Property Forfeitures and What Our AG is Doing About Them

by Tom Yamachika, President, Tax Foundation Hawaii

First, a quick question: What’s worse than having your property condemned, or taken for a payment representing “just compensation”?

The answer: Having your property taken for no payment. Taxation, of course, is one way this happens. But it also can happen if personal property, such as cars and currency, is connected to certain criminal offenses. The property may be forfeited without a court hearing, without compensation, and at times, without even a criminal charge filed against the property owner. The Attorney General oversees this kind of property.

In the Report No. 18-09, the State Auditor examined the Attorney General’s oversight of forfeited property and had some startling findings.

First, there wasn’t any written document either telling internal staff how the program worked, or administrative rules to educate the public and other agencies (such as law enforcement agencies). That led to frustration by law enforcement agencies such as county police departments who wanted to seize properties connected with illegal activity (and profit from them, as explained below), and by folks whose properties were taken who wanted to show that they weren’t connected with crime and could be returned.

The person in charge of the program at the AG’s office, furthermore, had responsibilities outside of the program, and as a result oversight of the program had been piecemeal and, well, second-rate at best. Processing petitions for administrative forfeiture took an average of 561 days (about 1 year and 7 months). Worse, the office couldn’t account for some of the cash or property it was supposed to have.

Finally, the laws governing property forfeiture specified that the agency initiating the forfeiture and the prosecutor’s office associated with that agency each get a cut of 25% of the cash or sale proceeds from the forfeited property. The Auditor also found that 20% of the balance was to be used to support drug abuse education, prevention, and rehabilitation programs. The 20% allocation was news to the AG’s office at the time, as not a penny had been spent toward drug abuse mitigation programs.

Recently, the Auditor’s Office issued Report No. 21-09 on whether its 2018 recommendations were being implemented. Here’s what the Auditor found.

The AG did indeed issue administrative rules covering the program, but they were an easy lift because the governing law allowed the AG to adopt the rules without a public hearing. The AG did not, however, adopt any internal procedures to guide its own staff. So, there is a chance that within the AG’s office there may be some arbitrariness as the staff responds to each case on its own facts.

The rules seemed to help with the office’s backlog. Average processing time for petitions for administrative forfeiture dropped from 561 days to 204 days. The good news is that they knocked one year off the processing time. The bad news is that they still need seven months. That’s a long time for a person to be without a car, for example, if it’s found that it wasn’t lawfully seized.

The Auditor also found that the AG’s staff got better at accounting for the money seized, but still didn’t keep an inventory of the hard goods.

And, when it came to the requirement that 20% of money be used to support drug abuse education, prevention, and rehabilitation programs, the AG’s staff couldn’t find the requirement in the law. So, they ignored the Auditor’s point. The AG’s position here is defensible. Even though the law passed by the Legislature said that the Legislature intended to create a 20% requirement, there was nothing in the law that in fact created it. If the Department spent money on drug abuse mitigation, justifiable criticism could follow. Legislators should take note and make sure that their intent stated in a bill matches the law that they intend to enact.

We’re making progress, it seems; perhaps not as quickly or smoothly as folks would like, but the program is better now than when the Auditor first looked at it.