Connecticut Seal

General Assembly

File No. 192

    January Session, 2017

Substitute House Bill No. 7146

House of Representatives, March 23, 2017

The Committee on Banking reported through REP. LESSER of the 100th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT REQUIRING A CRIMINAL CONVICTION FOR CERTAIN OFFENSES BEFORE ASSETS SEIZED IN A LAWFUL ARREST OF LAWFUL SEARCH MAY BE FORFEITED IN A CIVIL PROCEEDING.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 54-33g of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(a) (1) When any property believed to [be possessed, controlled, designed or intended for use or which is or has] have been used [or which may be used] as a means of committing any criminal offense, or which constitutes the proceeds of the commission of any criminal offense or is directly traceable to the proceeds derived from the commission of any criminal offense, except a violation of section 21a-267, 21a-277, 21a-278 or 21a-279, has been seized as a result of a lawful arrest or lawful search, which the state claims to be a nuisance and desires to have destroyed or disposed of in accordance with the provisions of this section, the Chief State's Attorney or a deputy chief state's attorney, state's attorney or assistant or deputy assistant state's attorney may petition the court not later than ninety days after [the seizure] proof of the commission of such criminal offense is established by criminal conviction, in the nature of a proceeding in rem, to order forfeiture of such property. Such proceeding shall be deemed a civil suit in equity, in which the state shall have the burden of proving [all material facts] by clear and convincing evidence that the property (A) has been used in the commission of such criminal offense, (B) constitutes proceeds derived from the commission of such criminal offense, or (C) is directly traceable to proceeds derived from the commission of such criminal offense. The court shall identify the owner of such property and any other person as appears to have an interest in such property, and order the state to give notice to such owner and any interested person by certified or registered mail. The court shall promptly, but not less than two weeks after such notice, hold a hearing on the petition.

[(b)] (2) If the court finds the allegations made in such petition to be true and that the property has been [possessed, controlled or designed for use, or is or has been or is intended to be] used [, with intent to violate or in violation of any of the criminal laws of this state, or constitutes the proceeds of a violation of any of the criminal laws of this state] in the commission of such criminal offense, constitutes proceeds derived from the commission of such criminal offense or is directly traceable to proceeds derived from the commission of such criminal offense, except a violation of section 21a-267, 21a-277, 21a-278 or 21a-279, the court shall render judgment that such property is a nuisance and order the property to be destroyed or disposed of to a charitable or educational institution or to a governmental agency or institution, except that if any such property is subject to a bona fide mortgage, assignment of lease or rent, lien or security interest, such property shall not be so destroyed or disposed of in violation of the rights of the holder of such mortgage, assignment of lease or rent, lien or security interest.

[(c)] (b) (1) When the [condemned] property forfeited under this section is money, [(A) on and after October 1, 2014, and prior to July 1, 2016, the court shall order that such money be distributed as follows: (i) Seventy per cent shall be allocated to the law enforcement agency, including the Department of Emergency Services and Public Protection and local police departments, responsible for investigating the criminal violation and seizing the money, and such local police departments shall use such money for the detection, investigation, apprehension and prosecution of persons for the violation of criminal laws, and any money allocated to the Department of Emergency Services and Public Protection shall be deposited in the General Fund; (ii) twenty per cent shall be deposited in the Criminal Injuries Compensation Fund established in section 54-215; and (iii) ten per cent shall be allocated to the Division of Criminal Justice and deposited in the General Fund; and (B) on and after July 1, 2016,] such money shall be deposited in the General Fund.

(2) When the [condemned] property forfeited under this section is a valuable prize [, which] that is subject to a bona fide mortgage, assignment of lease or rent, lien or security interest, such property shall remain subject to such mortgage, assignment of lease or rent, lien or security interest.

