The case has obvious implications for the property rights of Americans living abroad and foreigners who own assets located in the United States. The same logic might also apply to Americans who live in one state, but own property in another, and contest extradition to the latter. Even if these suspects successfully resist extradition, the government could still potentially seize their property and hold on to it permanently, without giving them any right to contest the seizure.
The suspects in this case are the controversial former owner and operators of the once-famous Megaupload website. But whatever you think of Megaupload and its business practices, the issues the case raises go far beyond this specific instance.
Trevor Burrus of the Cato Institute has more details on the case and its significance:
Remember Megaupload.com? It was once the 13th most popular website on the internet, with more than 82 million unique visitors and a billion total page views during its seven-year operation. The site allowed people to store files on the cloud for later use — and some users inevitably stored copyrighted TV shows, films, songs, and software.In 2012, the U.S. government charged the owner, the colorful Kim Dotcom, and the website’s operators with conspiracy to commit copyright infringement. The defendants are currently resisting extradition to the United States (Dotcom lives in New Zealand), as is their right under extradition treaties. In 2014, the seemingly frustrated government moved to seize the defendants’ considerable assets in a civil forfeiture action, claiming that the assets are probably connected to the alleged criminal activity.Under civil forfeiture laws, the government can take property without an underlying criminal conviction based only on the allegation of a crime. Those whose property has been seized can get it back by proving that their property is “innocent.” The government, however, is preventing the defendants from even making that argument. Using the “fugitive disentitlement” doctrine, the government is blocking the defendants from challenging the forfeiture.Fugitive disentitlement has historically been applied only to criminals who escaped custody while appealing a conviction, the idea being that a court could decide to dismiss the appeal because any judgment would be unenforceable against an absent defendant. Here, the government has decided that, because the Megaupload defendants aren’t coming to the United States to defend their property, they are “fugitives” who have lost the ability to defend against that seizure — and the district court agreed.
Cato, the Institute for Justice, and the National Association of Criminal Defense Lawyers have filed a joint amicus brief which explains why the government’s position is dangerous and unconstitutional.
As mainstream opinion has come to realize in recent years, asset forfeiture is rife with abuses – often victimizing poor and legally unsophisticated property owners who have not actually done anything wrong. In some states, the authorities often seize property and hold it for many months before giving the owners any opportunity to contest the seizure – a blatant violation of the Due Process Clauses of the Fifth and Fourteenth Amendments. This misapplication of “fugitive disentitlement” goes even further, by preventing some suspects from ever contesting the seizure at all. Hopefully, the court of appeals will reverse the trial court’s ill-advised ruling.
NOTE: I have worked with the Cato Institute and the Institute for Justice on other property rights issues, on a pro bono basis, but have no involvement in this case.