Archives for October 2017

Civil asset forfeiture policies shrug off due process

In 2014, American police seized more assets from American citizens through civil asset forfeiture policies than burglars stole.

Federal, state and local officers have broad scope to seize assets from Americans without trial or criminal charge, let alone proof that they committed any offense. While property owners can challenge a seizure in court, the burden of proof is on them and costly attorney fees and arcane procedures often discourage them. The value of the property is often less than cost to hire an attorney.

Only a handful of states require that, in some or all cases, police clearly and convincingly prove seized assets are linked to a violation. More than half of states only ask police to show that at the time of the seizure they had probable cause to believe that the property was tied to a violation. Probable cause is usually defined as more than a mere suspicion but less than a prima facie case. This is a much lower burden of proof than “clear and convincing evidence” or “beyond a reasonable doubt”. Anything less than having to show beyond a reasonable doubt that the property was connected to a crime lets the state take property from citizens without a conviction or even charge.

This is a slap in the face to due process. The Fourth Amendment demands:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Before the American revolution, the English Crown would permit customs officials to seize homes and vessels for alleged contraband or for on- or off-loading cargo without proof of having paid import and export duties and taxes.  Legal scholars have suggested this was “among the key grievances that triggered the American Revolution.”

To combat this practice, the founders guaranteed in the Fifth Amendment that “No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

According to the New Yorker, asset forfeiture became a serious problem in the U.S. in the 1970s.  The forfeiture was aimed at fighting crime bosses and drug lords and these federal statutes permitted the seizure of assets tied to illegal drug production. When Congress passed the Comprehensive Crime Control Act in 1984, which permitted police departments to keep the proceeds from the forfeitures, the practice expanded, especially in poor areas.

If there is no due process, there is no rule of law. Proper order is impossible when institutions do not maintain fair and constitutional laws. Rather, the government fortifies institutional violations of law and decreases trust in police and government overall.

Apart from its intrinsic problems, civil asset forfeiture policies are also rife with corruption.

In more than 40 states, police departments keep at least 50 percent of the seized assets for themselves. In about half of those states, police are able to keep 100 percent of the seized assets. This provides police with an incentive to seize assets.

As the Washington Post reported, police use hundreds of millions of dollars they received from asset forfeiture to fund “guns, armored cars and electronic surveillance gear,” as well as “luxury vehicles, travel and a clown named Sparkles.”

Chicago alone seized $72 million over seven years, and used the money to purchase items, which include cell-phone tracking devices. As Reason reported, some seized assets in Illinois include “Xbox controllers, televisions, nunchucks, 12 cans of peas, a pair of rhinestone cufflinks, and a bayonet” supposedly linked to crimes. Police hit low-income areas the hardest.

“These forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings,” Supreme Court Justice Clarence Thomas, said on the issue. “Perversely, these same groups are often the most burdened by forfeiture. They are more likely to use cash than alternative forms of payment, like credit cards, which may be less susceptible to forfeiture. And they are more likely to suffer in their daily lives while they litigate for the return of a critical item of property, such as a car or a home.”

Advocates of civil asset forfeiture policies argue the procedure deters crime and helps fund the police. In truth, Constitutional rights are surrendered for a false sense of security. This legal theft traduces due process and law and order. Crime deterrents only work if criminals are being targeted. If everyone is harmed by these policies, it doesn’t deter crime; it just diminishes Americans’ trust in law enforcement.

Tyler Arnold is a communications associate at Cause of Action Institute

CoA Institute to Appeal Ruling that Children’s Clothing Consignment Volunteers Must be Considered Employees

Washington, DC – Cause of Action Institute (“CoA Institute”) today announced it will appeal a ruling by the district court that wrongly found that volunteers at Rhea Lana’s children’s clothing consignment events must be considered employees under the Fair Labor Standards Act.

Cause of Action Institute Vice President Julie Smith: “The district court reached the wrong conclusion in taking an outdated view of a decades-old law intended to protect vulnerable individuals and groups from exploitation. The court freely conceded that Rhea Lana’s labor practices are not designed to exploit anybody. We continue to believe that the Department of Labor has overstepped its authority. The federal government should not attack a business model that provides hardworking families with affordable children’s clothing.”

Rhea Lana Riner: “Individuals should be free to volunteer their time for their own benefit. The Labor Department’s crusade to classify volunteers as employees has put my business and livelihood in jeopardy. If everyone is satisfied, why would the federal government need to intervene?”

