Status of Funds Seized by Local Law Enforcement Authorities

Subject:

Requested By: Aubrey S. Tomlinson, Jr Attorney for Franklin County

Questions: (1)

Does the county have legal standing to contest the action of the U.S. Attorney in confiscating drug related property where all aspects of the investigation, search, arrest and seizure are handled by state law enforcement officials and all criminal charges are in state court?"

(2)

Where federal agents participate in the investigation, arrest or seizure?

(3)

If federal authorities confiscate drug related property and thereafter return a part of it to local authorities for law enforcement purposes, do the N.C. Constitution and laws require these funds to go to the local school board as forfeited property or may it be used by local law enforcement?

Conclusions: (1)

The county does not have a sound legal basis for contesting the action of the U.S. Attorney under the posited circumstances.

(2)

No.

(3)

Federally shared funds may be used by local law enforcement since the provision contained in the North Carolina Constitution applies only to forfeitures resulting from a breach of the penal laws of North Carolina, and has no application to forfeitures proceeding from a breach of any federal law.

The following federal law is our guidance in answer to the first question above. Title 21, U.S.C. 881(e) and Title 19, U.S.C. 1616, as made applicable by 21 U.S.C. 881(d) and other statutes, authorize the United States Department of Justice to transfer forfeited property to any state or local law enforcement agency that directly participated in the acts which led to the seizure or forfeiture. 21 U.S.C. 881 states that [(a)(6)] "All moneys . . . or other things of value furnished . . . in exchange for a controlled substance in violation of this title, all proceeds traceable to such an exchange, and all moneys . . . used . . . to facilitate any violation of this title . . . [(a)] shall be subject to forfeiture to the United States and no property right shall exist in them . . . ." Further, 21 U.S.C. 881(h) states that "All right, title, and interest in property described in [2] U.S.C. 881(a)] shall vest in the United States upon commission of the act giving rise to forfeiture under this section."

Federal courts have held that the government need not link the property to a particular unlawful transaction [Banco Cafetero Panama, 797 F.2d at 1160] and that "the lack of a criminal conviction on [federal] charges relating to the incident giving rise to the forfeiture is not a valid defense" to the forfeiture [United States v. One Mercedes Benz, 660 F.Supp. 410, 414 (S.D.N.Y. 1987)]. Further, it has long been well-settled that the United States may adopt seizures of property made by any person for forfeiture to the government where the property was used in violation of federal law. In United States v. One Ford Coupe Automobile, 272 U.S. 321, 325 (1926), the Supreme Court held:

If it [the government] adopts the acts of the party, and proceeds to enforce this forfeiture by legal process, this is a sufficient recognition and confirmation of the seizure, and is of equal validity in law, with an original authority to make the seizure. The confirmation acts retroactively, and is equivalent to a command.

All of the foregoing is equally relevant to the situation posited in the second question, which adds to the first question the additional fact of the participation of federal agents in the investigation, arrest, or seizure.

The foregoing is also relevant to the third question, which is prompted by the fact that under the North Carolina Constitution [Article IX, Section 7] the clear proceeds of all penalties and forfeitures and of all fines collected for any breach of the penal laws of the state must go to the county board of education.

For the reasons stated above in response to the first question, and for the following reasons, it is our opinion that the provision contained in the North Carolina Constitution applies only to forfeitures resulting from a breach of the penal laws of North Carolina, and has absolutely no application to forfeitures proceeding from a breach of any federal law, and that local law enforcement may share in the proceeds of federal forfeitures.

Article IV, clause 2, of the United States Constitution states that "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding."

28 U.S.C. 1355 states that the federal district courts "have original jurisdiction, exclusive of the courts of the States, of any action or proceeding for the recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress, . . ."

The Supreme Court of the United States stated in Ray v. Atlantic Richfield Co., 435 U.S. 151, 158 (1978), that "Even if Congress has not completely foreclosed state legislation in a particular area, a state statute is void to the extent that it actually conflicts with a valid federal statute; and a conflict will be found where compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to accomplishment and execution of the full purposes and objectives of Congress."

Under federal law, local sheriffs and police departments have an independent right to request federal adoption of a seizure made pursuant to state law. According to the "Attorney General’s Guidelines on Seized and Forfeited Property" [52 Fed. Reg. 46855, December 10, 1987], issued pursuant to 21 U.S.C. 881, "Any . . . State, or local law enforcement agency that participates in the acts leading to a seizure or forfeiture may file a request for an equitable transfer of the property (to the requesting agency). " [52 Fed. Reg. (III-D-2a) at 46857] Such equitable sharing can only occur if the agency is a law enforcement agency, if the agency directly participated in any of the acts which led to the seizure or forfeiture, and if "the tangible property or cash will be credited to the budget of the state or local agency that directly participated in the seizure or forfeiture, resulting in an increase of law enforcement resources for that specific State or local agency." [52 Fed. Reg. (III-D-3e) at 46857]

Further, we construe the provisions of N.C. General Statutes, Chapter 147-83 and Chapter 160A17.1, to authorize the city and county governments and the county sheriff, who is a constitutional officer in North Carolina [N.C. Constitution, Art. VII, § 2] to accept and receive such grants from the federal government. Therefore, should any state or local law enforcement agency be so fortunate to have the U.S. Attorney recommend that a part of a forfeiture go to it, it is our opinion that the laws and constitution of North Carolina do not stand in the way of such generosity.

Finally, this opinion should not be construed to encourage law enforcement agencies in North Carolina to seek federal administrative adoption of seized assets prior to seeking competent legal advise from departmental legal staff or district attorneys concerning the relevance or vitality of such seized assets in pending criminal actions under state law. [See G.S. 15-11.1] The preservation of such evidence through photographic or other means usually will not significantly delay federal forfeiture proceedings and may sometimes be pivotal in state criminal proceedings. Indeed, the U.S. Attorney General’s Guidelines [52 Fed. Reg. (III-D-5f) at 46859] indicates that "Decision-makers should consult each other in situations where inconsistent decisions are possible in factually related forfeiture proceedings that might jeopardize relations between Federal agencies and State or local law enforcement agencies."

Nevertheless, once a federal proceeding has been instituted, whether through Federal or local initiative, "A decision to forego a Federal judicial forfeiture proceeding against any seized asset in favor of a State or local forfeiture proceeding requires the personal approval of the United States Attorney after review of the evaluation and recommendation of the concerned Department investigative bureau." [52 Fed. Reg. (V-A-1) at 46861]

While it is to be anticipated that the U.S. Attorney would cooperate in preserving evidence to protect the integrity and vitality of state criminal proceedings, nothing in the federal statutes or regulations requires the federal government to forego its forfeiture actions in favor of state or local law.

Lacy H. Thornburg Attorney General

Harold M. White, Jr. Associate Attorney General