[(d)] (c) When any property or valuable prize has been declared a nuisance and [condemned] forfeited under this section, the court may also order that such property be sold in accordance with procedures approved by the Commissioner of Administrative Services. Proceeds of such sale shall first be allocated toward the balance of any mortgage, assignment of lease or rent, lien or security interest, and the remaining proceeds of such sale, if any, shall be [allocated in accordance with subparagraphs (A) to (C), inclusive, of subdivision (1) of subsection (c) of this section] deposited in the General Fund. In any criminal prosecution, secondary evidence of property condemned and destroyed pursuant to this section shall be admissible against the defendant to the same extent as such evidence would have been admissible had the property not been condemned and destroyed.

[(e)] (d) If the court finds the allegations not to be true, or [that the property has not been kept with intent to violate or in violation of the criminal laws of this state, or that the property does not constitute the proceeds of a violation of the criminal laws of this state, or] that the state has not satisfied its burden of proving the requirements of subsection (a) of this section, or that the property is the property of a person who [is] was not a defendant in a related criminal proceeding, the court shall order the property returned to the owner forthwith and the party in possession of such property pending such determination shall be responsible and personally liable for such property from the time of seizure and shall immediately comply with such order.

[(f)] (e) (1) [Failure of the state to proceed against such property in accordance with the provisions of this section shall not prevent the use of such property as evidence in any criminal trial] Any person claiming an interest in property seized in connection with a lawful arrest or lawful search may petition the court for the return or delivery of such property at any time prior to sixty days before trial of the criminal offense. The court shall identify the owner of such property and any other person as appears to have an interest in such property, and order the claimant to give notice to such owner and any interested person by certified or registered mail. The court shall promptly, but not less than thirty days after such notice, hold a hearing on the petition.

(2) The court shall order that such property be returned or delivered to the claimant if the court finds that: (A) Such claimant has a legal right or title to, or interest in, the property; (B) the state is not likely to obtain an order of forfeiture pursuant to subsection (a) of this section; (C) the property is not reasonably required to be held by the state for investigatory purposes; and (D) the property is intended to be used by such claimant to pay legitimate attorney's fees in a forfeiture proceeding under subsection (a) of this section or a related criminal prosecution.

Sec. 2. Section 54-36h of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(a) The following property shall be subject to forfeiture to the state pursuant to subsection (b) of this section:

(1) All moneys used, or intended for use, in the procurement, manufacture, compounding, processing, delivery or distribution of any controlled substance, as defined in subdivision (9) of section 21a-240;

(2) All property constituting the proceeds obtained, directly or indirectly, from any sale or exchange of any such controlled substance in violation of section 21a-277 or 21a-278;

(3) All property derived from the proceeds obtained, directly or indirectly, from any sale or exchange for pecuniary gain of any such controlled substance in violation of section 21a-277 or 21a-278;

(4) All property used or intended for use, in any manner or part, to commit or facilitate the commission of a violation for pecuniary gain of section 21a-277 or 21a-278;

(5) All property constituting, or derived from, the proceeds obtained, directly or indirectly, by a corporation as a result of a violation of section 53a-276, 53a-277 or 53a-278.

(b) Not later than ninety days after [the seizure of moneys or property subject to forfeiture pursuant to subsection (a) of this section, in connection with a lawful criminal arrest or a lawful search] a criminal conviction for a violation of section 21a-777, 21a-778 or 53a-276 to 53a-278, inclusive, the Chief State's Attorney or a deputy chief state's attorney, state's attorney or assistant or deputy assistant state's attorney may petition the court in the nature of a proceeding in rem to order forfeiture of [said] any moneys or property seized in connection with a lawful criminal arrest or lawful search for such violation and subject to forfeiture pursuant to subsection (a) of this section. Such proceeding shall be deemed a civil suit in equity, in which the state shall have the burden of proving all material facts by clear and convincing evidence. The court shall identify the owner of said moneys or property and any other person as appears to have an interest therein, and order the state to give notice to such owner and any interested person by certified or registered mail, and shall promptly, but not less than two weeks after notice, hold a hearing on the petition. No testimony offered or evidence produced by such owner or interested person at such hearing and no evidence discovered as a result of or otherwise derived from such testimony or evidence, may be used against such owner or interested person in any proceeding, except that no such owner or interested person shall be immune from prosecution for perjury or contempt committed while giving such testimony or producing such evidence. At such hearing the court shall hear evidence and make findings of fact and enter conclusions of law and shall issue a final order, from which the parties shall have such right of appeal as from a decree in equity.