Case background:
Rhea Lana founded her clothing consignment business in her living room more than a decade ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with 80 locations across 24 states.

In 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana a letter claiming that her company was in violation of the Fair Labor Standards Act regarding minimum wages and overtime pay.  The government claimed that volunteers who help at the consignment events must be classified as “employees.”

Rhea Lana’s complaint was initially dismissed in 2014 for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review.  Last month, the district court ruled in favor of the government. CoA Institute will represent Rhea Lana in her appeal of the district court’s decision.

Rhea Lana Inc., et al. v. Department of Labor, No, 14-0017, U.S. District Court for the District of Columbia

Watch a short video about Rhea Lana’s story here

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute:

Progress has been made in appointing IGs, but more should be done

Earlier this year, we highlighted an important, troubling, occasion: the passage of the 3,000th day without a permanent Department of Interior Inspector General (“IG”).  Five months have passed and President Trump has still not appointed a watchdog for that agency.  At least eight other IG offices are similarly without permanent leadership.  Nevertheless, despite the need for greater effort on the part of the Administration, due credit should be given for the important progress that has been made in appointing competent individuals to some of the vacancies.

We applaud President Trump for nominating five individuals to IG posts since taking office.  In June, Robert Storch was nominated to oversee the National Security Agency.  In September, Mark Greenblatt and Christopher Sharpley were selected for the Export-Import Bank and Central Intelligence Agency, respectively.  And last week, President Trump announced his intent to nominate yet another two IGs—John Edward Dupuy for the Office of Personnel Management, and Gail Ennis for the Social Security Administration.  These candidates all appear to be eminently qualified.  Better, nearly all of them have previous experience working in IG offices.

It was inexcusable for President Obama to neglect to fill empty IG spots with qualified candidates, and President Trump has made important steps to rebuilding the federal government’s watchdog network.  We hope that the White House will make a special effort, however, to find IGs for Cabinet-level entities, such as the Department of Defense, the Department of Energy, and the Department of Housing and Urban Development.  These agencies, in particular, have substantial budgets, and permanent IGs would provide an important internal check on waste, fraud, and abuse.

As we argued before, the absence of permanent IGs is concerning because it can reflect a lack of commitment to transparency and accountability in government.  Acting IGs cannot truly be independent.  As Senator Ron Johnson has commented, “[t]hey are not truly independent [because] they can be removed by the agency at any time; they are only temporary and do not drive office policy; and they are at greater risk of compromising their work to appease the agency or the president.”

President Trump should accelerate his efforts to identify and nominate strong, independent, and motivated watchdogs.  Taxpayers and the federal government only stand to benefit—as the savings illustrated on the new suggest. We look forward to the White House’s future efforts on this critical issue.

Ryan P. Mulvey is Counsel at Cause of Action Institute.

HUD Ignores the Law for 3 years: A Closer Look

Cause of Action Institute (“CoA Institute”) is investigating the U.S. Department of Housing and Urban Development (“HUD”) for its failure to comply with a 2014 court decision requiring the agency to award contracts based on a competitive bidding process. The United States Court of Appeals for the Federal Circuit held that HUD unlawfully categorized Performance Based Annual Contribution Contracts as “cooperative agreements” instead of procurement contracts.[1] Despite this ruling, HUD has continued to treat these contracts as cooperative agreements for the last three years, allowing unelected bureaucrats to award public housing funds to favored groups and blocking others from competing for the contracts. CoA Institute urges Secretary Ben Carson to bring HUD back into compliance immediately.

Cooperative Agreement v. Procurement Contract

The agency’s use of Performance Based Annual Contribution Contracts’s comports with the statutory definition of a procurement contract. A procurement contract exists when “(1) the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; or (2) the agency decides in a specific instance that the use of a procurement contract is appropriate.”[2] Conversely, a cooperative agreement exists when, “the purpose of the relationship is to transfer a thing of value, to carry out a public purpose of support.”[3] When HUD or any other federal agency uses a procurement contract, it must comply with federal procurement laws, such as the Competition in Contracting Act and the Federal Acquisition Regulation.[4] By improperly classifying Performance Based Annual Contribution Contracts’s, HUD was able to ignore these important contracting safeguards and to select any recipient it wished, making it ripe for cronyism.

