RICHARD MOORE

AMERICAN INVESTIGATOR REPORTING THE CASE FOR CONSTITUTIONAL INTEGRITY

AMERICAN INVESTIGATOR

U.S. is an also-ran in human freedom index

Cato: Regulations, crony capitalism suppress liberty

By Richard Moore

If you live in the U.S. and believe you’re in the freest country in the world, you’d better think again.

America is not even close to making the playoffs, if a new report by several libertarian leaning international think tanks are to be believed. According to their new report, the United States ranks only 23rd in human freedom.

And we’ve been tumbling downward for some time in the Human Freedom Index, which is researched and published by the American-based Cato Institute, the Fraser Institute in Canada, and the Liberales Institut at the Friedrich Naumann Foundation for Freedom in Germany.

In 2008, for instance, the U.S. ranked 16th; in 2015, it came in 19th. The index aims to measure “the state of human freedom in the world based on a broad measure that encompasses personal, civil, and economic freedom.”

Overall, the index ranked 159 nations based on multiple measures of personal, civil, and economic freedom.

One of the co-authors of the report, Ian Vasquez, director of the Cato Institute’s Center for Global Liberty and Prosperity, says the U.S. slide is concerning.

“Human freedom is a social concept that recognizes the dignity of the individual,” Vasquez said in announcing the report’s release. “The declining performance of the United States, once considered the bastion of liberty, is worrisome. We should all be concerned with the impact on liberty of the war on terror, the war on drugs, and the decline in the rule of law and economic liberty in the United States.”

So, if not the United States, what’s the freest country in the world? That would be Hong Kong.

Rounding out the top 10 were, in order, Switzerland, New Zealand, Ireland, Denmark, Australia (6), Canada (6), the United Kingdom (6), Finland, and the Netherlands.

Bottom feeders include Russia (115), Nigeria (140), China (141), Saudi Arabia (144), Zimbabwe (148), Venezuela (154), and Iran (157). Other notable nations included Germany (13), Chile (29), France (31), Japan (32), Singapore (40), South Africa (74), Brazil (82), and India (87).

The Freedom Index
Among the measures scrutinized in each country were the rule of law; security and safety; ability of movement; freedom of religion; freedom of association; freedom of assembly and civil society; freedom of expression and relationships; size of government; legal system and property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor, and business.

Vasquez says measuring human freedom is more important than ever in a world in which populism, nationalism, and authoritarianism is on the rise. And those measurements, he wrote, are important not merely to appreciate the inherent value of freedom but to better appreciate its central role in human progress. 

For example, Vasquez and co-author Tanja Porčnik wrote, countries in the top quartile of freedom enjoy a significantly higher per capita income ($37,147) than those in other quartiles ($8,700 in the least-free quartile), and there is a strong correlation between human freedom and democracy, though Hong Kong is an outlier in that regard, they wrote.

“The findings in the HFI suggest that freedom plays an important role in human well-being, and they offer opportunities for further research into the complex ways in which freedom influences, and can be influenced by, political regimes, economic development, and the whole range of indicators of human well-being,” Vasquez and Porčnik wrote.

Besides Hong Kong specifically, the authors wrote, the highest levels of freedom are in Western Europe, Northern Europe, and North America (Canada and the United States), while the lowest levels are in the Middle East and North Africa, South Asia, and sub-Saharan Africa. 

“Women’s freedoms, as measured by seven relevant indicators in the index, are strongest or least repressed in Europe and North America and least protected in the Middle East and North Africa, South Asia, and sub-Saharan Africa,” they wrote.

The United States’ decline, writes Vasquez on his Cato Institute blog, is due to a combination of factors.

“In terms of economic freedom, for which we have decades of comparable data, the United States has been on a long-term decline since the year 2000,” he wrote. “Surely, the war on drugs, the war on terror, the expansion of the regulatory state, the rise of crony capitalism and the erosion of property rights due to the abuse of eminent domain have contributed to the U.S. fall in the rule of law and overall human freedom. The United States can unfortunately no longer claim to be the world’s bastion of liberty.”

Interestingly, the decline since 2000 has coincided with two presidential administrations that expanded the reach of the federal government, that of George W. Bush and that of Barack Obama.

Beyond economic liberty, Vasquesz wrote, all dimensions of freedom matter and reinforce each other. 

