A Comparison on Due Process Rights of Drug Kingpins and Charities Accused of Supporting Terrorism

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This article, and the chart supporting it, shows that due process procedures used in asset forfeiture proceedings for accused drug traffickers provide more protection than procedures afforded charities accused of supporting terrorism. These asset forfeiture procedures may be a model for developing new rules for charities.

 
I. Introduction
 
Congress expanded the government’s power to seize property of designated terrorists and their supporters when it passed the Patriot Act after September 11, 2001.[1] The Patriot Act amended the International Emergency Economic Protection Act (hereinafter IEEPA) and expanded it from an economic embargo statute to give the government the power to "block" transactions with Specially Designated Global Terrorists (hereinafter SDGT) when United States (hereinafter U.S.) interests are threatened.[2]Since 2001, the Department of the Treasury (hereinafter Treasury) blocked over $16 million dollars associated with Foreign Terrorist Organizations (hereinafter FTOs).[3] When Treasury blocks these funds, it freezes bank accounts and seizes tangible assets, including files, office equipment, and real property.[4] Treasury has designated forty-eight organizations, including eight in the U.S., as supporters of terrorism.[5] 
 
Under IEEPA, any group that has been designated a supporter of terrorism will have its funds immediately frozen.[6] Treasury has no formal hearing or appeals process to release blocked property for charitable purposes.[7]The lack of due process rights and the lack of any standards to release frozen charitable funds for charitable purposes point out the flaws of using IEEPA in the charitable context.[8]One possible remedy is the adoption of civil asset forfeiture laws to help narrow the executive branch’s power in order to protect charities and ensure people in need get the necessary help.[9]The Civil Asset Forfeiture Reform Act of 2000 provides a model for this.[10]
            
Modern civil asset forfeiture began to take shape in 1970 after Congress passed the Racketeering Influenced and Corrupt Organization Act (hereinafter RICO Act).[11]Congress created the RICO Act in response to the onslaught of organized crime.[12]The Act was intended to give the government an opportunity to claim large amounts of a criminal’s personal wealth.[13] Over time civil asset forfeiture statutes have become more heavily relied upon than criminal forfeiture statutes because with criminal asset forfeiture, a seizure is usually made after a person is charged, or convicted of a crime.[14] A criminal charge conviction is unnecessary under CAFRA.[15] Thus, civil asset proceedings under CAFRA are more attractive to government agencies. CAFRA provides specific remedies against forfeiture and guidelines for seizure.[16] It also establishes the rights and burdens that the government has over property that is subject to seizure.[17]
 
Unlike IEEPA, CAFRA has specific remedies against forfeiture, guidelines for what may be seized, and sets what rights and burdens the government has over property subject to seizure.[18] IEEPA lacks these basic protections. This article compares key elements of due process for charities designated under IEEPA and drug lords subject to CAFRA forfeiture proceedings to illustrate how this unfair situation may be remedied.
 
II. Notice of Forfeiture
 
A. Drug Lords
Under CAFRA the Government is required to send written notice to any persons with interest in the property seized.[19] The notice must be sent “in a manner to achieve proper notice as soon as practicable,” generally within 60 days after seizure of the property.[20] There are exceptions that allow the government to send notice of forfeiture after 60 days, and the court may grant extensions.[21]
 
B. Charities
Under the IEEPA, any group that has been classified as a “specially designated terrorist group ([hereinafter] SDTG)”, can have any type of property (real property or fungible property) seized without any type of pre-seizure notice.[22]
 
III. Legal Representation
 
A. Drug Lords
A person whose property has been seized has the right to retain counsel to challenge the seizure.[23] If the challenge is successful, the government is liable to pay reasonable attorney fees for the claimant.  In certain cases, the government will provide legal representation for a claimant. The court will appoint counsel if a person who has standing to contest forfeiture of property in a judicial civil forfeiture proceeding is represented by a court appointed legal counsel in a criminal case that is related to the seizure of the property, and that person is also unable to afford legal counsel in the civil judicial action.[24] This right requires a person to have standing and the claim must be made in good faith.[25]
 
B. Charities
Any potential counsel must receive a special license from the Treasury Department that allows them to act as counsel, because IEEPA bars transactions of any kind with designated SDTG.[26] This license is issued on a case by case basis, and can be revoked at any time. The government is not required to provide counsel for a charity who is unable to pay for counsel.The licensing regulations allow the Treasury Department to permit counsel to be paid from seized assets, although the Treasury Department has complete discretion whether or not to approve such requests. Currently, the Treasury Department's policy is to deny such requests.
 
