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| Robert Johnson |
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| Caroline Grace Brothers |
The case started early one morning in January 2019, when Dereck McClellan collided with a concrete pillar at a South Carolina gas station and fell asleep in his car. An officer, called to the scene, discovered a marijuana blunt in the ashtray, an empty Cognac bottle on the passenger's seat, and a large amount of cash in the trunk.
The first two items were illegal, and McClellan pled guilty less than one month later to public intoxication and transporting alcohol in an open container. The third item presented police and prosecutors with a challenge.
Officers seized nearly $70,000 from the vehicle, and the government took steps to keep the money using a law enforcement maneuver called civil forfeiture. The process puts property on trial rather than humans. To claim ownership, the government merely must show that seized assets were used to commit a crime or are the proceeds of a crime.
The problem — for police and prosecutors — is that carrying cash is not illegal. Detectives speculated that McClellan was dealing drugs, but they could not say where, when or with whom. Law enforcement officials had not witnessed any transaction, discovered any stash or cultivated any inside source.
All they could do was guess. Still, they saw a path forward: They created a circumstantial case.
Among other arguments, they claimed that McClellan must have been involved in a criminal enterprise because an ion scan detected cocaine particles on the cash. The government failed to mention that most U.S. currency carries trace amounts of cocaine,[1] rendering the test meaningless.
Such evidence falls far short of proof beyond a reasonable doubt, the criminal standard. Fortunately for the government, civil forfeiture laws are not nearly so demanding. In South Carolina and many other jurisdictions, including federal court, law enforcement agencies merely must establish their claims by a preponderance of the evidence. Under this standard, courts will accept any government argument that is more likely true than not.[2]
In most cases the government does not even have to go that far. Civil forfeiture usually ends at the administrative level before reaching the courthouse steps.[3] Property owners have no right to counsel because the process is civil, which means they must pay for the privilege of seeing a judge, and the process can take years to navigate.
Most property owners cut their losses and walk away, regardless of their guilt or innocence, because seized assets are not worth the expense. Law enforcement, meanwhile, has an incentive to pursue even marginal cases because up to 100% of the proceeds go toward funding their operations.
Civil forfeiture critics have long argued that the process violates the U.S. Constitution. One problem stems from the built-in financial incentives, which invite self-serving law enforcement.
As the U.S. District Court for the District of New Mexico held in 2018 in Harjo v. City of Albuquerque, allowing agencies to police for profit with little oversight creates an "unconstitutional institutional incentive" to pursue as many cases as possible.[4] Essentially, civil forfeiture allows the executive branch to bypass the legislature and self-fund.
Weak procedural safeguards and low standards of proof compound the constitutional problems by restricting judicial oversight. Police and prosecutors declare victory for themselves more than 80% of the time without ever going court.[5] Separation of powers disappears, along with the Fifth and 14th Amendment guarantees of due process.[6]
Despite the long odds against them, McClellan and his girlfriend, Yvonne Silver, opted to fight back as joint owners of their cash. They quickly found themselves mired in the federal justice system.
Although their case originated as an accident investigation, local officials transferred the paperwork to the U.S. government under a program called equitable sharing. Once the process ends, federal agencies take a cut of the proceeds and kick back the rest — usually about 80% — to their local and state partners.
When McClellan and Silver arrived at the U.S. District Court for the District of South Carolina, a federal judge declared their cash guilty without giving a jury a chance to weigh in. The currency was sufficiently suspicious, the judge determined, based on the government's strongly worded insinuations.
Many cases like this are built on insinuations. Texas resident Guillermo Espinoza learned this the hard way while driving through Arkansas with his girlfriend. A state trooper pulled him over and conducted a roadside search, which produced no drugs, weapons or contraband of any type. Despite the lack of evidence, the government seized and forfeited nearly $20,000 in cash from the vehicle based on speculation that it was connected to drug trafficking.
Espinoza, who was never arrested or charged with a crime, tried to appeal in 2014. But the Arkansas Court of Appeals refused to consider his case because he missed a filing deadline.[7] The government counts on inexperienced property owners getting lost in the paperwork.
Even when cases reach neutral judges, forfeiture teams lean heavily on general observations that cannot stand on their own. Instead, police and prosecutors string together multiple observations and ask courts to consider the totality of the circumstances.[8]
Popular excuses include a person looking nervous during a traffic stop, giving incomplete or slow answers, packaging money in suspicious ways, buying airline tickets at the last minute, visiting high-crime neighborhoods, traveling to known "drug-source states," failing to explain a legal source of cash, and having a criminal record.
