323.2Forfeiture of Property
- Drugs, proceeds, equipment, containers, vehicles, records and other items connected to a violation of North Carolina controlled substance laws can be seized and forfeited.
- The state must make a motion for forfeiture, and after the defendant is convicted the court will hold a hearing to decide whether forfeiture should be ordered.
- Property forfeited in state court generally must be retained by the law enforcement agency for official use, or it can be sold and the revenue given to the local school board.
- If the forfeiture is eligible for “adoption” by a federal agency, then the local law enforcement agency may be able to receive a portion of the proceeds back.
Property Subject to Forfeiture
Property subject to forfeiture under G.S. 90-112(a) in connection with a conviction for a controlled substances offense includes all of the following:
- All controlled substances manufactured, distributed, dispensed, or acquired in violation of the controlled substance laws;
- All money, raw material, products, and equipment of any kind which were acquired, used, or intended for use in selling, manufacturing, compounding, processing, delivering, importing or exporting controlled substances;
- Any property used, or intended for use, as a container for property described in (i) and (ii) above;
- All conveyances, including cars, boats, or planes, used or intended for use to unlawfully conceal, convey, or transport (or to facilitate the same) property described in (i) and (ii) above (although there are exceptions for common carriers, innocent owners, and security interest holders); and
- All books, records, and research, including microfilm, tapes, and data, which were used or intended for use in violation of the controlled substances laws.
Additionally, if a defendant is convicted of engaging in a “continuing criminal enterprise” in violation of the controlled substance laws, the following property is subject to forfeiture under G.S. 90-95.1(b):
- The profits obtained by the defendant in such an enterprise; and
- Any interest in, claim against, or property or contractual rights affording a source of influence over such enterprise.
Procedure for Seizing and Storing
Property subject to forfeiture under G.S. 90-112 may be seized by any law enforcement officer based on process issued by either a district or superior court having jurisdiction over the property. See G.S. 90-112(b) (see also the related entry on Sample Motions and Orders). Property also may be seized without process, incident to an arrest or pursuant to the execution of a search warrant, or if the property subject to seizure has been the subject of a judgment in the state’s favor in a prior injunction or forfeiture proceeding. Id. There is no specific time limit for when process authorizing the seizure must issue. See State v. Hall, 52 N.C. App. 492 (1981) (judge’s order on April 9 to seize defendant’s car under G.S. 90-112 for act committed on March 12 was proper because G.S. 90-112(f) does not restrict the time within which a vehicle may be seized after a controlled substances violation).
Property seized under these provisions is not subject to an action for “replevin” (a request to return the property to the owner pending the outcome of the proceeding); instead, the agency seizing the property must place the property under seal, remove the property to a designated place for storage, or request that the N.C. Department of Justice take custody of the property and store it. See G.S. 90-112(c); see also G.S. 90-112.1(c), (d) (allowing return of conveyance to lawful owner upon payment of expenses, but authorizing holding of the conveyance as evidence pending trial). The seized property shall be held in safekeeping until an order of disposition is entered by the court. Id.
Convictions That Support Forfeiture
Property may only be forfeited under G.S. 90-112 following a criminal conviction. See G.S. 90-112 (citing Chapter 18B of the General Statutes, which requires a conviction for forfeiture); State v. Johnson, 124 N.C. App. 462 (1996) (“Criminal forfeiture, therefore, must follow criminal conviction.”); State ex rel. Thornburg v. Currency, 324 N.C. 276 (1989) (“the property ... is subject to forfeiture under the North Carolina Controlled Substances Act, upon a final conviction”).
Forfeiture of any property encompassed by G.S. 90-112(a)(1), (2), (3) and (5) (which includes drugs, money, equipment, containers, records, and data) is permissible even for a misdemeanor conviction, but forfeiture of conveyances and “all other property” require a felony conviction per G.S. 90-112(a)(4)c. and 90-112(f). A federal drug conviction can also support the forfeiture of a defendant’s property under G.S. 90-112. See G.S. 18B-504; G.S. 90-112(d), (d1) and (f); State v. Woods, 146 N.C. App. 686 (2001), aff’d, 356 N.C. 121 (2002).
