David Soares, Albany, New York, district attorney. (Photo: Tim Roske)

Prosecutors in New York will no longer be able to seize a defendant's assets in most cases unless they can show those funds are the direct product of illicit activity, according to legislation that's expected to be passed as part of the state budget Sunday.

The proposal will amend the state's law on so-called civil asset forfeiture, which is currently used by prosecutors in some cases to either freeze or collect the assets of a defendant throughout a criminal proceeding.

There are three major provisions of the legislation, all of which are opposed by the District Attorneys Association of the State of New York. The proposal was included in one of 10 omnibus bills that will make up the $175 billion state budget—a mishmash of policy items and appropriations.

The first section of the legislation would block prosecutors from freezing a defendant's assets unless they can show they're “tainted” or the direct proceeds of the crime an individual was charged with. Steven Kessler, an attorney from Manhattan specializing in asset forfeiture, said that provision will align New York's statute with federal case law.

“[The law] was allowing the claiming authority, the DAs, to freeze assets that were untainted,” said Kessler, who's also a member of the National Association of Criminal Defense Lawyers Forfeiture Abuse Task Force. “What was permitted under [the law] until this was assets could be frozen that were not traceable to the criminal activity.”

Albany County District Attorney David Soares, the current president of DAASNY, argued that, if they're not able to freeze all of someone's assets, the defendant could use them to either pay for their legal defense or get rid of the money in some other way. That would leave fewer assets to be awarded to victims in court if the defendant is convicted, according to Soares.

“This proposal shows a major lack of understanding of New York's asset forfeiture laws,” Soares said. “The bill removes the prosecutor's ability to go after a defendant's assets until a judgment is entered. This is a terrible proposal. People who steal money usually spend it quickly. If we have to wait until after a judgment is entered, there will be no assets left. Victims will be the ones that suffer.”

Current law allows prosecutors to calculate what a defendant earned from their alleged crimes and then get a restraining order against all of the defendant's assets up to that amount. The legislation in the budget would allow prosecutors to only seize assets they can show are the direct proceeds of an alleged crime.

DAASNY claimed the bill would make it more difficult for prosecutors to go after criminals who don't pay taxes or fair wages to their employees, for example, because they wouldn't be able to identify the specific dollars gained through those schemes to move for them to be frozen.

“Again, innocent victims are the ones who will be punished here, after already suffering from being victimized,” Soares said.

That partly ties into the second provision of the legislation, which involves money judgments. Under current law, prosecutors can secure assets from a defendant to award to a victim regardless of whether those funds are the direct proceeds of the crime. In other words, if the direct proceeds of a crime have disappeared, prosecutors can seize other funds to award to a victim in their place.

The proposal would only allow prosecutors to seize untainted funds if they can't find the direct proceeds of a crime, Kessler said. At that point, it would be up to the judge overseeing the case to decide whether a prosecutor could require those funds be seized.

“If you get a money judgment and you can't find the traceable assets, then you have to go back and ask the court to permit you to attach untainted assets. At that point it's forfeiture,” Kessler said. “Only tainted funds can be frozen pretrial by the claiming authority.”

The third provision would prohibit judges from considering whether funds were obtained illegally when deciding on a motion to release them to pay for attorneys' fees. That would allow those funds to be released to pay for a defendant's counsel, even if they're alleged to be the direct proceeds of a crime.

“Under [the law] an application by the defendant … the court can release funds for reasonable living expenses and counsel fees. That will be permitted without the need to distinguish whether the assets are tainted or untainted,” Kessler said. “The fact that the assets are tainted, or alleged to be tainted, will no longer be a factor in the court's decision.”

Soares urged lawmakers to remove the proposal from the state budget before it's approved by the Legislature. That's unlikely, since the bill has already been introduced. Lawmakers typically don't amend budget bills after they've been printed in the days leading up to passage.

“Under this proposal, a criminal can use someone else's money to pay their attorneys and their living expenses and the court cannot even ask about the source of the funds. The forfeiture proposal should be removed from the budget bill today,” Soares said.

The change will take effect six months after it's passed by lawmakers on Sunday and wouldn't pertain to alleged crimes committed before that date, according to the legislation.

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