Indiana Supreme Court Announces Proper Procedural Framework for Civil Forfeiture and Who Constitutes an ‘Owner’
by Sam Rutherford
The Supreme Court of Indiana recently issued a decision clarifying the procedural framework, relevant pleading standards, and the State’s evidentiary burden before it may lawfully seize a citizen’s money or property in a civil forfeiture action. Because the State failed to comply with these requirements in this case, the Court ordered it to return the cash it seized to its rightful owner.
Background
Dylan Williams was on parole in September 2020. He tested positive for illegal drugs, so his parole officer decided to search his residence pursuant to Williams’ parole agreement. The parole officer enlisted the assistance of local police to conduct the search. Inside Williams’ apartment, they located illegal drugs, packaging materials, and $11,180 in cash in various denominations. Williams ultimately pleaded guilty to a felony drug possession charge and was sentenced to prison.
The State then sought forfeiture of the $11,180, alleging it “had been furnished or was intended to be furnished in exchange for a violation of a criminal statute, or is traceable as proceeds of a violation of a criminal statute.” Williams did not answer the complaint, but his aunt, Angela Smith, was permitted to intervene in the action. She asserted at a subsequent hearing that she had given the cash to Williams to hold it for her to conceal it from her abusive ex-boyfriend. She supported her claims with bank records, police reports, photos, and a protection order she obtained against the ex-boyfriend.
The State, on the other hand, asserted that the manner in which the money was stored and the denominations that were found were indicative of criminal activity. A detective involved in the search of Williams’ apartment testified that he saw cash and drugs in several locations but could not say for certain whether the drugs and cash were stored together or where the searching officers found the narcotics that led to Williams’ conviction.
The trial court entered judgment for the State, finding that it had “met its burden of proof by a preponderance of the evidence that the currency should be seized.” The Indiana Court of Appeals affirmed in an unpublished opinion. The Indiana Supreme Court granted discretionary review and reversed.
Analysis
“Civil forfeiture is a legal fiction that authorizes ‘action against inanimate objects for participation in alleged criminal activity.’” Quoting Abbott v. State, 183 N.E.3d 1074 (Ind. 2022). Indiana’s civil forfeiture statutes permit forfeiture in a contested action if the State shows by a preponderance of the evidence at a hearing that the seized property falls within one of several categories. See Ind. Code § 34-24-1-1; § 34-24-1-4. Money is one of these categories. Ind. Code § 34-24-1-1(a)(2), (d).
The statute provides two avenues for the State to seek forfeiture of money. § 34-24-1-1(d) creates a rebuttable presumption that the money is subject to forfeiture, but § 34-24-1-1(a)(2) does not. In this case, the State sought forfeiture of the money seized from Williams’ home under only § 34-24-1-1(a)(2), which imposes “a heightened burden on the State at a hearing.” The Court nonetheless took the opportunity to “clarify and apply the proper procedure, including the State’s burden under both avenues.”
The Court began by discussing the proper procedural requirements of a forfeiture action. The State must file a complaint “in the jurisdiction where the seizure occurred.” § 34-24-1-3(a). The “owner” or “any person whose right, title, or interest is of record” has 20 days to file an answer. § 34-24-1-3(d). If no answer is filed, the State is entitled to default judgment and may seize the money. § 34-24-1-3(e). But once an answer is filed, both parties must appear at a hearing, and the State “must show by a preponderance of the evidence that the” money is “subject to seizure.” § 34-24-1-4(a).
As the Court explained, “how this burden is met turns on the statute the State relied on in its complaint.” Under § 34-24-1-1(a)(2), the State may seize money if it was (1) “furnished or intended to be furnished by any person in exchange for an act that is in violation of a criminal statute,” (2) “used to facilitate any violation of a criminal statute,” or (3) “traceable as proceeds of the violation of a criminal statute.” At a hearing brought pursuant to this subsection of the forfeiture statute, “the State must identify the applicable criminal statute that was violated and establish a substantial connection between the seized money and that crime.”
