U.S. Supreme Court to Hear Forfeiture Case

WASHINGTON —  Hosep Bajakajian, a Syrian immigrant who lives in Los Angeles and owns two service stations in Hollywood, says he has been learning a lot about American law. The lessons might surprise many American citizens.

They include the following:

That U.S. authorities can seize tens of thousands of dollars in cash or traveler’s checks from international travelers whose only offense is failing to file a report saying they have the money.

That the authorities can refuse to give the money back, even if it is found to be entirely legal.

That the confiscation of this cash is not a “punishment” imposed on the victim.

And that the owner’s innocence is “not relevant.”

Bajakajian became trapped in the weird world of forfeiture law June 9, 1994, when he, his wife and two daughters tried to board a plane at Los Angeles International Airport with $357,144 hidden in their suitcases.

Money-sniffing dogs alerted authorities, and when Bajakajian gave evasive answers, he was arrested and the cash was seized.

A month later, a judge in Los Angeles examined the case and concluded that although Bajakajian’s story seemed “somewhat suspicious” at first, the money was lawfully his. It had been earned or borrowed from friends, and Bajakajian was carrying it to Syria to repay relatives who helped him get started in business.

“This wasn’t drug money. This wasn’t gambling money. This wasn’t stolen money. This wasn’t money being laundered for any reason,” said U.S. District Judge John G. Davies, refusing to uphold a total forfeiture. Instead, he imposed a $5,000 fine on Bajakajian for failing to file the required report and ordered $15,000 of his cash forfeited to the government.

U.S. attorneys in Los Angeles appealed to the U.S. 9th Circuit Court of Appeals. They pointed out that Bajakajian had changed his story more than once, but the appeals court upheld Davies and ruled that the full forfeiture was unconstitutional.

The money remains in government hands, however.

Today, the U.S. Supreme Court will hear arguments in Bajakajian’s case. The Justice Department insists that the government has the power to seize and keep an unlimited amount of cash, regardless of whether the owner is otherwise innocent.

“It is the property’s [referring to the cash] involvement in the offense that justifies such a remedial forfeiture,” the department said in its brief to the high court in U.S. vs. Bajakajian. The forfeiture does not depend on “the culpability of the owner,” it added.

Critics say the case illustrates the government’s unchecked power to seize money and property even from essentially innocent people.

“This is one of the more egregious examples of the forfeiture laws at work,” said Roger Pilon, director of constitutional studies for the Cato Institute, a conservative think tank here. “It brings us face to face with the bizarre doctrine that allows the government to seize property [including cash] on the theory that the property is involved in the crime. It is utterly illogical and archaic, but the government is raking in money because of it.”

Last year alone, the U.S. Customs Service seized a total of $56 million from outbound travelers, an official said.

The people involved, lawyers say, are typically foreigners, whether traveling here for medical care or college, or leaving to take money home to relatives.

“Thousands of innocent travelers run afoul of this,” said David B. Smith, a former Justice Department expert on forfeiture law. “They come from countries where customs officials are corrupt, so they tend to be secretive with cash.

“The real problem is that Congress wrote the statute so broadly. There are no exceptions for innocent owners,” added Smith, now a criminal defense lawyer in Alexandria, Va.

During the 1980s, the forfeiture laws became a popular tool for prosecutors seeking to strip drug dealers of their ill-gotten gains. Despite loud complaints about the occasional unfairness toward innocent property owners, Congress has so far refused to change the laws.

“There is no real outcry about this because it is seen as part of the war on drugs,” Pilon said.

Bajakajian, 41, said he thought it was legal to take cash out of the United States. He said he feared customs agents at his destinations in Cyprus and Syria.

“I was stupid. I didn’t know these things,” he said in a recent interview. “I am learning a lot about the law because of this case.”

Bajakajian’s money was seized under the terms of the Bank Secrecy Act of 1970. That measure ordered banks, financial institutions and individuals to report the movement of large amounts of currency. Its intent was to nab drug dealers, tax cheats and organized crime bosses who needed to secretly move large amounts of cash.

One provision requires people to report the movement of “monetary instruments of more than $10,000” in or out of the country. A second provision says “any property, real or personal, involved in a transaction” that violates this reporting rule “may be seized and forfeited to the United States government.”

Officials in the Customs Service and the Justice Department stress that the government often returns all or nearly all the cash seized from a traveler who unwittingly fails to file a report.

“The whole purpose is to smoke out illicit proceeds, basically drug money,” said Dennis Benjamin, a program manager at the Customs Service. “We are looking for big amounts of money, cash that is undeclared and probably illicit.”

Inbound passengers on international flights are given a customs form that asks whether they have $10,000 or more in currency. There is no similar declaration for outbound passengers, so the scrutiny is more random, he says.

“At LAX, we would have an agent stand in the jet way. Most of the passengers are allowed to walk by, but a few might be stopped for questioning,” Benjamin said.

Often, those stopped and arrested with large amounts of hidden cash turn out to be couriers for criminals, he said.

“They may be able to tell you that someone gave them a ticket and told them to carry a bag, but they don’t know any more,” he said.

Federal agents are not as likely to be convinced by a traveler’s story as “a gullible member of the public. We tend to be more cynical than the average person,” said Assistant U.S. Atty. Janet Hudson, who heads the asset forfeiture section in Los Angeles. “After the hundredth time you hear a story that begins, ‘Well, in my culture, in the Mideast or in South America or in Asia . . . ‘ that story might sound pretty hokey to us.”

Moreover, seizures authorized by the law are “not limited to money that came from unlawful activity,” she said. “[The law] allows you to forfeit the entire amount, whether it came from an illegal source or not.”

Davies may well have been right that Bajakajian’s money was lawfully earned, but “that is a fact not relevant to the statutory scheme,” Hudson said.

Examples abound of innocent travelers who have been ensnared by the law, defense lawyers say.

On May 26, a Norwegian businessman arrived at the Dallas-Fort Worth airport with $17,600 in U.S. and Norwegian currency. His hobby was buying U.S. cars and selling them in Norway, and he was searching for a 1965-67 Ford Mustang. Customs agents seized the money and strip-searched him, said Betty Wilderspin, a Hurst, Texas, customs broker who represented the man.

After four months of appeals, the Customs Service refunded all but $2,299 of the money.

“I could understand a fine, but why do they take all your money?” Wilderspin asked.

Most legal experts say Bajakajian’s chances of prevailing are poor.

“It’s probably a loser for us,” said Smith, the defense lawyer.

Pilon agrees. “The court has been completely unwilling to reexamine the principles on which these forfeitures are based,” he said, “and I predict they won’t do any better this time in Mr. Bajakajian’s case.”