and money obtained through illegal activity." But, as a report from Michigan State Police Director Kriste Etue notes, it can also serve as an "important supplement" to police funding.

Others agree.

"Police departments right now are looking for ways to generate revenue, and forfeiture is a way to offset the costs of doing business," Sgt. Dave Schreiner, who runs Canton Township's forfeiture unit, told The Detroit News in 2009. "You'll find that departments are doing more forfeitures than they used to because they've got to — they're running out of money and they've got to find it somewhere."

This suggests that law enforcement agencies have an incentive to seize money and property to enhance their budgets.

In Michigan, if cash or property is valued at more than $50,000 a court proceeding is required for it to be seized. But if the amount is less than that, the seizing can be "streamlined" and taken administratively. Eighty-nine percent of assets were taken this way in 2012.

A 2011 law changed how agencies could use funds. Previously, money was restricted to drug law enforcement. Now, the funds can be used for all law enforcement activities and can also be provided to nonprofit agencies; 3 percent was spent that way in 2011.

Law enforcement agencies seized at least $26.5 million in cash and assets in 2012 with 60 percent coming from the state police and local agencies. These funds are used for equipment, crime programs and matching grants to obtain more federal money.

Michigan has weak confiscation laws, according to the Institute for Justice, a libertarian law firm that represents people whose money and property have been seized despite them not having committed a crime. The state received a "D-" for its forfeiture laws, according to an IJ study published in 2010.

Many of the high profile forfeiture cases come as a result of federal agency actions, and several have occurred in Michigan.

Last November, the government seized $135,000 from the Cheung family restaurant. Though no criminal charges were filed, the feds went after them for making bank deposits under $10,000. Banks must notify the government when they receive deposits of $10,000 or more. After the money was taken, the family could not pay their property taxes or inventory costs for their restaurant. Eventually, charges were dropped.

The family was represented by Stephen Dunn, an attorney in Troy. He said Rep. Irwin's proposed bill is good, but should go further.

"[The bill] provides necessary due process before property is forfeited to the state, but it does not go far enough," Dunn said. "It is an important first step. But much more needs to be done concerning Michigan asset forfeiture law."

He suggested a law that requires notification to the property owner within a certain amount of time, criminal proceedings within a timeframe, the release of seized funds if they are required to pay for legal defense, a way for property to be returned and litigation costs paid if a defendant is not successfully prosecuted by the state.

In another case, in January, the bank account of the Dehko family, which owns a grocery store in Fraser, was seized by federal agents. The family was not charged with a crime, but the government seized $35,000. This past spring, the IRS confiscated $70,000 from Mark Zaniewski, a Sterling Heights gas station owner. He was not charged with a crime. The owners of the businesses teamed up with IJ and the cases were dropped.

This week, it was reported by the Associated Press that John Gutowski, the owner of Brougham Manor apartments in Plymouth, has been trying to recover $250,000 from the federal government. Gutowski was charged with knowing about and helping recent immigrants establish legal citizenry by committing marriage fraud. He denied the charges and they were dropped, but the criminal complaint means the government still holds money seized from his bank account.

Another bill pending in the legislature, House Bill 5081, sponsored by Rep. Tom McMillin, R-Rochester Hills, has bipartisan support and would require more transparency in forfeiture cases.

The Michigan State Police did not respond to a request for comment.

Kenneth Grabowski, legislative director of the Police Officers Association of Michigan, said the group has no comment at this time and will look into the bill further.