Waste of taxpayer dollars

In addition to its defiance of a court order, HUD also harmed its relationship with PHAs like Navigate Affordable Housing Partners (“Navigate”), which had previously been eligible to compete for housing assistance dollars across state lines. HUD’s decision to alter its long-standing classification of these contracts was intended to generate an estimated savings of $208 million in voucher programs and $250 million in the public housing program.[5] Moreover, HUD announced it was not going to allow PHAs to compete for Performance Based Annual Contribution Contracts’s outside of their home states even though some, like Navigate, had competed beyond state lines and were able to provide the government with the best value.[6]

Change on the Horizon

According to a recent Washington Examiner article, discussions of HUD’s return to the competitive bidding process has already begun. HUD officials, however, have failed to elaborate on when the necessary changes will take place. CoA Institute will continue to monitor HUD’s unacceptable delay in complying with the court’s orders. Additionally, CoA Institute will continue to examine whether other government agencies are partaking in the same or similar unlawful activity as HUD.

HUD should take immediate action to ensure that its policies are in line with federal law to ensure money intended for public housing isn’t wasted on bureaucrats’ favored PHAs.

Travis Millsaps is counsel and Katie Parr is a law clerk at the Cause of Action Institute


[1] See United States v. CMS Contract Mgmt. Servs., 745 F.3d 1379, 1380 (Fed. Cir. 2014) cert. denied subnom.

[2] 31 U.S.C. § 6303.

[3] See 31 U.S.C. § 6305.

[4] See CMS Contract Mgmt. Servs, supra note 1, at 1381; see also Competition in Contracting Act, P.L. 98-369, §§ 2701-2753, 98 Stat. 1175 (1984) and 48 C.F.R. 31 2017 et seq.

[5] Press Release, Nat’l Ass’n of Hous. & Redevelopment Officials, NAHRO Analyzes Impact of HUD Proposed Savings (Oct. 31, 2012), available at

[6] See CMS Contract Mgmt. Servs., supra note 1 at 1383.

Litigation Update: Ensuring Access to Records of the Executive Branch’s Interaction with Congress

In December 2016, Cause of Action Institute (“CoA Institute”) sued the Internal Revenue Service (“IRS”) after it refused to produce a variety of records concerning its dealings with the Joint Committee on Taxation .  The IRS claimed that all such records, which CoA Institute requested under the Freedom of Information Act (“FOIA”), would be “congressional records” exempt from disclosure.  Yet the IRS never conducted a search.  Instead, it based its determination on questionable guidance from its Office of Chief Counsel, which contradicts long-standing legal precedents for when agency records must be provided to the public.

The IRS moved to dismiss CoA Institute’s lawsuit for lack of subject-matter jurisdiction, arguing that because any and all responsive records were presumptively “congressional,” the court lacked the authority even to hear CoA Institute’s arguments.  Once again, the IRS founded its position on the Chief Counsel’s guidance, as well as generalized descriptions of a consistent course of “confidentiality” in IRS’s communications with the Joint Committee on Taxation.  CoA Institute opposed the IRS’s motion and explained that the agency’s position relied on a serious misunderstanding and misapplication of the law, prescribed an overbroad and unjustified approach to distinguishing “agency” and “congressional records,” and would sweep a broad range of records, which should otherwise be subject to the FOIA, into an “exempt” category.  As I have argued elsewhere, “[t]he mere fact that a record controlled by an agency relates to Congress, was created by Congress, or was transmitted to Congress, does not, by itself, render it a congressional record.”  Its availability instead depends on whether Congress manifested clear intent to maintain its control over it.  Here, the IRS had failed to meet its burden in demonstrating that intent.  How could the agency do so when it refused to conduct a search for the very records at issue?

During oral argument at the end of August, the Court expressed its reservation about the novelty of the IRS’s argument and its presumptive application of the relevant legal standards to exclude categorically all of the requested records as being “congressional” records.  The Court also questioned whether the IRS had properly moved to dismiss for lack of subject-matter jurisdiction, rather than moving to dismiss for failure to state a claim upon which relief can be granted.  Although the distinction may seem like mere “legalese,” it is an important one that affects what sort of evidence outside the pleadings the Court may examine and whether the Court lacks authority to adjudicate a claim arising under federal law (i.e., subject-matter jurisdiction), or simply has no basis to provide the relief sought by a plaintiff, (i.e., an order to disclose non-exempt agency records).