“As countries become more free and therefore more prosperous, the data suggest that they first have relatively higher levels of economic freedom compared to personal freedoms, and that once they reach a high level of freedom, they have relatively higher levels of personal freedom compared to economic freedom, but all indicators of freedom are high,” he wrote. “Put another way, if you want to live in a country with a high level of personal freedom, you better have a relatively high level of economic freedom.”

Slightly better
Over at the conservative Heritage Foundation, Heritage and the Wall Street Journal have their own index, a freedom meter called the Index of Economic Freedom, and there the U.S. scores better than in Cato’s overall freedom ratings.

But the USA still misses the top 10, coming in at number 11 in the 2016 rankings (2017 rankings are forthcoming), up one notch from 2015. Overall, Heritage and The Journal calculate, the world economy is “moderately free,” with four straight years of increases in freedom.

“The world average score of 60.7 is the highest recorded in the 22-year history of the index,” Heritage stated. “Thirty-two countries, including Burma, Germany, India, Israel, Lithuania, the Philippines, Poland and Vietnam, achieved their highest-ever index scores. Among the 178 countries ranked, scores improved for 97 countries and declined for 74.”

Over the period covered by the 2016 index, scores improved in half of the categories measured by the index editors, most notably in investment freedom, Heritage stated.

Five economies earned the index’s designation of “free” (scores of 80 or above), while the next 87, including the U.S., were classified as “mostly free” (70-79.9) or “moderately free” (60-69.9). Yet the number of economically “unfree” economies remains high, Heritage found, with 62 considered “mostly unfree” (50-59.9) and 24 “repressed” (scores below 50).

“Economies rated ‘free’ or ‘mostly free’ enjoy incomes that are over twice the average in all other countries and more than four times higher than the average incomes of ‘repressed’ economies,” the editors wrote. “Nations with higher degrees of economic freedom prosper because they capitalize more fully on the ability of the market to generate and reinforce dynamic growth through efficient resource allocation, value creation and innovation.”

The U.S. remained the second-place economy in the North America region behind Canada, though its score dipped slightly because of notable drops in labor freedom, business freedom and fiscal freedom, Heritage found.

The top five countries in economic freedom were Hong Kong, Singapore, New Zealand, Switzerland, and Australia. Canada ranked sixth; Chile, seventh; Ireland, eighth; Estonia, ninth; and the United Kingdom, 10th.

Other rankings of interest include Chile (29), the freest country in Latin America, while Venezuela (154) is the least free in the region, Heritage wrote. India ranked 87; Russia, 115; and China, 141. Turkey ranked 73rd, South Africa 74th, Brazil 82nd and Egypt 144th.

Police rake in billions in property seizures

No crime, no criminal charge needed to take your assets

Posted by Richard Moore Aug. 11, 2016

The first in a series

Across the United States, at a proliferating and alarming rate, police are seizing properties they say have been implicated in various crimes, though often enough the property owners are never convicted or even charged with a crime.

Under the weakest of pretexts, property — cars, cash, homes — is seized and sold, most often going to pad law-enforcement budgets. Most people never fight the confiscations because the police target the less well off, and, while some people do fight and get their property back, it can take months and even years, causing irreparable harm and bankruptcies.

Justice delayed is justice denied, as they say.

Now, across the U.S., bipartisan calls for reform are gaining momentum as stories mount of egregious abuses of the process known as civil asset forfeiture.

Consider just one example, as reported by Sarah Stillman in The New Yorker: In Philadelphia, a family named Adams owned a nice, modest, two-story home, where they raised their son, and marigolds, and where they worked hard until they retired. 

Their son, Stillman reported, never left home, and that’s where the trouble started. Not that the trouble was very major. In 2012, the 31-year-old son allegedly sold $20 worth of marijuana to a police informant on the porch of the Adams’s house, and made arrangements for two more sales, also for $20 each.

Selling $60 of pot got this police response: Nine days after the first sale, the police arrived unannounced — “swat-team officers in riot gear,” Stillman reported — and sledge-hammered the front door down. They carted the son off to jail.

But that wasn’t the worst of it. A month later, the state moved to take the Adams’s house, where the alleged crime occurred, and to sell it at a biannual city auction, with the spoils to be divided between the district attorney’s office and the police department. What’s more, Stillman reported, the state was allowed to sell the house whether the son was convicted or not and could do so before he even stood trial.

But the police showed compassion, The New Yorker reported. The father had cancer and so authorities decided the family could stay in the house until they sold it out from under them. 

In the end, the Adams were lucky. It just so happened that, at the University of Pennsylvania Law School, a clinic was helping indigent homeowners challenge civil-forfeiture claims, and their intervention saved the home.