IV. Burden of Proof
 
A. Drug Lords
The government has the burden of proof by a preponderance of the evidence that the property is subject to seizure under CAFRA's criteria.[27] In order to meet this burden, the government must show that the property seized was used to commit, facilitate, or was involved in the commission of a crime, and that there is a substantial connection between the property and the crime.[28] The government may use the evidence it gathered after the filing of a complaint in order to meet its burden of proof.[29]
 
The claimant will have the burden of proof if he is using an innocent owner defense.[30] In order to meet this burden, a claimant must show that he did not know of the action causing the seizure, or that he reasonably attempted to end that conduct when he learned of such conduct,[31] The claimant can show this by giving a law enforcement agency timely notice of information about said conduct, and by making a good faith effort to revoke permission for anyone engaging in criminal conduct, as long as that person reasonably believes this will not lead the criminal actor to cause physical injury.[32]
 
B. Charities
The government has a low burden of proof under IEEPA. It must only show a that there is a reasonable suspicion that a charity has provided support or services to a terrorist organization, or "is otherwise associated with" a terrorist group.[33] If that burden is met, and the group is designated as an SDGT, the burden of proof shifts to the charity if it asks the Treasury Department to "de-list" it.[34] With this designation, there is no “innocent owner” defense. Treasury has complete discretion whether to grant a charity's request.[35]
 
V. Release of Goods and Return of Property

A. Drug Lords

If a challenger's claim prevails, the seized property must be released to the claimant or his agent.[36]. The government can divide the property among multiple claimants if it will not cause difficulty. [37] The claimant’s interest in the property will be released if one or more claimants are determined to be an innocent owner.[38] The government must immediately release seized property if proper notice has not been given.[39] However, the government does not have to release illegal goods or seized contraband.[40]
 
When the claim includes currency, negotiable instruments, or proceeds from an interlocutory sale the government is responsible for paying interest actually paid to the government while in possession of the property.[41]
A claimant is also entitled to the release of seized property if he has sufficient ties to the community, if loss of the property will cause a substantial hardship that would prevent the claimant from working, maintaining his business, or will leave them homeless. The hardship of the government’s possession must outweigh the risk that the property will be damaged, destroyed, or lost.[42]
 
B. Charities
TheTreasury Department's regulations allow for the transfer of seized property to other charitable organizations through the specific license process.[43] In no case has the Treasury Department done so.
 
For example, in 2002 the Treasury Department denied Benevolence International Foundation (hereinafter BIF) license to release funds to a children’s hospital in Tajikistan and the Charity Women’s Hospital in Dagistan, even though measures were taken to ensure the funds were received by the groups.[44] Other examples of the Treasury Department’s policy in action are the cases of Holy Land Foundation (hereinafter HLF) and Kind Hearts for Charitable Humanitarian Development (hereinafter Kind Hearts).[45] HLF asked that $50,000 be released to the Palestine Children’s Relief Fund.[46] Kind Hearts asked its funds to be released and spent by the United States Agency for International Development or any other relief group, and that "special consideration be given to the refugees in the earthquake ravaged areas of Pakistan since the overwhelming majority of frozen funds were earmarked for projects therein."[47] Both groups’ requests were denied.
 
VI. Right to a Hearing
 
A. Drug Lords
A person with an interest in seized property in a non-judicial civil forfeiture proceeding may file a claim after the seizure.[48] The person's claim cannot be made before 35 days, or within the time frame given in the personal notice letter received by a claimant.[49] Within 90 days, the government must file a complaint in federal District Court for forfeiture or release of the property.[50]
 
The claimant can also request possession of the property from an appropriate official of the seizing agency.[51] If the property has not been released within 15 days of the request, the claimant may file a petition in the court that issued the seizure warrant.[52] The court must make a decision within 30 days of receiving the petition.[53]
B. Charities
            A charity can ask the Treasury Department to remove it from the list of designated entities, but it is totally within Treasury's discretion to grant or deny the request.[54] A designated charitable group cannot present its own evidence in an appeal to the federal courts.[55]On appeal, the courts are limited to deciding whether a group’s designation as a supporter of terrorism was reasonable.[56]On matters relating to national security, courts have deferred back to Treasury.[57]
 
VII. Conclusion
While far from perfect, CAFRA is an example of what future adjustments to U.S. law governing charities and counterterrorism should do. At a minimum, the government must create an independent venue where a charitable group can contest their designation as an SDTG. The requirement for a special license for potential legal representation should be removed. Otherwise, without some sort of well defined forfeiture procedure, more donated money will not reach the people who need it most.

[1] E.L. Gaston, Taking the Gloves Off of Homeland Security: Rethinking the Federalism Framework for Responding to Domestic Emergencies, 1 Harv. L. &Pol’y Rev. 519, 521 (2007).

[2] International Emergency Economic Powers Act, 50 U.S.C. §1701 (1)(2).

