Governor vetoes Indiana forfeiture “reform” bill by which prosecutors hoped to codify some of their illegal practices

On May 13 Indiana Governor Mitch Daniels vetoed Senate Enrolled Act 215, which would have divided forfeiture proceeds among prosecuting attorneys and law enforcement, with a small portion going to schools. Citing a state supreme court ruling issued April 27, Governor Daniels said the bill violated the Indiana Constitution, which calls for the proceeds “from all forfeitures” to go to the Common School Fund, which helps pay for school construction.

The vetoed bill would have given one-third of civil forfeiture proceeds to prosecutors; with law enforcement agencies and schools splitting the remaining dollars, 85% to 15% respectively. Indiana law currently provides that, aside from recouping expenses of seizing the assets, proceeds “from all forfeitures” must go into the Common School Fund. However, these amounts are left to the discretion of county prosecutors, each of whom has interpreted such costs differently. According to the Indianapolis Star and Indiana attorney Paul Ogden, only one of Indiana’s 92 counties made any significant payments into the school fund from August 2008 to July 2010.

The 2010 investigation by the Indianapolis Star found that virtually none of the money gained from seizures has gone to the school fund. State Attorney General Greg Zoeller contends that Indiana’s constitution is talking only about the state’s rarely used criminal forfeiture provision, and that proceeds “from all forfeitures” does not include civil forfeitures, which comprise the vast majority of Indiana forfeiture cases. Alternatively, many prosecutors and police agencies use A.G. Zoeller’s opinion to justify keeping nearly all of the proceeds from forfeiture cases by claiming that all the confiscated proceeds fit under the legal definition of reimbursement for law enforcement expenses.

Another method by which prosecutors avoid contributing to the school fund is to contract out civil forfeiture cases to private attorneys, who get to keep a quarter to a third of their courtroom winnings. The Indianapolis Star reported that private attorney Christopher Gambill, who prosecutes forfeiture cases for several Indiana counties, once made $113,146 from a single forfeiture case – more than all 92 Indiana counties paid into the school fund during the two year period examined by the Star. Private attorney Greg Garrison won $627,525 by representing Madison County in a single gambling forfeiture prosecution. And Delaware County District Attorney Mark McKinney is presently facing disciplinary action before the Indiana Supreme Court for misconduct relating to his conflicting roles as full time public servant and private attorney prosecuting civil forfeiture cases on behalf of the Muncie-Delaware County Drug Task Force (DTF).

The Muncie-Delaware DTF used numerous confidential agreements between the DTF and accused drug dealers to bypass local courts and state law requiring that proceeds of forfeitures be placed into the school fund. The DTF routinely funneled seized money and property through confidential agreements into DTF accounts in violation of state law. Some of those agreements were never approved by court order, and rarely detailed the cost of law enforcement and prosecution, on which the forfeited assets are required to be spent.

In addition to these secret agreements to exclude judicial oversight and statutory requirements for the disposition of seized assets, Delaware Circuit Court  Judge Richard Dailey examined forfeiture cases over the past decade. Judge Dailey found 140 “abandoned property” affidavits, executed by Muncie police in charge of their property room or DTF officers, for the purpose of distributing money and property seized from alleged drug dealers. In some instances property was declared abandoned while the property owners were engaged in forfeiture litigation. Dailey wrote a 16-page report on civil drug forfeiture cases in which he determined that prosecutors’ “handling of civil drug forfeitures amounts to fraud on the court.”

Due to the diligent investigation by Judge Dailey, the Indiana Supreme Court Disciplinary Commission launched a probe of allegations against Delaware County Prosecutor Mark McKinney, investigating as many as 35 drug forfeiture cases and companion criminal cases. The cases presently under review by the Indiana Supreme Court are those in which McKinney was a full-time prosecutor while also working as a private attorney representing the DTF in civil forfeiture cases.

The conflict of interest when a public prosecutor also acts as private attorney seeking secret monetary settlements from those he is also engaged in criminally prosecuting is underscored by the amount of money that McKinney pocketed as a result of these illegal deals. According to an October 15, 2008 article in the Muncie Star Press, “Prosecutor reconstructs the record to comply with new rules,” the civil forfeiture cases that D.A. McKinney illegally handled on the side while serving as prosecutor “paid McKinney nearly $100,000 in attorney fees during the last decade.”

According to Judge Dailey, the secret agreements between prosecutors and police agencies,

covering a period from 2000 to 2007, were intentionally drawn to avoid court supervision and adjudication of forfeitures as required by state law. This concealment was successful until uncovered by the court in 2008, following up on a chance comment by a DTF supervisor. The secret agreements show McKinney’s and Hoffman’s clear intent to profit from their special positions as public servants invested with a public trust.

An Indiana Supreme Court opinion in a recent unrelated forfeiture case questions whether the state constitution allows prosecutors to keep any proceeds from forfeited assets.

As Heather Gillers wrote for IndyStar:

For decades, police and prosecutors have used the assets they seize from suspected criminals to help balance their budgets. But some legal and political leaders are now questioning whether that practice violates the state constitution.

At stake is potentially millions of dollars that would shift from law enforcement to education.

Police and prosecutors already were expecting to lose some forfeiture funds next year. State lawmakers are preparing to approve a bill that would cap the law enforcement share at 85 percent and send the rest to schools.

It is no longer clear, however, that police and prosecutors are entitled to any of the money.

A Marion County judge, several state legislators, a pending lawsuit and a state Supreme Court opinion are questioning whether the proposed law and an existing law violate the state constitution, which they suspect requires all forfeiture money to be deposited in the state’s Common School Fund.

But chief financial officer for the city of Indianapolis Department of Public Safety says that Indianapolis won’t change its practice of financing law enforcement with forfeiture proceeds. Private attorney Chris Gambill supports the legality of his lucrative multi-county forfeiture prosecution contracts by noting that the Indiana Supreme Court opinion is nonbinding. A.G. Zoeller’s office also pointed to the nonbinding nature of the recent decision, as the state’s high court had not been asked to rule on the question of whether civil forfeiture money belongs in the Common School Fund.

The semi-private and public servant profiteers’ commitment to continue business as usual comes as no surprise to attorney Paul Ogden, whose whistleblower suit against 98 Indiana prosecutors was recently dismissed in State of Indiana Ex Rel Adam Lenkowsky v. Christopher E. Harvey, et. al., No. 49D13-1007-PL-031572). In dismissing that case, Marion Superior Court Judge Tim Oaks wrote that while “Mr. Lenkowsky may have chosen the wrong legal mule to ride here to pursue this issue, the merits of the issue at the heart of the matter do not deserve to be ignored.” Ogden then filed another lawsuit currently pending in Marion County, challenging the constitutionality of the state’s forfeiture law and the practices used by many Indiana prosecutors. A.G. Zoeller’s office, which represented prosecutors in the whistleblower suit, said the attorney general will also defend prosecutors and the state statute against the constitutional challenge. As Ogden says, “the money is just too great a motivation, and prosecutors and police are going to want to continue keeping basically all of it.”

–Judy Osburn

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