NEWS ANALYSIS : Reining In Property Seizures by Police : Law: U.S. Supreme Court ruling puts limits on the confiscation of goods tied to drug trade. Lawyers say clients may be more inclined to press claims of innocence.

In slapping new limits on the government seizure of property tied to drug sales, the U.S. Supreme Court recently reaffirmed the most fundamental of legal principles and sent prosecutors an unmistakable signal: The government’s police powers are not unlimited.

From now on, property owners whose belongings are seized by the government in drug cases will be given their day in court to prove innocence. Before, owners had little recourse when agents seized cash, cars, houses or boats, even a coffee maker or baby shoes.

But because the court did not address the legal doctrine underpinning the seizures, legal experts say, even innocent people still face a formidable challenge to reclaim property. In federal court, the government need not prove guilt--the property owner must prove innocence.

Nonetheless, the ruling promises, for the first time, to rein in law enforcement’s aggressive use of “civil forfeiture” laws, which give the government the right to seize, then sell off, property linked to the drug trade. A Torrance police lieutenant lost his car that way because his brother-in-law used the car while drug dealing. The officer was never charged with a crime.

“The government has incorrectly felt for years that they could get away with anything in the forfeiture area,” said David B. Smith, an Alexandria, Va., attorney and author of a treatise on the prosecution and defense of forfeiture cases.

The justices’ February ruling, Smith said, “is going to change that tune. They clearly know that something has been rotten in Denmark.”

The ruling dealt the government its first significant defeat in a forfeiture case since 1965, but legal experts said it is hard to know how extensive the reverberations will be.

Civil libertarians said the ruling may encourage the Legislature to revamp California’s forfeiture law, which is patterned after federal statutes and due to expire at the end of the year.

Lawyers who specialize in forfeiture cases predict that clients will now be far more inclined to go to court to press claims of innocence. That could have a major impact at the Los Angeles federal court, which has the highest forfeiture caseload in the nation.

But the forfeiture process, even for an innocent owner, still contains a number of daunting legal obstacles--the product of an ancient legal doctrine that provides the framework of modern forfeiture laws.

That premise is that the property--not the drug dealer--has broken the law. The New Jersey case that prompted the recent Supreme Court ruling bears this unusual title: U.S. v. 92 Buena Vista Ave.

The case involved a woman who lost her home to the government because she purchased a house with money her boyfriend allegedly earned by dealing drugs.

Today’s forfeiture laws, based on statutes used to seize pirate ships in the 1700s, give prosecutors the power to take not just stolen money or property but “all proceeds traceable to” an illegal drug transaction.

Moreover, forfeiture cases are civil rather than criminal, so there is no need for arrest or prosecution. Accordingly, there is no right to a free defense attorney.

In addition, the government must prove only that there is probable cause--or good reason--linking the property to crime. And it may rely on hearsay evidence, which is otherwise inadmissible in court.

State and federal prosecutors insist that the laws are just and that the high court’s ruling will not change government attitudes toward seizures. “The laws just have to be enforced fairly,” said Assistant U.S. Atty. Eric S. Honig, chief of the Los Angeles asset forfeiture division. “That’s all people are asking.”

Police and prosecutors say the modern forfeiture laws, first passed by Congress in 1978, let them land knockout blows on drug dealers. In recent years, a chorus of complaints has arisen from homeowners, landlords, auto dealers, banks and others who had property seized.

Among the victims is Mike Dersham, the Torrance police lieutenant. He lost his BMW 325 after Orange County sheriff’s deputies busted his brother-in-law for dealing marijuana. Dersham said he had no clue what his brother-in-law had been up to.

“It was so unfair and unjust,” Dersham said.

Eventually, some lower courts also pronounced their disgust. In August, the U.S. 2nd Circuit Court of Appeals, the federal appeals court in New York, said it was “enormously troubled” by the government’s “increasing and virtually unchecked use of the civil forfeiture statutes” and by the “disregard for due process that is buried in those statutes.”

The U.S. Supreme Court confronted the issue in the case from New Jersey.

Beth Ann Goodwin bought a home in Rumson, N.J., in 1982, using $240,000 given to her by Joseph Anthony Brenna, who lived with her in the house until 1987.

The government moved to take the house in 1989, alleging that Brenna earned the money as part of a marijuana smuggling ring. She claims that she knew nothing about his role in any drug dealing.

The law forbids forfeiture if a property owner had no “knowledge or consent” of drug law violations. Even so, prosecutors asserted that the U.S. government was entitled to the house, citing a legal doctrine called the “relation back” principle.

Under that principle, ownership “relates back” to the date of the crime that generated the money for the property. Title to property passes to the government the instant drug money passes hands, prosecutors said, meaning Goodwin never owned the house.

But that argument held no merit, the Supreme Court decided. The court said Goodwin was indisputably the owner of the house, even if she got the money as a gift, and deserves the chance to prove her innocence.

It also set the stage for another Supreme Court ruling, due in a few months, on the forfeiture laws.

In California, the state forfeiture law, though patterned after the federal statute, features an essential difference: In state court, the burden is on prosecutors, not the owner, to persuade a judge or jury that the property is tainted.

In addition, the state law sets minimum amounts of drugs that qualify most property for seizure. The federal law allows agents to seize any property where there is probable cause for drugs.

Even before the U.S. Supreme Court ruling, state legislators had been dueling over the future of the state law, looking to its Jan. 1 expiration date.

Led by Assemblyman John Burton (D-San Francisco), the faction seeking more safeguards for innocent owners is touting the Supreme Court ruling as proof that more is needed.

“I’m really delighted that the Supreme Court found the government’s case was based on this idea that as soon as something happens with drugs, the government owns the property,” Burton said. “That just is un-American and totalitarian.”

Assemblyman Richard Katz (D-Sylmar), who helped write the law, maintains that it contains sufficient safeguards and should be renewed as is.

Then there are forces led by Atty. Gen. Dan Lungren who want the law toughened so that police can seize more property.

If California fails to renew the law, prosecutors will have to go to federal court. But under federal procedures, local law enforcement agencies lose 20% or more of a seized asset to the U.S. government.

The financial implications are immense. In recent years, such seizures have produced $2.84 billion nationwide, $150 million in California.