jessica.sharma: The Outrageous and Totally Legal Threat to Your Wealth

By Dave Gonigam | 10/19/12

At age 68, Russ Caswell is on the verge of losing the business that?s been in his family for two generations. And it?s not for lack of customers.

Mr. Caswell is another object lesson that ?If you?ve done nothing wrong, you have nothing to worry about? no longer applies.

On Nov. 5, a federal trial will begin with the curious name of United States of America v. 434 Main Street, Tewksbury, Massachusetts.

The defendant is not Mr. Caswell, but rather the Motel Caswell ? a $1.5 million property Caswell owns mortgage-free. He had an eye toward possibly selling it so he could retire comfortably and take care of his gravely ill wife.

?I may sell it eventually, but the government doesn?t have the right to take it,? he tells the local Patch.com site. ?It?s not right.?

Caswell is one of a growing number of Americans subject to ?civil asset forfeiture? ? or CAF.

?Asset forfeiture,? explains Duke professor Gary Hull, ?is used by federal and state officials to seize cars, boats, cash, houses, businesses ? all on the grounds that the asset might have been used or could conceivably be used in the commission of a crime, by someone, somewhere, at some point.?

Thus do the feds, along with the local police, allege that the Motel Caswell has been used for drug-related offenses going back to 1994. Note well: Russ Caswell stands accused of no crime. Nor is he accused of committing or facilitating crimes. Or that he was aware any crimes were going on at his motel.

The feds alone collected $2.5 billion last year from 15,000 CAF cases.

Recourse is, to say the least, a challenge. ?To retrieve that asset, you must enter Kafka?s universe,? professor Hull says.

?Even if you have the tens or hundreds of thousands of dollars necessary to mount a defense, CAF reverses the burden of proof and forces on the property owner an impossible standard ? to prove that the asset was not used to facilitate a crime, or if it was, that you did not know that the property was being used for facilitation. Further, you have to prove that you did everything possible (whatever that means) to prevent the crime(s).?

The Motel Caswell: Guilty until proven innocent?

The feds have been on Caswell?s case for three years now. Should they prevail in court, both the feds and the Tewksbury police stand to profit: Under a program called ?equitable sharing,? the locals get up to 80% of the booty.

?In the Caswell case,? Hull says, ?that could mean $1.2 million for the Tewksbury police to spend on new cars, uniforms, hi-tech equipment, junkets to Hawaii. Meanwhile, Caswell and his wife will have been impoverished.?

The ?Hawaii junkets? is not hyperbole on the professor?s part.

Over the past four years, the Milwaukee County Sheriff?s Office in Wisconsin has hauled in forfeiture money totaling $825,577. An audit released last week reveals some of the ways that money was spent?

$11,400 on workout gear for Sheriff David Clarke Jr.?s command staff
$8,200 for 9 flat-screen TVs, also for the command staff
$24,900 for ?customer-service training? provided by an outfit called Disney Destinations
$77,000 for upkeep of the sheriff?s mounted patrol ($43,000 of that was to buy a Dodge Ram pickup to haul the horses around).

But it?s all good: The audit found, ?none of the spending violated federal rules governing asset forfeiture money,? according to the Milwaukee Journal-Sentinel.

You don?t have to own property like Mr. Caswell to fall into Kafka?s universe. All you need to do is commit a moving violation and carry a wad of cash.

On Jan. 7, 2009, Anthony Smelley was pulled over on Interstate 70 in Putnam County, Ind. He was on his way from Detroit to St. Louis to visit his aunt. He?d had recently won a $50,000 settlement from a car accident. He was taking $17,500 of it to St. Louis to buy his aunt a new car.

You can see where this is going: Smelley was pulled over for an unsafe lane change and an obscured license plate. He was also driving with an expired license. During the stop, the officer asked Smelley to get out of the car and patted him down, discovering the cash. The dogs were called in and ?alerted? to the presence of drugs.

But a search of the car turned up no drugs, and Smelley never faced criminal charges. The $17,500, however, was judged guilty as hell.

?To make matters worse,? wrote Reason?s Radley Balko, ?the county was represented not by an elected public official, but by Christopher Gambill, an attorney in private practice who handles several Indiana counties? forfeiture cases on a contingency basis, earning 25-33% of what he wins in court, a system stacked with twisted incentives.?

In the end, Smelley did prevail and got his money back. But it took 13 months? and he wasn?t compensated for his time, interest on the money, court costs or attorney?s fees.

Cheers,
Dave Gonigam

Dave Gonigam

Treading a fine line between contrarian thinking and conspiracy theory, Dave Gonigam explores the nexus of finance, politics, and the media for Agora Financial's 5 Minute Forecast. He joined kindred spirits at Agora Financial in 2007 after a 20-year career as an Emmy award-winning writer, producer, and manager in local TV newsrooms nationwide.