The Institute for Justice, a libertarian advocacy law firm, is suing the state of Indiana over its civil asset forfeiture practices. Under state law, the proceeds from forfeiture are supposed to go to a schools fund. But that isn’t happening.

For far too long, police and prosecutors in Indianapolis have been keeping 100 percent of forfeiture proceeds for themselves. The constitution couldn’t be clearer—“all forfeitures” belong to the schools—yet the Indiana school fund hasn’t seen a penny of forfeiture money from Indiana’s capital since before some current students were even born. Meanwhile, police and prosecutors are siphoning off millions of dollars in civil forfeiture proceeds, violating both the Indiana Constitution and the state’s Civil Forfeiture Statute and fueling an increasingly aggressive forfeiture machine.
Now a group of Indiana citizens—two of whom were once unjustly targeted in a forfeiture case—have teamed up with the Institute for Justice to right the ship in Indianapolis. They are asking the courts to compel Indy’s police and prosecutors to follow the law and stop profiting from their forfeiture program. Victory will set a precedent to bind every police department and prosecutor’s office in Indiana. Equally important, it will have a nationwide impact by driving home that police and prosecutors—like everybody else—must follow the law.

More here. Under the law, law enforcement agencies can use forfeiture funds to reimburse themselves only for the cost of the investigation that led to the property seizure. The counties get around the requirement by wildly overestimating the cost of those investigations. Or they simply don’t try to justify their actions at all. Indiana Attorney General Greg Zoeller has expressed little interest in enforcing the requirement that the forfeiture proceeds go to the schools fund.

The problem with the money going back to law enforcement agencies is of course that it creates a perverse incentive to “find” connections between money or property and illegal activity, even where none exists. A 2010 investigation by the Indianapolis Star found sheriffs and police chiefs essentially operating slush funds with forfeiture proceeds.

But this is a problem in many states. In Indiana, not only is the money not getting to the schools fund, in many counties prosecutors have contracted forfeiture cases out to private attorneys and law firms, who then get a cut of what they win in court. (I know this is also done in Kansas, and possibly in other states.) Back in 2008, one attorney who specializes in these forfeiture contracts made more than $113,000 on a single case. That’s more than all 92 Indiana counties contributed to the state’s schools fund from 2008 through 2009.

It gets better. For 10 years, one Indiana prosecutor simultaneously prosecuted criminal drug cases while referring the civil forfeitures in those cases to his own private law firm, from which he’d then get a portion of the proceeds. The Indiana Supreme Court eventually found that he had a conflict of interest and suspended his law license for 120 days. But sources in Kansas have told me that prosecutors in some rural counties still “refer” cases to their private law practices, then take a cut of what they win in court.