(c) No property shall be forfeited under this section to the extent of the interest of an owner or lienholder by reason of any act or omission committed by another person if such owner or lienholder did not know and could not have reasonably known that such property was being used or was intended to be used in, or was derived from, criminal activity.

[(d) Notwithstanding the provisions of subsection (a) of this section, no moneys or property used or intended to be used by the owner thereof to pay legitimate attorney's fees in connection with his defense in a criminal prosecution shall be subject to forfeiture under this section.]

[(e)] (d) Any property ordered forfeited pursuant to subsection (b) of this section shall be sold at public auction conducted by the Commissioner of Administrative Services or his designee.

[(f)] (e) The proceeds from any sale of property under subsection [(e)] (d) of this section and any moneys forfeited under this section shall be applied: (1) To payment of the balance due on any lien preserved by the court in the forfeiture proceedings; (2) to payment of any costs incurred for the storage, maintenance, security and forfeiture of such property; and (3) to payment of court costs. The balance, if any, shall be deposited in the drug assets forfeiture revolving account established under section 54-36i.

(f) (1) Any person claiming an interest in moneys or property seized in connection with a lawful criminal arrest or lawful search may petition the court for the return or delivery of such moneys or property at any time prior to sixty days before trial of the criminal offense. The court shall identify the owner of such moneys or property and any other person as appears to have an interest in such moneys or property, and order the claimant to give notice to such owner and any interested persons by certified or registered mail. The court shall promptly, but not less than thirty days after such notice, hold a hearing on the petition.

(2) The court shall order the moneys or property be returned or delivered to the claimant if the court finds that: (A) Such claimant has a legal right or title to, or interest in, the moneys or property; (B) the state is not likely to obtain an order of forfeiture of the property pursuant to subsection (b) of this section; (C) the moneys or property are not reasonably required to be held by the state for investigatory purposes; and (D) the moneys or property are intended to be used by such claimant to pay legitimate attorney's fees in a forfeiture proceeding under subsection (b) of this section or a related criminal prosecution.

Sec. 3. Section 54-36o of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(a) All property constituting, or derived from, the proceeds obtained, directly or indirectly, by a person as a result of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-127g, 53a-129b, 53a-129c, 53a-129d, 53a-129e, 53a-130, 21-120 or 21-121 shall be subject to forfeiture to the state pursuant to subsection (b) of this section.

(b) Not later than ninety days after [the seizure of property subject to forfeiture pursuant to subsection (a) of this section] a criminal conviction for a violation of section 53a-129a, revision of 1958, revised to January 1, 2003, or section 21-120, 21-121, 53a-127g, 53a-129b, 53a-129c, 53a-129d, 53a-129e or 53a-130, the Chief State's Attorney or a deputy chief state's attorney, state's attorney or assistant or deputy assistant state's attorney may petition the court in the nature of a proceeding in rem to order forfeiture of [said] any moneys or property seized in connection with a lawful criminal arrest or lawful search for such violation and subject to forfeiture pursuant to subsection (a) of this section. Such proceeding shall be deemed a civil suit in equity, in which the state shall have the burden of proving all material facts by clear and convincing evidence. The court shall identify the owner of such property and any other person as appears to have an interest therein, and order the state to give notice to such owner and any interested person by certified or registered mail, and shall promptly, but not less than two weeks after notice, hold a hearing on the petition. No testimony offered or evidence produced by such owner or interested person at such hearing and no evidence discovered as a result of or otherwise derived from such testimony or evidence, may be used against such owner or interested person in any proceeding, except that no such owner or interested person shall be immune from prosecution for perjury or contempt committed while giving such testimony or producing such evidence. At such hearing the court shall hear evidence and make findings of fact and enter conclusions of law and shall issue a final order, from which the parties shall have such right of appeal as from a decree in equity.