But such abuses are not isolated, and the victims are not always so fortunate. 

In 2012, the American Civil Liberties Union — which challenges civil forfeiture laws from the Left — settled a class-action lawsuit against officials in Tenaha, Texas, where officers routinely stopped and searched drivers, seizing their cash and other property. Almost all of the targets were black or Latino, according to the ACLU. 

Police deposited the money straight into law enforcement’s accounts. It was highway robbery, literally, the ACLU charged.

“From 2006 to 2008, police seized approximately $3 million from at least 140 people as part of the program,” the ACLU stated in announcing the 2012 settlement. “None of the ACLU’s clients were ever arrested or charged with a crime after being stopped and shaken down.”

Often times, the Tenaha police pulled motorists over for such things as driving too close to the center line, or driving in the passing lane, or having a burned-out tail light, and, upon finding valuables, threatened to charge them with money-laundering felonies if they did not sign over their assets. 

Those with children were sometimes threatened with worse: Sign over their money and property, or the police would take the children and put them in foster care.

As a result of the settlement in Morrow v. City of Tenaha, police in Tenaha are now required to videotape all stops, and police no longer can ask a motorist to waive his or her interests in property. A waiver in an individual’s interest in property can only be obtained before a judge or after the individual is represented by an attorney.

The procedure, the problem
So, how does civil asset forfeiture work exactly, and, beyond specific anecdotes, how big is the problem?

Civil asset forfeiture is a legal mechanism by which law enforcement officials seize property they allege has been involved in the commission of crimes. As the Heritage Foundation and others have pointed out, the property owner need not be guilty of any crime, or even charged with a crime; in fact, police charge the property itself and then take the property to civil court.

And so, to take the example of the Adams family in Pennsylvania, the name of that case was not the Commonwealth of Pennsylvania v. Adams, as might be expected, but the Commonwealth of Pennsylvania v. The Real Property and Improvements Known as (the address of the Adams).

Here’s a few other case names, to put what law enforcement is doing in context: United States v. $124,700 in U.S. Currency; United States v. Approximately 64,695 Pounds of Shark Fins; United States v. Article Consisting of 50,000 Cardboard Boxes More or Less, Each Containing One Pair of Clacker Balls; State of Texas v. One Gold Crucifix.

You get the idea.

The original notion of allowing police to use civil asset forfeiture was well-intentioned. Lawmakers envisioned the process as a tool law enforcement could use against organized crime and, in more recent years, drug cartels. If law enforcement couldn’t nab the cartel leaders, they could at least confiscate their property, and use those assets to fund their war on drugs.

What lawmakers didn’t envision was the use of civil asset forfeiture as an every-day revenue stream for police agencies, an enterprise that hinged largely on profiling and targeting average citizens and the smaller amounts of cash and valuables they carry. 

How much are police collecting and, again, how big is the problem?

The answers are a lot and very. According to the Texas Public Policy Research Institute, between 2003 and 2012, law enforcement agencies in Texas alone confiscated approximately $486 million in asset forfeiture cases. 

And, a new report by the Institute for Justice, “Policing for Profit: The Abuse of Civil Asset Forfeiture,” makes clear that Texas isn’t alone. The report’s authors are the IJ’s Dick M. Carpenter II, Lisa Knepper, Angela C. Erickson, and Jennifer McDonald. 

While the ACLU and others are leading reform efforts from the Left, the IJ does so from the Right, distilling the bipartisan nature of the reform efforts. The bottom line, according to the IJ’s report: “Forfeiture activity has exploded, particularly in the new millennium.”

In 1986, the U.S. Department of Justice’s Assets Forfeiture Fund took in $93.7 million in revenue from federal forfeitures, the report observed, but, by 2014, annual deposits had reached $4.5 billion — a 4,667-percent increase.

“The forfeiture funds of the DOJ and Treasury Department together took in nearly $29 billion from 2001 to 2014, and combined annual revenue grew 1,000 percent over the period,” the report stated. “Total annual forfeiture revenue across 14 states more than doubled from 2002 to 2013. Those 14 states were the only states for which the Institute for Justice could obtain forfeiture revenues for an extended period.”

No transparency
That latter observation demonstrates another problem — many states, including Wisconsin, don’t require reporting for forfeiture activity and assets seized. 

“Most state and federal civil forfeiture laws lack even basic transparency requirements, leaving the public in the dark about most forfeiture activity,” the report states. “Poor public reporting about law enforcement’s use of civil forfeiture makes it difficult, if not impossible, for lawmakers and the public to hold agencies accountable.”

