Imagine a scenario where the government can take a private citizen’s property they suspect was involved in a crime without ever having to charge anyone for a crime.

Before one assumes we are speaking of some foreign country, this is the legal reality of civil asset forfeiture in the United States.

In Arizona, civil asset forfeiture allows law enforcement to seize property they believe is involved in a crime and then take that property through a civil proceeding.  And because forfeiture operates under the premise that property itself can be guilty of a crime, it has produced a barrage of strange case names such as “Nebraska v. One 1970 2-Door Sedan Rambler” and “State of Texas v. One Gold Crucifix.”

Civil forfeiture became prevalent in the U.S during the 1980’s as a part of the “War on Drugs.”  It was a means to relieve big drug kingpins of the means and spoils of their crimes.  However, the use of asset forfeiture by law enforcement quickly expanded to targeting of lower value assets and currency, calling into question whether the activity is motivated by stopping crime or financial gain.  Some in law enforcement, such as the City Attorney for Las Cruces, New Mexico, described asset forfeiture as “a gold mine.”

According to the Institute for Justice, Arizona ranks as one of the worst states, earning a D- for abusive forfeiture laws.  The state’s dismal score is due to several areas of the law that create a disincentive for innocent owners to fight the government to recover their property.

Fortunately, reform to Arizona’s forfeiture laws is on the horizon.  A broad coalition of organizations and citizens have come together to propose HB2477, sweeping civil asset forfeiture reform sponsored by Representative Eddie Farnsworth (District 12).

HB2477 would make key changes to the current law:

  • Raises the burden of proof required of law enforcement to seize property
  • Makes claimants eligible to recover attorney fees when they prevail in court. Currently claimants are not only prohibited from recovering legal fees but are liable to pay the government’s attorney fees;
  • Creates third party accountability for the expenditure of forfeiture dollars;
  • Requires substantial reporting to make the type and value forfeitures transparent to the public and policy makers – including when forfeitures don’t result in a criminal conviction;

This legislation is a long time coming for Arizona.  Shocking abuses of civil rights and shady uses of funds are a current reality.  Cases such as Cox vs Voyles in 2013 demonstrate how innocent third party property owners are easily captured and trapped by a system that is tipped to favor government.

Pima County has had its fair share of scandal when it comes to flagrantly conflicted expenditures of forfeiture monies.  Navajo County recently seized a vehicle from an elderly couple from Washington and only returned it after Institute for Justice filed suit.  Former Maricopa County Sheriff Joe Arpaio used forfeiture dollars for a questionable trip to Honduras as well as to lease high-end vehicles for top management.

Even former Pinal County Sheriff Paul Babeu abused the program when he used RICO funds to write checks to a non-profit housed within his office and to pay for a political mailer sent to registered voters six months prior to a Republican Primary.

Civil Asset Forfeiture in Arizona is in urgent need of reform. The current system is a threat to property rights and must be rectified.  HB2477 would be a substantial step in the right direction – now it’s in the hands of lawmakers and the Governor to do what’s right.

There is much discussion among lawmakers and the Governor this year about how we will prioritize the many needs of the state.  Education – all day kindergarten, universities, and k-12 – all want a piece.  Then there are the requirements of the State to back fill the financial fallout of Prop 206 in the way of increasing funds to developmentally disabled car providers.

Amid all these constituents who are making their case for additional money – one hand out should raise a lot of eye brows.  And that’s the hand (probably dressed in a very expensive suit) of some venture capitalists in the state.

SB1212, the ‘Angel Investor Tax Credit Bill’, is not as sweet sounding as its Orwellian assigned name indicates.  A more apt name would be to call it the Shark Tank Bill because of its many similarities to the hit TV Show, with one difference: wealthy investors get a tax credit for making their risky venture capital investments.

Under the bill government employees at the Arizona Commerce Authority will dole out tax credits to “qualified” investors to hedge their potential losses in risky new start-up companies.  The argument made to defend the program is Arizona needs the tax credits to attract more investors into Arizona and that without them, good ideas in Arizona won’t find capital.  This of course is not true.  Good business ideas and plans can always find money to get off the ground because investors stand to gain millions of dollars in profit to do so.

The reality is, if a business is unable to attract the start-up capital it needs, perhaps the venture is not seen as viable, or scalable or profitable enough.  If that is the case, why would taxpayers be expected to flip the bill for it?  After all, we don’t stand to benefit monetarily from the businesses’ success, why should we therefore shoulder the losses of its failures?  And if a business was to attract the necessary start-up capital regardless of the tax credit, why are taxpayers subsidizing a business activity which would have occurred anyway?

Venture capital investing is inherently risky.  Successful speculations have the potential to enrich their investors immensely.  However, it is the risk itself and the profit motive which tempers the activity, and incentivizes investors to be prudent.  The Arizona Commerce Authority is not better equipped than the free market to facilitate these types of transactions.

Taxpayers should not be in the business of subsidizing risky venture capital investments by wealthy investors. It’s a program that picks winners and losers among taxpayers, among venture capital investors, and among aspiring entrepreneurs.

Lawmakers should continue to stay out of the venture capital business and reject SB 1212.

Mayor Greg Stanton claims that the City of Phoenix is beating the competition in attracting new businesses and jobs because of targeted tax subsidies and social progressive policies.

The Club debunks these claims and shows that any credit for job growth in Phoenix belongs to an overall business friendly environment of low-taxes and regulation in Arizona.



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The Arizona Free Enterprise Club is a free market policy and advocacy group dedicated to promoting a strong and vibrant Arizona economy.