(c) No property shall be forfeited under this section to the extent of the interest of an owner or lienholder by reason of any act or omission committed by another person if such owner or lienholder did not know and could not have reasonably known that such property was being used or was intended to be used in, or was derived from, criminal activity.

[(d) Notwithstanding the provisions of subsection (a) of this section, no property used or intended to be used by the owner thereof to pay legitimate attorney's fees in connection with his defense in a criminal prosecution shall be subject to forfeiture under this section.]

[(e)] (d) Any property ordered forfeited pursuant to subsection (b) of this section shall be sold at public auction conducted by the Commissioner of Administrative Services.

[(f)] (e) The proceeds from any sale of property under subsection [(e)] (d) of this section shall be applied: (1) To payment of the balance due on any lien preserved by the court in the forfeiture proceedings; (2) to payment of any costs incurred for the storage, maintenance, security and forfeiture of such property; and (3) to payment of court costs. The balance, if any, shall be deposited in the privacy protection guaranty and enforcement account established under section 42-472a.

(f) (1) Any person claiming an interest in moneys or property seized in connection with a lawful criminal arrest or lawful search may petition the court for the return or delivery of such moneys or property at any time prior to sixty days before trial of the criminal offense. The court shall identify the owner of such moneys or property and any other person as appears to have an interest in such moneys or property, and order the claimant to give notice to such owner and any interested persons by certified or registered mail. The court shall promptly, but not less than thirty days after such notice, hold a hearing on the petition.

(2) The court shall order the moneys or property be returned or delivered to the claimant if the court finds that: (A) Such claimant has a legal right to, or title or interest in, the moneys or property; (B) the state is not likely to obtain an order of forfeiture of the property pursuant to subsection (b) of this section; (C) the moneys or property are not reasonably required to be held by the state for investigatory purposes; and (D) the moneys or property are intended to be used by such claimant to pay legitimate attorney's fees in a forfeiture proceeding under subsection (b) of this section or a related criminal prosecution.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2017

54-33g

Sec. 2

October 1, 2017

54-36h

Sec. 3

October 1, 2017

54-36o

BA

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: Yes, See Below

Municipal Impact: Yes, See Below

Explanation

The bill makes the following changes to asset seizure laws:

The bill results in revenue changes show in the table below:

Revenue Changes Due to HB 7146

Based on FY 16 Revenue

Agency

Formula

FY 16 Totals

Revenue Loss Due to Criminal Conviction Requirement1

Change Loss Due to Formula Change

TOTAL

Section 1

Dept. of Emergency Services and Public Protection

70%

7,177

(1,794)

(8,971)

(10,766)

Local Police Departments

9,910

(2,478)

(12,388)

(14,865)

Judicial

20%

4,884

(1,221)

(6,105)

(7,326)

Resources of the General Fund

10%

2,442

(611)

27,464

26,853

TOTAL

 

24,413

(6,103)

-

(6,103)

Section 2

Dept. of Emergency Services and Public Protection

70%

721,154

(180,289)

 

(180,289)

Local Police Departments

781,295

(195,324)

 

(195,324)

Dept. of Mental Health and Addiction Services

20%

443,843

(110,961)

 

(110,961)

Division of Criminal Justice

10%

221,924

(55,481)

 

(55,481)

TOTAL

 

2,168,216

(542,054)

-

(542,054)

1Assumes a 25% decreased in asset forfeiture due to the requirement of a criminal conviction.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to the amount of asset forfeitures.

OLR Bill Analysis

sHB 7146

AN ACT REQUIRING A CRIMINAL CONVICTION FOR CERTAIN OFFENSES BEFORE ASSETS SEIZED IN A LAWFUL ARREST OF LAWFUL SEARCH MAY BE FORFEITED IN A CIVIL PROCEEDING.

SUMMARY

This bill makes changes to the laws governing civil forfeiture of property:

The bill permits the chief state's attorney to petition the court to order forfeiture of such property within 90 days of a criminal conviction, instead of within 90 days of the seizure resulting from a lawful arrest or lawful search as under current law.

