PHILADELPHIA—The Institute for Justice (IJ) today announced a major settlement with the city of Philadelphia, ending the city’s draconian civil forfeiture machine. In documents filed with the U.S. District Court for the Eastern District of Pennsylvania today, city officials agreed to a set of reforms that will end the perverse financial incentives under which law enforcement keeps and uses forfeiture revenue, fundamentally reform procedures for seizing and forfeiting property, and establish a $3 million fund to compensate innocent people whose property was wrongly confiscated. These sweeping reforms, if approved by the Court, are the result of the Institute for Justice’s class-action lawsuit that it has litigated over the past four years.

Civil forfeiture—where the government can seize and sell your property without convicting or even charging you with a crime—is one of the greatest threats to property rights today. With civil forfeiture, the government sues the property itself under the fiction that cash, cars or even homes can be guilty, resulting in bizarre case names like Commonwealth v. 2000 Buick. And because these cases are civil, innocent property owners are denied rights guaranteed to criminal defendants, like the right to an attorney.

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For decades, Philadelphia’s system was rigged against property owners. Until IJ brought suit, Philadelphia routinely threw property owners out of their homes without notice. It forced owners to navigate the notorious “Courtroom 478,” where so-called “hearings” were run entirely by prosecutors, without any judges or court-appointed lawyers to defend property owners. Again and again, prosecutors demanded that property owners appear in court, sometimes ten times or more. Missing even a single “hearing” meant that prosecutors could permanently take an owner’s property, sell it and use the proceeds for any law-enforcement purpose they wished. More than 35 percent of proceeds went to salaries, including the salaries of the very officials seizing and forfeiting property, thus creating a perverse incentive to abuse this system. Today’s landmark settlement brings all of that to an end.

“For too long, Philadelphia treated its citizens like ATMs, ensnaring thousands of people in a system designed to strip people of their property and their rights,” said Darpana Sheth, a senior attorney at the Institute for Justice and director of its Initiative to End Forfeiture Abuse. “No more. Today’s groundbreaking agreement will end years of abuse and create a fund to compensate innocent owners.”

For the clients named in the lawsuit, the settlement ends a struggle that lasted more than four years. In 2014, Chris Sourovelis nearly lost his house after his son was arrested for selling $40 worth of drugs. Although Chris did nothing wrong, the police showed up unannounced one day and threw his entire family out of his home.

“I’m glad that there is finally a measure of justice for people like me who did nothing wrong but still found themselves fighting to keep what was rightly theirs,” said Chris. “No one in Philadelphia should ever have to go through the nightmare my family faced.”

The agreement comes in the form of two legally-binding consent decrees, one governing Philadelphia’s forfeiture practices and the other providing compensation to victims.

In the first, Philadelphia, the District Attorney and the First Judicial District of Pennsylvania agree to dismantle the city’s forfeiture machine. Among other things, the consent decree would:

Greatly restrict when Philadelphia police can seize money and other property for forfeiture;

Improve the notice which owners receive about the forfeiture process and their rights under it;

Ensure that judges—not prosecutors—control forfeiture proceedings and monitor forfeiture settlements for fairness;

Prohibit prosecutors from making owners return to court again and again at the risk of losing their property forever; and

Create a prompt, meaningful hearing where property owners can demand the immediate return of their property.

The second consent decree ends Philadelphia law enforcement’s unconstitutional financial incentive. It blocks the District Attorney’s Office and the Philadelphia Police Department from using forfeiture proceeds on salaries or other law-enforcement purposes, instead directing those funds to community-based drug prevention and treatment programs. It also establishes a $3 million fund to compensate forfeiture victims, with the following details:

Each qualifying person who submits a timely claim will get up to $90 in recognition of the violation of their constitutional rights.

Each qualifying person who lost their property through forfeiture, but who was not convicted of a related criminal charge, will get up to 100 percent of the value of their forfeited property.

Each qualifying person who lost their property through forfeiture, but who was only sent to a diversionary program for low-level, first-time offenders, will receive up to 75 percent of the value of their forfeited property.

Each of the named representative plaintiffs, who fought for years to right this wrong, will get a $2,500 award for their efforts on behalf of the entire class.

A portion of undisbursed funds will be distributed to non-profit organizations that provide services to communities hardest hit by Philadelphia’s former forfeiture practices.

The parties will ask the Court to preliminarily approve the settlement. Once that happens, Philadelphians who were caught up in the city’s forfeiture machine can apply for compensation. IJ will work with a third-party administrator to review all claims and ensure they are carefully processed.

This agreement comprehensively reforms the largest municipal forfeiture program in the country. However, across the United States, law enforcement continues to use civil forfeiture to take property, often when no criminal charges are filed. In addition to defending property owners across the country, IJ will be bringing civil forfeiture to the U.S. Supreme Court this fall in a case called Timbs v. Indiana.

“Today’s settlement is an unprecedented blow against civil forfeiture,” said IJ President Scott Bullock. “IJ is continuing the fight to stop the government from using the justice system to raise revenue. Philadelphia is just one place where officials created a rigged system that deprived individuals of their property without due process.”