oday, the 4th U.S. Circuit Court of Appeals issued an important civil forfeiture decision holding that the government cannot just assume that drivers found with large amounts of cash in their vehicles are engaged in drug trafficking.
The case involves a North Carolina man, Dereck McClellan, who was found asleep in a car with $69,940.50 in cash in the trunk. Federal prosecutors had no idea where the cash came from, but they filed a civil forfeiture complaint alleging that the cash had to be drug proceeds. In the government’s view, only a drug dealer would have that much cash in a car.
In September 2020, the United States District Court for the District of South Carolina agreed with the government and entered judgment forfeiting the cash. The Fourth Circuit, however, reversed and rejected the government’s argument “that lawful citizens do not carry around large amounts of cash that are rubber-banded and bundled.” Rather, the court held, “not using a bank does not necessarily make one a criminal.” As a result, the case will be sent back to the district court, where McClellan can make his case to a jury of his peers.
“If the government is going to take money from someone, they should be required to provide real evidence that the money was obtained in an illegal way, not simply throw around baseless assumptions,” said Institute for Justice (IJ) Attorney Rob Johnson, who authored an amicus brief in McClellan’s case and also argued before the Fourth Circuit. “Unfortunately, however, assumptions are all the government has in many civil forfeiture cases. Today’s decision sets an important precedent that will force the government to come forward with real evidence to convince a jury.”
IJ’s brief argued that the government should be required to prove wrongdoing in a civil forfeiture case, rather than forcing a property owner to prove their own innocence. The court agreed, saying, “The Government has the burden of proof here, and that makes all the difference.”
“Dereck is very excited about the outcome, and it means a lot to him and his family that people are fighting for him,” said Adrianne Turner, McClellan’s attorney at Turner Law. “This decision would not have been possible without the help of IJ. Rob’s argument was invaluable. I cannot emphasize that enough.”
McClellan’s case began in January 2019 when police found him asleep in his car in a gas station parking lot, with a marijuana blunt in the ashtray and an empty liquor bottle in the passenger seat. McClellan eventually pleaded guilty to public intoxication, thus ending the criminal case against him.
During the arrest, police found $69,940.50 in McClellan’s trunk. While the cash had no connection to any criminal charges, and police did not prove the money was obtained illegally, they still seized the money through a process called civil forfeiture.
Police then transferred the money to the federal government using a program called “equitable sharing,” which allows them to circumvent state laws that protect against such seizures by turning the case into a federal one. While the federal government handles the forfeiture, the local police get a large kickback of the money – often 80%.
The use of equitable sharing is particularly significant here because the South Carolina Supreme Court is simultaneously considering—in another case litigated by IJ—whether to end the practice of civil forfeiture altogether.
“Equitable sharing creates a perverse incentive for police to find a way around state laws,” said IJ Attorney Caroline Grace Brothers. “By proceeding in federal court, under federal law, police were able to sidestep that case, which remains pending today.”
IJ has appealed other district court forfeiture rulings, including one in Rochester, New York, where police took $8,040 that Cristal Starling was planning to invest in her food truck business without ever charging her with a crime and without giving her a day in court.