Grounds for Forfeiture
All illegal controlled substances that are possessed, sold, or transferred in violation of state law are deemed contraband, and once seized they are “summarily forfeited to the State.” See G.S. 90-112(e). As for other types of property, the state must not only obtain a conviction, but also establish that a connection or nexus exists between the controlled substance offense and the property it seeks to forfeit. See State v. Honaker, 111 N.C. App. 216 (1993) (forfeiture of vehicle was supported where defendant’s husband used vehicle while carrying backpack containing large amount of cash and checks as proceeds from drug transactions, husband admitted activities, and cocaine was found at residence); State v. Ervin, 38 N.C. App. 261 (1978) (approving forfeiture of money found in briefcase in trunk of car, where marijuana was also found, along with papers showing it belonged to one of the defendants).
If the state is not able to demonstrate a connection to a drug offense for which the defendant was convicted, then the property is not subject to forfeiture. See State v. Jones, 158 N.C. App. 465 (2003) (G.S. 90-112 forfeiture was error in homicide/robbery/burglary case, since none of the convictions were controlled substance offenses); State v. Johnson, 124 N.C. App. 462 (1996) (error to forfeit money found on defendant at arrest when defendant was convicted of possession offense but acquitted of selling offense, since it was unclear if money was related to drug possession); State v. Fink, 92 N.C. App. 523 (1989) (error to order forfeiture of money when it was unclear whether it was drug proceeds or earned pay from defendant’s employment as a welder); State v. Teasley, 82 N.C. App. 150 (1986) (similar ruling); State v. McKinney, 36 N.C. App. 614 (1978) (close proximity of drugs to money, without more, was not enough).
Procedure and Hearing
To obtain the forfeiture of property, the state must file a motion for forfeiture and distribution of the property, and serve a copy on the defendant. (See the related entry on Sample Motions and Orders). Upon the defendant’s conviction, the court must immediately conduct a forfeiture hearing or set a date for such a hearing. At the hearing, the state must present evidence in support of its motion. This evidence may include copies of the conviction and judgment from the criminal trial or plea, testimony from witnesses, and other documentation or records. The rules of evidence are “relaxed” at a forfeiture hearing. See State v. Woods, 146 N.C. App. 686, 694 (2001) (“thus, the evidence [hearsay testimony of an informant] would have been admissible even if there had been an objection”).
The state’s burden of proof at such a hearing is not entirely clear under the case law, but as long the defendant has already been convicted of a controlled substance offense, the standard of proof for a related forfeiture motion likely is no higher than a preponderance of the evidence. See generally State v. Richardson, 23 N.C. App. 33 (1974) (regarding forfeiture of vehicle used to transport drugs: “The court's findings of fact are conclusive if supported by any competent evidence and judgment supported by such findings will be affirmed, even though there is evidence contra or even though some incompetent evidence may also have been admitted.”); see also State v. Johnson, 124 N.C. App. 462 (1996) ("G.S. § 90-112(a)(2) is a criminal, or in personam, forfeiture statute, as opposed to a civil, or in rem, forfeiture statute. [...] Criminal forfeiture, therefore, must follow criminal conviction").
The judge must make findings of fact and conclusions of law and, if appropriate, enter an order granting the forfeiture and ordering an appropriate disposition. See State v. Honaker, 111 N.C. App. 216 (1993) (no error in trial court's forfeiture ruling where the evidence presented at the hearing was "adequate" and "the trial court's findings, although not in the language of the statute, were sufficient on this issue to support the order of forfeiture"); see also the related entry on Sample Motions and Orders).
Innocent owners or other parties who have an interest in a conveyance subject to forfeiture (such as a bank that has a lien on a seized vehicle) may contest the forfeiture motion and ask the judge to “remit” (deny) it. The burden of proof is on the claimant opposing the forfeiture. See G.S. 90-112.1. The hearing is conducted before a judge, and the contesting parties do not have a right to a jury determination of the issue. See State v. Morris, 103 N.C. App. 246 (1991); State v. Honaker, 111 N.C. App. 216 (1993). To prevail on remission of forfeiture, the party contesting the motion must demonstrate that he or she:
- Has an interest in the property;
- Had no knowledge or reason to believe it was being used in a controlled substance offense; and
- The party’s interest is equal to or greater than the fair market value of the conveyance.