Federal agents even faulted African immigrant Sidialy Diaafar for driving southbound on Interstate 95 in a rental car — something thousands of people do every day.[9]
Against that backdrop, the district court unsurprisingly saw nothing wrong with the circumstantial case against the cash in McClellan's trunk. But that was not the end of the story. McClellan and Silver appealed to the Fourth Circuit and scored a victory on Aug. 10.
The ruling,[10] which sends the case back to the lower court for trial, faults the government for failing to satisfy the requirements for summary judgment. Preponderance of the evidence is a low standard, but still a standard.
"While it may be dubious to drive around with a large amount of cash in one's car, it does not create an inescapable inference of criminal activity," the panel held. "Not using a bank does not necessarily make one a criminal."
Many people conduct cash transactions out of necessity. The Federal Reserve estimates that about 6% of U.S. adults — more than 1 in 20 — have no checking, savings or money market account.[11] Some of these so-called unbanked individuals cannot afford minimum account balances or pay bank fees. Others lack required forms of identification to open accounts.[12]
People also use cash by choice. Sometimes they simply don't trust banks. Other times they lack credit, so they buy vehicles, heavy machinery and other equipment in cash to simplify transactions or to gain negotiation power. None of this is illegal.
Regardless of the reasons, unbanked individuals tend to have lower incomes and less education than the U.S. average, and many are Black and Hispanic.[13] When officers find large amounts of cash, the owner is most likely to be a person of color from a low-income household. A 2019 Greenville News investigation from South Carolina shows the potential for racial and ethnic profiling.[14]
Even when cash is actually dirty, the government should rely on more than speculation and innuendo for civil forfeiture. If the government accuses someone of a crime, forfeiture should require proof beyond a reasonable doubt. Nonetheless, even under the lower preponderance standard, the new ruling will help property owners stuck in circumstantial cases.
The trial court sided with the government without giving McClellan and Silver a chance to convince a jury that their money was innocent. Property owners deserve better. The appellate court makes clear that generic allegations are insufficient for summary judgment. The Constitution guarantees a fuller measure of due process — no matter how much cash a person carries.
As the Fourth Circuit held, "The Government has the burden of proof here, and that makes all the difference."
Robert Johnson is a senior attorney and Caroline Grace Brothers is an attorney at the Institute for Justice.
Disclosure: Johnson and Brothers filed an amicus brief on behalf of the Institute for Justice in U.S. v. McClellan. In addition, Johnson represented Harjo in Harjo v. City of Albuquerque.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] MarketWatch, July 11, 2017, "This is exactly how often cocaine and feces show up on your dollar bills." https://www.marketwatch.com/story/this-is-exactly-how-often-cocaine-and-feces-show-up-on-your-dollar-bills-2017-07-11.
[2] Legal Information Institute, Cornell Law School. https://www.law.cornell.edu/wex/preponderance_of_the_evidence.
[3] "Policing for Profit," The Institute for Justice, 2020, https://ij.org/report/policing-for-profit-3/.
[4] Harjo v. City of Albuquerque
, 326 F. Supp. 3d 1145 (D.N.M. 2018).[5] "Five Myths of Civil Forfeiture," Competitive Enterprise Institute, 2022, https://cei.org/studies/five-myths-of-civil-forfeiture/.
[6] "Incentives Matter: The Not-So-Civil Side of Civil Forfeiture," The Federal Lawyer, 2016, https://www.fedbar.org/wp-content/uploads/2019/12/Civil-Forfeiture-pdf.pdf.
[7] Nineteen Thousand Eight Hundred Ninety-Four Dollars ($19,894.00) in American Currency v. State
, 491 S.W.3d 486, 2016 Ark. App. 244 (2016), May 4, 2016, Arkansas Court of Appeals.[8] United States v. Approximately $13,205.54 in U.S. Currency
, CIVIL 1:19-cv-00007-MR (W.D.N.C. Mar. 16, 2022).[9] United States v. $22,930.00 in U. S. Currency (5:19-cv-00444), District Court, E.D. North Carolina.
[10] United States v. McClellan
, No. 20-2251 (4th Cir. Aug. 10, 2022).[11] https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-banking-and-credit.htm.
[12] https://www.fdic.gov/householdsurvey/2012_unbankedreport.pdf.
[13] https://www.nlihc.org/resource/four-ten-black-adults-and-three-ten-hispanic-adults-are-unbanked-or-underbanked.
[14] https://www.greenvilleonline.com/in-depth/news/taken/2019/01/27/civil-forfeiture-south-carolina-police-property-seizures-taken-exclusive-investigation/2457838002/.