RICO Law Criticized as Open to Abuse

JJ Hensley, The Arizona Republic

When Maricopa County Sheriff's deputies shut down a suspected gambling ring in April 2007 that stretched from the Southeast Valley to Costa Rica, the case was hailed as a victory for Arizona, legally and financially.

The announcement of the bust also came with pronouncements of a potential windfall for the participating law-enforcement agencies. Sheriff's officials boasted that law-enforcement agencies expected to collect $145 million in confiscated assets before Operation High Stakes was done.

Hopes by the Sheriff's Office of reaping more than $100 million were dashed in September when a judge formally dismissed charges against one of the final defendants involved, James Bennitt, after others pleaded to low-level misdemeanors.

Just over $8 million was seized, and attorneys estimate that 90 percent of that was returned.

As the case has fizzled, defense attorneys say state laws allowing seizure of cash and property from defendants suspected of committing a variety of crimes for financial gain encourage police to first lay claim to everything they can, and then later try to link the seized assets to criminal activity.

Defense attorneys contend there is a potential for abuse from law enforcement, which reaps the seized assets and spends the proceeds on an array of items ranging from office supplies to take-home cars for top administrators.

Prosecutors say the initial seizure prevents defendants from transferring assets and stashing cash that police could never recover if they had to wait for a conviction in a criminal case.

"A person who has ill-gotten gains is going to try to hide them or transfer them as soon as he realizes that the police are on to him," said Cameron Holmes, senior litigation counsel in the Arizona Attorney General's Office.

"That's one of the basic necessities of seizure."

Motivation questions

Law-enforcement agencies in Maricopa County collected more than $17 million in state and federal Racketeer Influenced and Corrupt Organizations Act funds during the last budget year. That's a small fraction of the combined annual budgets for all the law-enforcement agencies in the county.

But when police are experiencing layoffs, furloughs and spending cuts, seizures can take on heightened importance, attorneys said.

"Especially in a time of budget crisis, there is a concern . . . that agencies are going to be more aggressive because they can take care of some of their budget problems on the backs of people who haven't been convicted of a crime and aren't in a position to defend themselves," said Bennitt's attorney, Jean-Jacques Cabou.

Under the state and federal RICO laws, police agencies and prosecutors can keep confiscated property and cash linked to a variety of crimes committed for financial gain and use that money later for gang prevention, substance-abuse treatment and fighting crime.

Arizona's RICO law, based on 1970 federal legislation, was passed in 1978 and is similar to other state laws allowing agencies to seize cash and property to fund future criminal investigations and prosecutions.

Arizona's law also rewards individual departments with the proceeds from their officers' seizures instead of placing those revenues in the general fund, said James Belanger, a defense attorney who represented another suspect in the Operation High Stakes case.

The state statute also allows agencies to seize assets not directly linked to a criminal enterprise without a hearing, which leaves suspects with the burden of proving their houses, cars and bank accounts aren't the product of criminal activity - something that's difficult to do when funds to hire a lawyer are frozen, Belanger said.

"Even a well-intended law can be used for malicious purposes," he said.

"Law enforcement, they're incentivized. That's how human nature works. If the money they seize goes back into their pockets, there's at least some incentive to abuse forfeiture laws."

Limits on seizures

The asset-forfeiture process begins with a law-enforcement agency offering facts that show cash, property and other assets are probably linked to criminal activity and a judge signs a seizure order along with a search or arrest warrant.

Judges frequently limit the amount of property that agencies can seize and will occasionally place restrictions that keep officers from taking items of sentimental value, such as wedding rings.

Those limitations aren't always heeded, however, leaving suspects to ask police to return certain items.

Holmes said Arizona's RICO statutes were rewritten in 1994 to change the burden of proof for prosecutors from probable cause to a preponderance of evidence because the old laws were thought to be too favorable to the government. Defendants also can have a forfeiture hearing to challenge the seizure.

"The idea that things are just sort of whisked away and never seen again is just false," he said.

After the assets are seized, liens are placed on items like homes - though defendants can frequently live there until the case is resolved - bank accounts are frozen and the seized property is kept, like evidence in a criminal case, in storage until the case is adjudicated.

Asset forfeiture is a civil matter, meaning that even if defendants are found not guilty in their criminal trials, authorities may still prevail in keeping the seized assets.

If the civil case goes against the defendants, the assets are sold at auction and the money flows through the County Attorney's Office back to the agency that did the investigation with a portion going to the prosecuting agency and the trial courts.

Phoenix police took in the most RICO funds last year among agencies in Maricopa County with a combined total of $3.2 million between state and federal seizures. The Maricopa County Sheriff's Office gained more than $385,000 in that same time.

From the time it's seized, money and assets can take years to return to the investigating agency because defendants frequently file motions to stay the civil proceedings, which determine what becomes of the seized assets, while the criminal proceedings move forward.

By the time the cases are over, assets such as cars will have depreciated in value, and defendants who stay in their homes have been known to ransack the property on their way out if the proceedings don't go their way, Holmes said.

"We have paid dearly for that over the years," he said.