When it comes to property forfeiture, state Sen. Karl Rhoads has a fundamental disagreement with most of Hawaiʻi’s law enforcement community.

In his view, people should not lose their possessions unless they have actually been convicted of a crime.

“It’s just Law School 101,” Rhoads said.

But that is not how the state’s civil asset forfeiture law works. Law enforcement is allowed to seize millions of dollars worth of property and other valuables — including cars, homes, cash and jewelry — as a way to fight crime.

Seizures can even happen without actually charging someone with a crime. The burden of proof to recover the seized property lies with the property owner and not the state.

Rhoads wants to change the law so that asset forfeiture cases only involve cases where property owners have been convicted of a felony offense. The senator supports House Bill 126, which requires the underlying felony conviction.

Backers of the legislation say it would increase the transparency and accountability of the forfeiture process.

Among other provisions, the bill would limit the transfer of some forfeited property to federal agencies. It would also require maintaining all records of seized or forfeited property, making them open to inspection and posting them on a public website.

HB 126 is supported by ACLU of Hawaiʻi, the Community Alliance on Prisons and the Grassroot Institute of Hawaiʻi, which argue that the asset forfeiture system has been abused.

It is opposed by the Hawaiʻi attorney general and several county prosecuting attorneys.

In their view, the latest draft of the bill — it was amended just last week — would severely damage civil asset forfeiture, which they deem an essential law enforcement tool.

As Deputy Attorney General Gurudev Allin wrote in his testimony, the tool is used by law enforcement agencies against criminals and criminal organizations through the seizure of contraband — “property that is simply unlawful to possess, like illegal drugs, gambling machines, smuggled goods and counterfeit money.”

If HB 126 is passed, Allin warned that it would harm law enforcement agencies in the sharing of evidence, making it more difficult to investigate and prosecute serious crimes. The office of Steve Alm, the Honolulu prosecutor, raised additional concerns, noting that if a defendant dies during a pending prosecution, for example, the state could not proceed with property forfeiture.

That happened recently in the case of alleged organized crime figure Michael Miske, who was convicted in federal court of murder and other charges. But he died in prison before he was sentenced and the judge recently dismissed all charges against him under a little-used federal law. Prosecutors had moved to seize much of his property, a situation that is now in legal limbo.

Benefitting Directly From Seizures

The Legislature has wrestled with asset forfeiture reform for years, fueled by reports and court rulings that have shined a critical spotlight on the practice.

A 2015 study from the Institute for Justice gave the state a grade of D-minus, highlighting Hawaiʻi’s low standard of proof that law enforcement must meet before it can seize someone’s property. The nonprofit said the forfeiture practice was ripe for abuse because law enforcement usually gets to keep the property it seizes and the proceeds from selling it.

In essence, critics said, seizing assets amounted to legalized theft.

Concerns about the state’s asset forfeiture law were also raised by the Hawaiʻi State Auditor in a 2018 report.

It found that the the Attorney General’s Office, which administers the program, had failed to account for property obtained by forfeiture, inadequately managed funds and did not allocate about $2 million for drug prevention as required by law. The AG’s office also did not put into effect administrative rules to guide law enforcement and county prosecutors who initiated forfeitures, the audit found.

The Legislature sent an asset forfeiture reform bill in 2019 to then-Gov. David Ige that called for prosecutors to secure a felony conviction before selling someone’s property. But Ige vetoed it, arguing that the forfeiture program had sufficient safeguards in place and that the AG’s office reviewed each case and rejected those it considered inappropriate.

Seized Assets Worth Millions Of Dollars

Critics of asset forfeiture have long complained about the potential incentive to improperly seize property for forfeiture, as state and county law enforcement agencies can keep all the proceeds from the sale of the forfeited property.

Lawmakers in both chambers introduced six bills this session that would have restricted asset forfeiture to be used only once someone was convicted of a felony. House Bill 126 is the only one left.

A bill similar to HB 126 from Rhoads that died early this session, Senate Bill 722, cited Institute for Justice statistics showing seized assets in Hawaiʻi are worth millions of dollars.

The nonprofit civil liberties law firm said that from 2001 to 2018, Hawai’i generated at least $20 million in forfeiture revenue under state law and an additional $29 million under the federal equitable sharing program where state or local law enforcement agencies partner with federal agencies and share in the proceeds.

The estimated value of property seized by Hawai’i law enforcement agencies was $1,050,463 in fiscal year 2018-2019, $963,055 in fiscal year 2019-2020, and $483,506 in fiscal year 2020-2021, according to the bill.

Rather than eliminate the asset forfeiture program, as four states have already done, under SB 722 Hawaiʻi legislators would have directed any forfeiture proceeds to the state’s general fund.

That directive was included in Rhoads’ amendment to HB 126. But the provision was changed by the Senate Ways and Means Committee last week, the same committee that killed Rhoads’ earlier bill.

Under the current draft of HB 126, one-fourth of the proceeds would instead go to state and local investigative agencies involved in cases where property was seized, one-fourth would go to the prosecuting attorney that instituted the forfeiture, and one-half would be deposited into a criminal forfeiture fund that would be housed in the AG’s office.

All the money in the fund, then, would be used to continue the seizure, detention or forfeiture of property.

Although the bill would still require a criminal conviction for property forfeiture to occur, Rhoads was not happy about the change.

He thinks the general fund is the more appropriate destination rather than giving the money to the very same agencies that are seizing assets.

He also expressed doubts about whether HB 126 could survive conference committee later this month, given the many iterations of the bill this session. Conference committee is when the two chambers try to reach compromise on legislation where they have disagreed.

“Law enforcement doesn’t like it,” Rhoads said Monday about the chances of HB 126 being passed.

Honolulu Prosecutor Steve Alm reiterated that sentiment in an email Monday, citing the same arguments that were made in written and oral testimony by his office.

“Our current civil property forfeiture law addresses this situation and allows for due process for the property owner through civil procedures,” Alm said. “As we already stated, civil asset forfeiture stops the criminal activity which helps the community by ridding it of the illegal activity that is being conducted on the property, despite law enforcement’s attempts to stop it.”

Rep. David Tarnas, author of HB 126 and chair of the House Judiciary and Hawaiian Affairs Committee, said in a text message late Monday that he had not had the chance to review all the Senate changes to House bills.

“I don’t have any clear plan mapped out yet for HB 126,” Tarnas said.