In fact, only 11 states and the federal government make any kind of forfeiture information publicly accessible online, the IJ reported, while another three states and the District of Columbia will put forfeiture records online in 2016. 

“Obtaining information elsewhere requires public records requests, which are often arduous and ineffective,” the report states. “The limited information available is plagued by missing data and typically lacks key details, such as whether a forfeiture was civil or criminal or, in some cases, the type of property seized.”

And even federal data is skimpy and missing key correlations, the institute report observed.

“Although the Department of Justice’s forfeiture database tracks more than 1,300 variables about cash and property seizures, not one indicates whether a criminal charge or conviction accompanied a forfeiture,” the report stated. “The DOJ carefully tracks and reports forfeiture revenue, but fails to publicly report whether forfeitures target proven criminals.”

What’s more, the report continued, nearly all expenditures of forfeiture proceeds are hidden from public view.

“Forfeiture laws typically place few limits on law enforcement spending of forfeiture proceeds and impose even fewer checks to ensure that expenditures are proper or legal,” the report stated.

“Scant reporting requirements heighten the risk of abuse by shielding expenditures from public scrutiny. The few data available for the federal government and a handful of states indicate only broad categories of spending, making it impossible to evaluate individual expenditures.”

When expenditures were provided by category, the report stated, most known spending by state and local agencies was listed under equipment, “other,” and salaries and overtime. Only tiny fractions went toward substance abuse or crime prevention programs.

For example, the report stated, in 2007, law enforcement agencies in eight states spent more than $42 million in equitable sharing payments on “other” items; in 2012, agencies in four states spent $13.7 million in state forfeiture money on “other.”

Federal sharing
While a few states have tight restrictions on civil asset forfeitures, and on the ability of law enforcement to police for profit (in Wisconsin, civil property seizures are supposed to go to schools), many agencies have been able to get around those state restrictions by partnering with the federal government.

Federal “equitable sharing” programs enable state and local law enforcement to team with the federal government to forfeit property under federal law instead of state law, the IJ study states. Participating agencies receive up to 80 percent of proceeds, and the IJ says that creates a strong incentive to use equitable sharing to circumvent more restrictive state laws.

“State and local law enforcement’s participation in federal ‘equitable sharing’ has soared, and 2015 policy changes are unlikely to reverse the trend,” the report states. “… The Department of Justice announced new policies in January 2015 intended to curb one type of equitable sharing — federal ‘adoptions’ of locally seized assets. But the changes and subsequent clarifications largely left intact another vehicle for equitable sharing — joint task forces and investigations involving federal law enforcement.”

Between 2000 and 2013, in fact, annual DOJ equitable sharing payments to state and local law enforcement more than tripled, the IJ reports, growing from $198 million to $643 million.

In all, the DOJ paid state and local agencies $4.7 billion in forfeiture proceeds from 2000 to 2013, and the report says 82 percent resulted from joint task forces and investigations, procedures largely unaffected by new DOJ rules.

“In a nationwide ranking, Rhode Island, California, New York and Florida rank worst for equitable sharing participation, even after accounting for the rate of drug arrests by state,” the report states. “South Dakota, North Dakota and Wyoming rank at the top for their less frequent use of equitable sharing.”

By far, the IJ report continues, civil forfeitures far outpace criminal forfeitures.

“Criminal forfeiture requires a criminal conviction to deprive people of their property,” the report states. “By contrast, civil forfeiture allows law enforcement to take property from innocent people never convicted of or even charged with a crime, making it easier for the government to forfeit property and harder for property owners to fight back.”

Just 13 percent of DOJ forfeitures from 1997 to 2013 were criminal forfeitures; 87 percent were civil forfeitures. And of those civil forfeitures, the report continued, 88 percent took place administratively. 

“Administrative forfeitures happen automatically when a property owner fails to challenge a seizure in court for any reason, including the inability to afford a lawyer or a missed deadline to file a claim,” the report stated. “The seized property is simply presumed ‘guilty’ without a neutral arbiter such as a judge determining whether it should be permanently taken from its owner.”

A taxing task
Another major player in the civil forfeiture scheme on the federal level is the Internal Revenue Service.

Put simply, if the IRS suspects somebody of money laundering, it will seize that person’s bank account. However, often that suspicion is based on no evidence that a crime is being committed other than the size and pattern of a person’s bank transactions. 

As a result, the IRS has been seizing the money of innocent Americans who aren’t laundering money.