See G.S. 90-112.1(b); State v. Meyers, 45 N.C. App. 672 (1980) (court properly remitted forfeiture of car used to transport controlled substances when car owner met his burden of proving that he lacked knowledge of illegal activity). If the party fails to meet that burden, the request for remission will be denied and the motion for forfeiture will be allowed. See State v. Honaker, 111 N.C. App. 216 (1993) (remission denied - judge made sufficient finding that defendant knew or had reason to know of her husband’s use of vehicle in felony drug violation); State v. Bass, 65 N.C. App. 801 (1984) (airplane owner’s application for return of property denied – evidence showed owner had knowledge of illegal activity); State v. Richardson, 23 N.C. App. 33 (1974) (similar ruling, as to a vehicle).
Disposal of Forfeited Property
If the property is ordered forfeited, the law enforcement agency who has custody of that property may do one of the following, pursuant to G.S. 90-112(d):
- Retain the property for official use;
- Sell the property, if it is not harmful to the public or required by law to be destroyed, provided that the proceeds of the sale be used to pay for expenses related to the forfeiture proceeding and sale, including expenses for seizure, maintaining custody (i.e., storage), advertising, and court costs (remaining proceeds of the sale will go to the school fund for the county in which the conveyance was seized – see (iv) below);
- Transfer the conveyance to the North Carolina Department of Justice for official use by the Department; or
- Sell any vehicle, vessel, or aircraft that is no longer suitable for official use by the agency, in the same manner that other surplus property is sold, with proceeds of the sale to go to the school fund for the county in which the conveyance was seized.
The law enforcement agency that has possession of any forfeited money (or proceeds from the sale of other forfeited property) must pay it to the treasurer or other authorized officer for the school fund of the county in which the money was seized. See G.S. 90-112(d1).
Federal Forfeiture and Equitable Sharing
When money or other property is seized as part of a state investigation or prosecution, the forfeiture of those assets can be “adopted” by a federal agency if the offense is also cognizable under federal law (as most controlled substance offenses are). Under what is known as the “Equitable Sharing Program,” a percentage of the net proceeds from that forfeiture (after repayment to innocent owners, lienholders, or victims) will be shared with the local law enforcement agency that seized the assets. The scope and eligibility requirements for this program change over time based on policies set by the U.S. Department of Justice, but the current guidelines can be found here.
For state law enforcement agencies, there are several advantages to this program compared to pursuing forfeiture in state court.
First, any money received goes directly to the agency for training, equipment, conducting operations, travel, and other expenses, instead of going to the school board for the county where it was originally seized. See United States v. Winston-Salem/Forsyth County Board of Education, 902 F.2d 267 (4th Cir. 1990) (permitting disbursement of federal adoption of state-seized drug money and resulting forfeiture proceeds to a local law enforcement agency rather than the county school fund).
Second, forfeiture in federal court can be conducted as a purely “in rem” civil proceeding, as opposed to the “in personam” nature of state court forfeitures, which require a predicate criminal conviction. In other words, forfeiture in federal court can occur as a separate legal action against the property itself, and since a civil forfeiture action only requires proof by a preponderance of the evidence, it is possible to forfeit assets federally even if the defendant is acquitted of criminal charges. See State v. Johnson, 124 N.C. App. 462 (1996) (“Since an in personam action is criminal, the government must prove the charges against the defendant beyond a reasonable doubt. In an in rem action, on the other hand, only proof by a preponderance of the evidence is required.”)
Additionally, many assets can be “administratively forfeited” by federal law enforcement agencies, without any judicial involvement at all. In general, cash and vehicles up to any value, along with any other property (except for real estate) up to $500,000 in value, can all be administratively forfeited by the agency itself, based on a standard of probable cause. See 19 U.S.C. § 1607; 18 U.S.C. § 983; USDOJ Asset Forfeiture Policy Manual, Chap. 2, Sec. III, “Interplay of Administrative Forfeiture and Criminal Forfeiture” (2016). See also State v. Davis, 160 N.C. App. 693 (2003) (money in defendant’s drug case was transferred to DEA and administratively forfeited before trial – the fact that the actual seized cash was therefore not available at trial did not prejudice the defendant); State v. Hill, 153 N.C. App. 716 (2002) (currency was turned over to DEA for in rem forfeiture prior to forfeiture hearing in state court – court rejected defendant’s collateral attack argument that the state court already had exclusive jurisdiction, because the pending state forfeiture was an in personam action, not an in rem action). However, if a purported owner files a claim for the seized property, then the administrative forfeiture proceeding must stop and the federal government must either bring a forfeiture action in court (as part of the criminal prosecution or as a separate civil action) or else return the property to the claimant. See 18 U.S.C. § 983.