Michigan forfeiture laws allow assets to be turned over without a conviction
A year after the Saginaw County Sheriff seized a classic muscle car from a Shiawassee County couple, it sold the car — with another 56,000 miles that had been logged in the interim. Last month, the couple filed a federal lawsuit over the car and other items that had been seized and then sold by the department. The department's actions grew out of a 2008 investigation for possible drug crimes, but the couple was never convicted or even charged with a crime.
Gerald and Royetta Ostipow filed the lawsuit on Aug. 24 with the U.S. District Court in Detroit against Saginaw County Sheriff William L. Federspiel, the department and a number of unnamed sheriff deputies. The lawsuit alleges that Federspiel and members of his department seized, then sold, hundreds of thousands of dollars in property belonging to the couple before the final determination of forfeitability.
In April 2008, the department received search warrants to search a farmhouse in Shiawassee County owned by the Ostipows, who lived a half-mile down the street in their longtime residence.
The search warrants were issued by Saginaw County judges, said Outside Legal Counsel, which is representing the Ostipows. But it’s unclear why the Saginaw County officers were in a neighboring county’s jurisdiction and didn’t get search warrants from Shiawassee County judges.
The farmhouse, which was being renovated by Gerald Ostipow, was occupied by his adult son, Steven, and the property’s outbuildings were used for storage.
When the sheriff’s deputies searched the farmhouse they found marijuana plants and seeds grown by Steven Ostipow, but his parents have denied knowledge of his illicit activities, their lawyers said.
That’s when the Ostipow’s property stored in the Shiawassee farmhouse and outbuildings were seized by the Saginaw County officers, despite Gerald and Royetta not being charged with any drug-related crimes.
The deputies seized dozens of animal mounts, tools, deer blinds and farm equipment from the farmhouse property. They also took a 1965 Chevy Nova SS that was being renovated and stored on a trailer.
Outside Legal Counsel claims the seized property “lacked any realistic connection to the pot plants and seeds of Steven's grow.”
Later that day, Saginaw deputies obtained another search warrant — again from a Saginaw judge — to search the Ostipow’s main residence in Shiawassee County, down the street from the farmhouse. The couple's law firm says no drugs were found at the property, yet officers seized cash from Gerald Ostipow’s wallet, plus other items.
After the initial seizures, Saginaw deputies “would then routinely appear and present themselves, in plain clothes and in their personal vehicles while off duty, at the Residence and Farmhouse to continue to seize additional personal property,” the federal complaint alleges.
The Michigan Court of Appeals later found that Royetta Ostipow’s portion of property seized from the farmhouse — which included the classic car — should be repaid. A later trial court decision ruled “most of the personal property seized was improperly taken and was ordered non-forfeitable.”
But it was later discovered that Sheriff Federspiel and the department sold off most of the Ostipow’s seized property before there was a ruling on the forfeitability of the items held by the county.
Documents provided by Outside Legal Counsel show the department seized the Ostipow’s 1965 Chevy Nova SS on April 24, 2008, when the vehicle’s mileage was 73,865. Federspiel, who signed the vehicle title transfer form, sold the partially restored muscle car over a year later on June 4, 2009, for $1,500.
The vehicle’s title certificate filled out by Federspiel around the time it was sold says the mileage was 130,000 — 56,000 miles more than when the department seized the car.
“They went ahead and spent the proceeds,” the Ostipow’s lawyer, Philip Ellison, said. “Their intent wasn’t to protect my clients’ rights, it was a pure money grab.”
Federspiel and his department did not return requests for comment.
Federspiel competed in and won the Democratic Party primary in August, campaigning on forfeiting drug dealers’ property and claiming it saved taxpayers money. (He will face no Republican opposition in the November general election.) For two years, Federspiel drove a black Mustang GT as his department vehicle after the car was forfeited, MLive reported. In 2013, Federspiel sold the Mustang, which read “Taken From A Local Drug Dealer” on the sides, on eBay for $14,800.
Ellison said the biggest obstacle in the Ostipow’s case has been the department's lack of documentation of the property it seized.
Lee McGrath, the legislative counsel for the Institute for Justice, said this case is an example of policing for profit.
“This case illustrates what happens when police and prosecutors benefit financially from confiscatory policies,” he said.
McGrath praised reforms the Michigan Legislature made to forfeiture laws last year but noted lawmakers should continue to improve the state’s laws.
“Those changes will improve reporting, but it’s essential the legislature continues,” he said. “Legislators in Lansing and city council members must take back their control of funding and setting priorities. It’s wrong when sheriffs and police officers control both the sword and the purse, and this case illustrates the bad incentives of policing for profit.”
A 2015 study by the Institute for Justice gave Michigan a grade of D- for its civil asset forfeiture laws, noting as much as 100 percent of forfeited property can go into law enforcement coffers even without a conviction.
“Despite modest reforms approved in October 2015 that raised the standard of proof required to forfeit property, Michigan’s laws still earn a D-, largely because the state’s large profit incentive remains intact,” according to the study titled “Policing for Profit.”
Since 2001, law enforcement in Michigan has forfeited at least $270 million in assets related to drug crimes. It is not known how much has been taken in total because there was no requirement to report the information.
Last year Gov. Rick Snyder signed a package of seven bills reforming civil asset forfeiture laws. These laws required law enforcement to disclose civil asset forfeitures and better document seizures. The laws also increased the burden of proof for civil asset forfeitures from preponderance of evidence to clear and convincing evidence.
Rep. Peter Lucido, R-Shelby Township, said he doesn’t think anybody should profit from criminal activity, and until it’s been proven that criminal activity occurred, no property should be forfeited. “That’s just simple due process,” he said.
“There are better regulations that we have now put through on civil asset forfeiture reform as it relates to accounting for the property seized,” he said.
Lucido sponsored House Bill 4505, one of the bills signed into law last year. That law moved the burden of proof. He also sponsored House Bill 4629 in May 2015, which would repeal bond requirements in contesting civil asset forfeitures. The bill has passed the House and a Senate committee and is awaiting a vote in the full Senate.
“You want the playing field to be fair, and the only way you’re going to make it fair is to stop taking the people’s property,” Lucido said. “There is no logic and reason that people should be taking people’s property — nothing — until after there’s been a conviction or there’s been a lawsuit filed.”
“There’s too much gamesmanship with the way they’re doing it now,” added Lucido, who’s also a criminal defense attorney.
“When police have a pecuniary interest in the property rights of others there will be overreaching on behalf of the police,” he said.
In 10 other states, law enforcement is not able to forfeit (take ownership) of someone’s property until that person has been convicted of a crime. Two states, New Mexico and Nebraska, have completely eliminated civil forfeiture. In those states, property can only be taken and turned over to the state after a conviction in criminal court and a decision by that court that assets were directly gained from illegal activity.
Correction: This story originally reported the mileage at 54,000 extra miles. The correct mileage was 56,000.
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