Take the case of Dr. Alireza Yarahmadi, an Iowa neurologist. Yarahmadi didn’t much trust banks — his family lost its savings during the 1979 Iranian revolution, his lawyer told the Des Moines Register — and so he periodically transferred funds from his bank account to safety deposit boxes. Those routine transfers caught the IRS’s attention, and, in 2014, it seized $344,405 from the doctor’s bank account. 

Banks have to report any cash transactions of $10,000 or more, and it’s against federal law to “structure” deposits in amounts under $10,000 for the purpose of evading the reporting requirement.

The IRS said that’s exactly what Yarahmadi was doing. He denied any wrongdoing and any criminal activity, and, after a protracted battle, the U.S. Attorney’s Office for the Northern District of Iowa dismissed the case and directed that the money be returned.

A happy ending, but, as the IJ reports, the IRS was doing the same thing to many people. Between 2005 and 2012, the IJ states, the IRS seized roughly $242 million for alleged “structuring” in about 2,500 cases. 

“Half of the seizures were under $34,000,” the IJ stated. “Remarkably, in at least a third of all cases, merely making transactions under $10,000 triggered an IRS seizure; no additional wrongdoing was alleged.”

In recent years, lawmakers have begun to push for federal reform. In 2015, Rep. Tim Walberg (R-Michigan) introduced the Fifth Amendment Integrity Restoration Act, which, among other things, would increase the federal government’s burden of proof in civil forfeiture proceedings to clear and convincing evidence and require the government, in addition to showing a substantial connection between the seized property and an offense, to establish by clear and convincing evidence that the property owner used the property with intent to facilitate the offense or knowingly consented to such use. 

To remove incentives for carrying out civil forfeitures, the bill would require proceeds to be deposited into the general fund of the Treasury, rather than to Department of Justice accounts for law enforcement activities. 

That bill has not passed, though a slightly different version passed the House Judiciary Committee in May.

“Seizing private property without charging property owners with a crime infringes on an individual’s constitutionally protected rights,” Walberg said in May. “We must put an end to this abusive practice and return the balance of power back to the American people.”

Other lawmakers have kept up the heat on the IRS, too, and this past June the agency announced it would update its policies to help small business owners and farmers wronged by the agency’s civil asset forfeiture abuses.

That action came after the House Ways and Means Oversight Subcommittee engaged in an almost two-year investigation of seized assets from small businesses and individuals that the IRS suspected of structuring transactions to avoid reporting requirements. But, said subcommittee chairman Peter Roskam (R-Illinois) and ranking member John Lewis (D-Georgia), many of those small businesses and individuals were not aware that structuring was a crime or intended to avoid any reporting requirements.

In June, the IRS told the subcommittee it would send letters to everyone from whom it had seized assets based on allegations of structuring since October 2009, about 700 cases. Those people can petition the IRS to see if they qualify to get some or all of their money back, and people whose assets were seized before October 2009 also can contact the IRS to see if they are eligible to get their money back.

In addition, the IRS also has changed its internal policies to require agents to include evidence of illegal sources in affidavits before seizing money.

“It took two years, two hearings, and letters from every Republican and Democratic member of the oversight subcommittee, but we can now see justice on the horizon,” Roskam said.

But, while justice might on the horizon at the IRS, there’s still not much reform going on in the various states, where civil asset forfeiture laws are notoriously lax, and where law enforcement agencies can still partner in equitable sharing programs in most states.

In fact, the IJ gives 35 states grades of D+ or worse and says federal civil forfeiture laws are among the nation’s worst, earning a D-.
New Mexico and the District of Columbia earn the highest grades because of reforms the institute says will eliminate financial incentives for civil forfeiture. Most state laws, though, beg for substantial improvement.

“Civil forfeiture laws pose one of the greatest threats to property rights in the nation today,” the IJ stated in its report. “They encourage law enforcement to favor the pursuit of property over the pursuit of justice, and they typically give the innocent little recourse for recovering seized property. And without meaningful transparency, law enforcement faces little public accountability for its forfeiture activity or expenditures from forfeiture funds.”

The best solution would be to simply abolish civil forfeiture, the institute believes. 

“Short of that, lawmakers should eliminate financial incentives to take property, bolster property rights and due process protections, and demand transparency for forfeiture activity and spending,” the report stated. “No one should lose property without being convicted of a crime, and law enforcement agencies should not profit from taking people’s property.”

Next: a look at civil asset forfeiture in Wisconsin and in neighboring states