Civil Forfeiture: Part Two

Medford, Ore. — Civil forfeiture is a tool police have that is not widely known. It allows police to take cash or property that may be tied to crime. If there’s a conviction in the case, the department can keep it.

“Years ago, we had a lottery ticket case that was a civil forfeiture,” Medford Police Deputy Chief Brett Johnson.

In 2005, Christina Goodenow was convicted on theft and forgery charges, after police say she used a deceased person’s credit card to make a very lucky purchase.

“Buys a winning lottery ticket, and the money is attached to the ticket, and then it’s reported to us that it’s a criminal event, and so we investigate it,” Johnson said.

Because the million dollar ticket was paid for with a stolen credit card, the department contacted the Lottery Commission.

“‘This was fraud, you guys should not pay out on this,’ and they said, ‘It’s already a done deal, this one’s already coming out,'” Johnson said. “So there was a forfeiture process on that case.”

As a result, a court ruled and Medford Police Department kept the ticket and the winnings.

“There’s still a yearly pay out on that, that comes in,” Johnson said.

The process is called asset forfeiture. It allows police to take cash they believe is unlawfully obtained.
While Goodenow’s case was tied to fraud, typically the cash police seize comes from drug or sex trafficking. In Southern Oregon, Johnson says black market marijuana is continuing to rank higher and higher on that list.

“If you are an Oregon cop, and you go to a conference out of the state, and people understand you’re from Oregon, the first question they ask is about your marijuana program, because it’s impacting every state that doesn’t have legal marijuana,” Johnson said.

Johnson says pot is sent out, and the money is sent back, often in large amounts of cash.

“There’s times we’ll get $30,000 or $40,000 in a package,” Johnson said.

Jackson County Deputy District Attorney Marco Boccato is assigned cases from the Medford Area Drug and Gang Enforcement team. He says a lot of drug cases include civil forfeiture.

“It’s my job to actively investigate it, and kinda look into it, and see what’s going on, and get as much information as possible because we always want to do the right thing,” Boccato said.

Sometimes Boccato says the money is returned, but if there’s a conviction in the case, it’s kept by the arresting agency. While this practice has been around for a while, there are new developments in technology that are changing the game.

“The issue that’s going to kind of come to the forefront is, what’s going to happen with civil forfeiture and Bitcoin?” Boccato said.

Bitcoin is a popular type of digital currency, or cryptocurrency. It’s been around for a couple years, but most people don’t know what it is or how to use it. For that reason, Colin Fagan with the Southern Oregon High Tech Crimes Task Force says it’s gaining popularity among criminals.

“That’s become a challenge for law enforcement internationally, as well as locally, dealing with this block chain cryptocurrency,” Fagan said.

Fagan has been looking into Bitcoin in particular for a while, and even he’s fallen victim to a scam.

“First time that we, we bought a small amount,” Fagan recalled, “we connected with someone out of state, made this agreement, we gave them our gift card information, we never got our Bitcoin.”

Transactions are happening everywhere, either through third parties like the person Fagan was scammed by, or through websites. The Rogue Valley Mall even has a bitcoin vending machine. But where does the criminal element come in?

“There are many people who were buying small amounts of bitcoin, using gift cards, and then buying it at 85-percent of the actual dollar value, so that they could then post Backpage ads, because that’s the only form of payment Backpage will take, so that they could post human sex trafficking ads, and we’ve done several of those investigations locally,” Fagan said.

Fagan says cryptocurrency is now heavily involved in the local sex trafficking scene.

“[They] used to show pictures and flash cash, now they’re talking about what bitcoin they’ve got,” Fagan said.

That’s not the only place investigators are finding it.

“Another place that we see it is in the black market marijuana world,” Fagan said.

Instead of cash sent in boxes, Fagan says bitcoin is being traded.

“While marijuana is legal with very restrictive perimeters, there’s clearly a large amount of marijuana that’s leaving this state, that is not accounted for in the lawful process,” Fagan said. “Those exchanges we’ve seen are occurring with Bitcoin.”

But that presents MPD with a new kind of problem — how do you seize virtual currency?

“[It] used to be that our concern was we could never solve this because it’s anonymous, but it’s not as anonymous as it originally appeared, and there are tools that are helpful to us to identify the buyers, the sellers, the movers,” Fagan said.

By diving into the world of Bitcoin, Fagan has learned what’s legal and what movement signals a red flag. While our local departments haven’t seized Bitcoin yet, it’s not completely unheard of.

“Our federal partners, federal agencies have done those seizures,” Fagan said. “I’ve checked around the state of Oregon, and I’ve found a couple of agencies that have done some seizures.”

According to Forbes, last month, the U.S. Marshals Service held online auctions of Bitcoin valued at more than $50 million. That cryptocurrency was seized in cases of federal, criminal, and civil forfeiture.

“This is a new frontier for all involved, those that are making those exchanges, and those of us in law enforcement,” Fagan said.

Fagan says the next step here locally is educating the rest of the criminal justice system.

“We’re preparing to host a local training at the Medford Police Department to make our investigators and prosecutors more aware of how cryptocurrencies are used, and understanding the majority of the time, it’s completely appropriate and lawful,” Fagan said.

When it’s not lawful, Fagan says local law enforcement needs to know how to approach it, and eventually, how to seize. it.

“Clearly if we don’t seize the profits of criminal enterprise, we’re really ineffective in enforcing that behavior,” Fagan said.

NBC5 News will continue to follow the progress of local law enforcement as they dive into the world of cryptocurrency. We’ll bring you an update when the training is taking place.

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