Yesterday, CoA Institute filed a supplemental brief, arguing that the Court was correct to question whether the IRS had properly moved to dismiss for lack of subject-matter jurisdiction.  It is important that the Court reach the right answer to this procedural question.  It will have important implications for FOIA litigation.  The government, here and in other recent FOIA cases, seeks to collapse merits determinations—e.g., whether a requester has sought “agency records”—into jurisdictional questions.  The courts should not allow that to happen.  There is already an asymmetry of knowledge between requesters and agencies.  Forcing a requester to fight an agency on jurisdictional grounds, without the benefit of a search having been conducted and relevant records identified, is not only unfair but would provide the government yet another tool to evade its transparency obligations under the FOIA.

Ryan P. Mulvey is Counsel at Cause of Action Institute.

The FTC Raided My Office, Found Nothing, And Is Destroying My Business Anyway

The FTC Raided My Office, Found Nothing, And Is Destroying My Business Anyway


Without due process or conviction in a court of law, the government is destroying my family’s business.

In early May, federal investigators raided my small tech-support company, Vylah Tec LLC, d/b/a “V-Tec,” on suspicion of “deceptive” sales practices. The raid was part of a politically hyped campaign by the Federal Trade Commission with the Florida Attorney General’s office, dubbed Operation Tech Trap, to “crack down on tech-support scams.” The problem: My business is not a scam.

Read the full article at Investor’s Business Daily.

Supreme Court Denies Petition to Review Job-Killing Fishery Rule

Washington, D.C. — The U.S. Supreme Court today denied the petition for writ of certiorari filed by Cause of Action Institute (“CoA Institute”) on behalf of its clients, groundfisherman David Goethel and Northeast Fishery Sector 13. Mr. Goethel and Sector 13 sued the U.S. Department of Commerce in December 2015 after the agency announced that it would begin shifting the costs for at-sea monitoring onto fishermen.  That transition was anticipated as early as 2010, but the government delayed its implementation for over five years.  Both the U.S. District Court for New Hampshire and the First Circuit Court of Appeals dismissed the lawsuit, ruling that the fishermen had filed their legal challenge too late. 

CoA Institute Vice President Julie Smith: “We are disappointed that the Supreme Court declined to hear the case.  Our clients deserved an opportunity for their challenge to be heard on the merits. The Department of Commerce has gone beyond the bounds of the law in putting this financial burden of more than $700 per day on small-scale fishing businesses in the Northeast. Because the New England Fishery Management Council has announced its intention to extend this unlawful requirement to other fishermen, we will continue to look for ways to challenge that and to require the Department of Commerce to follow the law. This fight is not over.”

The Supreme Court’s refusal to review the First Circuit’s opinion on pre-enforcement review and its interpretation of certain provisions in the Magnuson-Stevens Act allow a dangerous precedent to stand. As argued in the petition, the First Circuit decision “effectively eliminate[s] the doctrine of pre-enforcement review and the possibility of meaningful judicial review of delayed agency implanting actions.” Moreover, “it rewards agencies that delay implementation of regulations by making their later actions immune to challenge.”

David Goethel: “The Supreme Court was our last judicial hope to save a centuries-old New England industry. I’ve been fishing my entire adult life, and I will try to continue, but the costs associated with at-sea monitoring will be crushing. We may have lost the battle, but the war to save the fishing industry from overregulation is far from over.”

Sector 13 Manager John Haran: “This is a sad day for the New England fishing industry. The high court’s decision to allow the First Circuit’s decision to stand puts the full brunt of at-sea monitoring costs on industry. Many fishermen in my sector will likely be put out of business. It may be too late for judicial relief, but we hope the regional Councils and our legislators act quickly to remove this job-killing mandate.”

Case Background

In November 2015, the Department of Commerce finally announced a date by which sector fishermen who fish for cod, flounder, and other groundfish, must not only carry third-party contractors known as “at-sea monitors” on their vessels during fishing trips, but also pay out-of-pocket for the cost of those monitors.  CoA Institute’s clients filed suit to challenge this industry funding requirement, which will devastate the New England fishing industry.

In July 2016, the U.S. District Court for the District of New Hampshire dismissed the lawsuit.  CoA Institute appealed the decision and, in April 2017, the First Circuit Court of Appeals upheld the District Court’s ruling, but without addressing the merits of the case. The First Circuit held that the fishermen’s suit was untimely and must have been filed within thirty days of the original agency rule that mandated industry-funding, even though this requirement was never enforced for half-a-decade. Interestingly, while the First Circuit did not address the merits of the case, it emphasized the devastating economic impacts of the regulation and, in a rare move, urged congressional action to clarify the Magnuson-Stevens Act regarding the payment of monitors.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: