Nevada Court Shuts Down Federal Civil Forfeiture Loophole That Bypassed State Restrictions

Legal Issues

from the gotta-play-by-ALL-the-rules dept

Marine vet Stephen Lara’s lawsuit against the Nevada Highway Patrol (NHP) and forfeiture abuse in general in that state has paid off. Not just for Lara, whose $86,900 was returned to him shortly after he filed this lawsuit, but for all residents of the state, who are now less likely to see cops walk off with their property just because of a convenient loophole that allows them to bypass local restrictions on seizures.

Lara was pulled over by the Highway Patrol in February 2021, allegedly for following another vehicle too closely. During the traffic stop, several NHP officers gathered, milled around for awhile, and finally “discovered” nearly $87,000 in Lara’s vehicle. Lara had receipts for the cash — lots and lots of receipts generated by ATMs and bank tellers. But it didn’t matter to the troopers, who claimed their drug dug smelled drug residue on the cash, which meant it only could have been obtained by illegal means.

Of course, drug residue is present on almost all cash in circulation, which — following this logic — would make almost all cash everywhere the byproduct of illegal activity. The troopers took his cash. To ensure they’d still be able to keep most of it, they called up some DEA buddies, which allowed the NHP to use the “federal adoption” loophole that would allow them to keep up to 80% of anything they seized.

Three years later, Lara’s lawsuit was still a going concern, despite the state and NHP’s best efforts to terminate it. One year after the court allowed the lawsuit to move forward, it has arrived at a decision that ensures it won’t just be Lara benefiting from its ruling. (via the Institute for Justice)

After a long discussion of the competing claims and the “dual sovereignty” (state and federal) precedent that governs this case, the court says it is indeed possible for local law enforcement to utilize federal loopholes to obtain property it might not have been able to accomplish under state law alone. But that doesn’t end this discussion. From the opinion [PDF}:

[T]here is no question that federal law enforcement agencies have full authority to adopt seizures from state law enforcement agencies and then start forfeiture proceedings in federal court—divesting state courts from jurisdiction over the seized item. There is also no question that federal law enforcement agencies have full authority to then transfer the proceeds recovered from the forfeiture proceedings back to the state law enforcement agency that originally seized the property. But this does not necessarily mean that state law enforcement agencies may participate in this process. State law enforcement agencies must be able to point to independent authority permitting them to participate in this process.

State law doesn’t contain any language expressly allowing federal adoption of forfeitures. But neither does it specifically forbid this. However, the plain language of the law “places strict requirements” on asset forfeitures engaged in by local law enforcement. But a lack of specific denial is not the same thing as explicit permission. And that’s where the NHP went wrong in the Lara case.

Unlike other forfeiture statutes in other states, nothing in Chapter 179 expressly allows NHP to hand over seized property to federal law enforcement agencies. This Court, unlike the above mentioned state appellate courts that found their respective state law enforcement agencies could participate in the federal equitable sharing program, cannot point to a state statute justifying NHP’s participation in the federal equitable sharing program. Without the appropriate statutory authority, NHP is unable to participate in the federal equitable sharing program to the detriment of the state forfeiture statutes.

Two aspects of the law tacitly forbid federal adoption of seizures, even if they don’t refer directly to the loophole exploited here.

When NHP participates in the federal equitable sharing program, it circumvents the statutory requirements set upon it in Chapter 179 of the NRS. For example, when NHP participates in the federal equitable sharing program, it effectively circumvents the requirements of NRS 179.1171(3), as the seized property may be forfeited without following the dictates of the statute. And when NHP participate in the federal equitable sharing program, it effectively circumvents the requirements of NRS 179.1175(2), as the currency may very well not be placed in an interest-bearing account—despite not receiving the requisite court order.

More basically, subsection (3) says forfeitures must be filed in the court of the county where the cash was seized — something that is no longer possible once the feds are involved. Subsection (2) says the seized funds must be placed in an “interest-bearing” account — something that very likely may not happen if federal agencies take control of the funds.

That’s two strikes against the law. The third (not that it matters, this ain’t baseball) is the lack of explicit permission to involve federal agencies in local forfeitures. As the court points out, this could have easily been added to the law if that’s what legislators intended. It cites numerous other states laws that give local agencies permission to work cooperatively with federal agencies before going back to tap the forfeiture law in an irritated manner, emphasizing yet again there’s nothing in the law that gives local cops permission to do the things the state troopers chose to do here.

The end result is this: local forfeitures need to follow state law. And if the seizure looks like it won’t survive the specifics of state law, law enforcement agencies are strictly forbidden from calling the feds in hopes of salvaging some part of the seizure. Without a doubt this will result in fewer people being robbed of their cash by opportunistic local agencies. And Lara has scored a rare double-win against forfeiture, not only getting back every cent that was taken from him but forcing law enforcers to, you know, actually follow the laws they cite when they start picking people’s pockets.

Filed Under: asset forfeiture, civil asset forfeitue, dea, legalized theft, nevada, nevada highway patrol, stephen lara