The bill also limits the conditions under which property is subject to forfeiture to the state and establishes a procedure by which a person who claims interest in seized property may petition the court for its return. The bill repeals a provision that specifies that the state's failure to proceed against property in a civil forfeiture proceeding does not prevent its use as evidence in a criminal trial.

Additionally, the bill makes various changes to the civil forfeiture proceedings, including the circumstances in which the court must order property returned to its owner and the evidence the state must provide to meet its burden of proof in such proceedings.

It also makes minor, technical, and conforming changes.

EFFECTIVE DATE: October 1, 2017

PROPERTY SUBJECT TO FORFEITURE

For non-drug crimes, current law allows the state to seek forfeiture of any property (1) believed to be possessed, controlled, designed, or intended for criminal use or (2) that is, has been, or may be used in the commission of a crime. Under the bill, the property must be believed to (1) have been used in a crime or (2) be directly traceable to the proceeds derived from a crime.

The law, unchanged by the bill, specifies certain property for which the state may seek forfeiture related to drug and money laundering, identity theft, and sexual exploitation, prostitution, and human trafficking crimes.

FORFEITURE PROCEEDINGS

Forfeiture proceedings are civil suits in equity in which the court has jurisdiction over property.

The bill allows the chief state's attorney to petition the court to forfeit property associated with a crime within 90 days of a criminal conviction, instead of within 90 days of the property's seizure during a lawful search or arrest as under current law.

Non-drug Crimes

The bill requires the state, in civil forfeiture proceedings for property related to certain non-drug crimes, to prove by clear and convincing evidence that the property:

Current law requires the state to prove all material facts by clear and convincing evidence.

Drug Offenses, Money Laundering, and Identity Theft

The law, unchanged by the bill, requires the state to prove all material facts by clear and convincing evidence in civil forfeiture proceedings related to (1) property seized in relation to identity theft and (2) money or property seized in relation to drug offenses.

Disposition of Forfeited Property

Under the law, unchanged by the bill, if the state meets its burden of proof, the court must render judgment that the property is a nuisance and order it destroyed or disposed of to a charitable or educational institution or governmental agency or institution. However, the state may not destroy or dispose of the property if (1) it is subject to a bona fide mortgage, lease, rent, lien, or security deposit and (2) the destruction or disposition would violate the holder's rights.

By law, forfeited money and certain proceeds from the sale of nuisance property must be deposited to the:

PETITION FOR THE RETURN OF PROPERTY

For certain drug, money laundering, and identity theft crimes, the bill repeals provisions that prevent forfeiture of money or property that the owner used or intends to use to pay legitimate attorney's fees in connection with a criminal offense.

The bill instead establishes a process for a claimant to petition the court for the return of money or property seized in a lawful search or lawful arrest to pay legitimate attorney's fees in a forfeiture proceeding or related criminal prosecution for certain non-drug, drug, money laundering, and identity theft crimes.

Under the bill, any person claiming an interest in seized property may, at least 60 days before the criminal trial, petition the court for its return. The court must:

The court must promptly, but not less than 30 days after the notice, hold a hearing on the petition. (It is unclear whether the court must hold a hearing within 30 days after the notice is sent or received.)

The bill requires the court to order the property returned or delivered to the claimant if it finds:

Existing law, unchanged by the bill, provides a process by which an owner may petition the court for the return of property seized during a criminal arrest or lawful search that did not result in arrest (see BACKGROUND).

BACKGROUND

Related Law

CGS 54-36a provides a process for the disposition of property seized in connection with a criminal arrest or seized pursuant to a search warrant without an arrest. This includes specific provisions for the forfeiture of seized property including stolen property, currency, fireworks, drugs, or drug paraphernalia. Among other things, this law requires law enforcement to inventory the seized property and provides a process by which an owner may petition the court for the return of the property.

COMMITTEE ACTION

Banking Committee

Joint Favorable Substitute

Yea

10

Nay

9

(03/07/2017)

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