Subsection 34-24-1-1(d), on the other hand, creates a rebuttable presumption that money is subject to forfeiture if it was “found near or on a person who is committing, attempting to commit, or conspiring to commit” one of 16 listed serious drug offenses for dealing, manufacturing, or possessing significant quantities of illegal drugs. “At a hearing in an action invoking this statute, the State must identify the listed offense and establish that the seized money was found either near or on a person committing, attempting to commit, or conspiring to commit that crime.”
If the State meets its burden under either statutory provision, the money “is presumed forfeitable—period.” Quoting Lipscomb v. State, 857 N.E.2d 424 (Ind. Ct. App. 2006). But if the State fails to meet its burden, then “court shall order the property released to the owner.” § 34-24-1-4(b). The forfeiture statutes do not define the term owner, so the Court interpreted the term in its “plain, or ordinary and usual, sense,” I.C. § 1-1-4-1(1), by reference to dictionaries, Performance Servs., Inc. v. Randolph E. Sch. Corp., 211 N.E.3d 508 (Ind. 2023). Merriam-Webster defines owner as “one who has the legal or rightful title to something” and “one to whom property belongs.” The Court declared that until the Legislature provides an alternate definition of owner, “for purposes of the civil forfeiture statutes, an owner of money refers to the person to whom it belongs.”
Thus, when the person contesting forfeiture is the person from whom it was seized, the court will return the money to that person if the State fails to carry its burden of proof at the hearing. “But when someone else contests the forfeiture, that party must produce evidence showing the money belongs to them.” If that person establishes to the court’s satisfaction that they are the owner of the money, it is returned to them. Otherwise, the money is returned to the person from whom it was seized, the Court instructed.
After clarifying the appropriate statutory framework under which forfeiture actions proceed, the Court then applied that newly clarified framework to determine whether the trial court correctly concluded that Smith’s $11,180 was forfeitable. The trial court erred in several respects, according to the Court. First, “the State did not identify a criminal statute that was violated and did not produce evidence showing a substantial connection between the money and any underlying offense.” The State’s complaint and argument at the hearing failed to reference any specific statutory drug offense the money was connected to. Instead, the State simply alleged that the money was “seized money as part of [a] drug operation.” But § 34-24-1-1(a)(2) requires proof that the money was seized in connection with a specific, enumerated offense under Ind. Code chapter 35-48-4, the Court explained.
But even assuming that the drug offenses for which Williams was arrested were the enumerated offenses to justify seizure of the money, “State’s evidence at best establishes an ‘incidental or fortuitous connection between’ those crimes and the money,” according to the Court. Quoting Katner v. State, 655 N.E.2d 345 (Ind. 1995). The detective who testified at the forfeiture hearing did not identify the type or quantity of drugs seized from Williams’ apartment or the location where they were found. Nor was there evidence from ledgers or the like listing financial transactions related to drug sales. The detective did testify that he found cash behind a TV and in Williams’ wallet and that the money was “banded up” in different denominations, but “the fact that a large sum of money in different denominations is held together by a rubber band does not alone create a substantial connection between that money and illegal drug activity,” the Court stated. Thus, the Court ruled that the State failed to meet its burden of establishing “the requisite nexus between the money and an applicable offense.”
The next issue was whether Smith sufficiently established her ownership of the funds. The unrebutted evidence at the hearing established that Smith had been in an abusive relationship with a man who routinely forced her to withdraw funds from her bank account and give it to him. She further testified that she gave the money to Williams because she trusted him to keep her money safe and produced bank statements showing she had withdrawn large sums of money from her bank account just a few months before the cash was seized from Williams’ apartment. “All in all, the uncontradicted evidence presented during the hearing establishes that Smith is the owner of the $11,180.” Thus, the Court held that the trial court erred by not releasing it to her.
Conclusion
Accordingly, the Court reversed the trial court’s forfeiture order and remanded for the court to order the money released to Smith. See: Smith v. State, 232 N.E.3d 109 (Ind. 2024).
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