[3] OMB Watch, Authority and Process of Office of Foreign Assets Control to Release Frozen Charitable Funds (2006), http://www.ombwatch.org/article/articleview/3632/1/407?TopicID=2.

[4] OMB Watch, supra note 3.

[5] Press Release, Dep’t of Treasury, Contributions by the Dep’t of the Treasury to the Fin. War on Terror: Fact Sheet, (Sept., 2002), http://www.treas.gov/press/releases/reports/2002910184556291211.pdf.

[6] International Emergency Economic Powers Act, 50 USC §1701.

[7] Exec. Order No. 13,224, 66 Fed. Reg. 186. (Sept. 25, 2001).

[8] Nicole Nice-Petersen, Justice for the “Designated”: The Due Process that is Due to Alleged U.S. Financiers of Terrorism, 93 Geo. L.J. 1387, 1388 (2005).

[9] Nina J. Crimm, High Alert: The Government’s War on the Financing of Terrorism and its Implication for Donors Domestic Charitable Organizations and Global Philanthropy, 45 Wm. & Mary L. Rev. 1341, 1392 (2004).

[10] See generally, Civil Asset Forfeiture Reform Act of 2000, 18 U.S.C. § 983 (2000).

[11] See generally, Racketeering Influenced and Corrupt Organization Act, 18 U.S.C. § 1962 (2006).

[12] Chrystal Mancuso-Smith, From Monkey Wrenching to Mass Destruction: Eco-Sabotage and the American West, 26 J. Land Resources & Envtl. L. 319, 331 (2006).

[13] Mancuso-Smith, supra note 13 at 331.

[14] Lisa H. Nicholson, The Culture of Under-Enforcement: Buried Treasure, Sarbanes-Oxley and the Corporate Pirate, 5 DePaul Bus. & Com. L.J. 321, 349 (2007).

[15] Civil Asset Forfeiture Reform Act of 2000, 18 U.S.C. § 983 (2000).

[16] Avital Blanchard, The Next Step in Interpreting Criminal Forfeiture, 28 Cardozo L. Rev. 1415, 1442 (2006).

[17] Civil Asset Forfeiture Reform Act of 2000, 18 U.S.C. § 985 (2000).

[18] Civil Asset Forfeiture Reform Act of 2000, supra note 18; Civil Asset Forfeiture Reform Act of 2000, 28 U.S.C. § 2465 (2000).

[19] Civil Asset Forfeiture Reform Act of 2000, supra note 19.

[20] Civil Asset Forfeiture Reform Act of 2000, 18 U.S.C. § 983 (2000).

[21] Id.

[22] International Emergency Economic Powers Act, 50 U.S.C. §1701.

[23] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (b).

[24] Civil Asset Forfeiture Reform Act of 2000, 18 U.S.C. § 983 (2000).

[25] Id.

[26] Amer. Airways Charters, Inc. v. Regan, 746 F.2d 865, 866-67 (D.C. Cir. 1984).

[27] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (c).

[28] Id.

[29] Id.

[30] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (d).

[31] Id.

[32] Id.

[33] Exec. Order No. 13,224, supra note 8.

[34] Id.

[35] Id.

[36] Civil Asset Forfeiture Reform Act of 2000, supra note 19 at (a).

[37] Civil Asset Forfeiture Reform Act of 2000, supra note 19 at (b).

[38] Id.

[39] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (a).

[40] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (f).

[41] Civil Asset Forfeiture Reform Act of 2000, supra note 19 at (a).

[42] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (f).

[43] Benevolence Int’l Found., Inc. v. Ashcroft, 200 F. Supp. 2d 935 (N.D. Ill. 2002).

[44] Id.

[45] Holy Land Found. for Relief & Dev. v. Ashcroft, 219 F. Supp. 2d 57 (D.C. Cir. 2002); Kind Hearts v. Comm’r of Econ. Sec., No. C4-02-110 (Minn. Ct. App. July 02, 2002).

[46] Holy Land Found. for Relief & Dev.,219 F. Supp. 2d at 76. 

[47] OMB Watch, Letter from Betsy Buchalter Adler, et al. to Henry Paulson, U.S. Secretary of Treasury (Nov. 6, 2006), available at http://www.ombwatch.org/npadv/Paulson_letter.pdf. 

[48] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (d).

[49] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (a).

[50] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (a).

[51] Id.

[52] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (f).

[53] Civil Asset Forfeiture Reform Act of 2000, supra note 10 at (a).

[54] International Emergency Economic Powers Act, 50 USC §1702 (c).

[55] International Emergency Economic Powers Act, supra note 54.

[56] Holy Land Found. for Relief & Dev. v. Ashcroft, 219 F. Supp. 2d 57 (D.C. Cir. 2002

[57] Paradissiotis v. Rubin, 171 F.3d 983, 988 (5th Cir. 1999).