Where do bad homes go when they die?

Barry S. Slosberg Inc. of 2501 East Ontario Street in Philadelphia’s Port Richmond neighborhood today auctioned 23 properties acquired by the City of Philadelphia via criminal forfeiture. The Philadelphia District Attorney’s (DA’s) Office seized all properties auctioned today in conjunction with drug crime convictions. They represent a combined value of around $1.6 million, according to Philadelphia Office of Property Assessment data.

The term “forfeiture” refers to an act by which a government entity—typically law enforcement—claims ownership of private property on the basis that it bears some connection with a crime. Criminal forfeiture requires that prosecutors convince a jury these connections exist by means of a criminal trial. Conversely, civil forfeiture often requires little justification beyond law enforcers’ subjective suspicion.

21 of the 23 properties auctioned today fall into Census tracts with a non-white population of 70% or more. 19 of the 23 properties closely border or fall into tracts in which 30% of the population or more lives below the poverty line. Although this auction as a case study suggests non-white and low-income people are more likely to have their property seized via forfeiture than others, no large-scale empirical studies yet exist to prove as much.

Much current debate over forfeiture in Philadelphia and elsewhere centers on what conflicts-of-interest it causes, whether law enforcement has become too dependent on the revenue it generates and whether authorities abuse this power.

Barry S. Slosberg Inc.'s auction warehouse from the outside

Barry S. Slosberg Inc.’s auction warehouse as seen from outside.

Institute of Justice (IJ), a libertarian public interest law firm, has recently organized a pending class action lawsuit against the City of Philadelphia on behalf of several families who have lost their homes via forfeiture. The suit alleges that the city’s exercise of forfeiture violates residents’ rights on several accounts.

The DA forfeited 1,172 properties between 2002 and 2012, according to research filed with that suit. Authorities in all other Pennsylvania counties forfeited a collective total of only 56 properties during that time.

Attorney Bryan C. Hughes argues in defense of the D.A.’s Office that the clients’ interests “are secondary to the interest of the IJ itself in the federal litigation,” and that the court ought not to countenance this conduct.

Another important facet to the argument: Does asset forfeiture as a punishment hurt low-income people worse than others? Imagine Person A owns one home and Person B owns three. Losing one home is arguably a different experience for Persons A and B.

This is not a hypothetical situation. Compare and contrast the two following cases:

  1. This year, Philadelphia real estate financier Matthew E. McManus was convicted of defrauding over 2,000 real estate developers out of about $26 million. Court forfeited McManus’s Center City condominium and his New England summer home, sentenced him to 15 years in prison and charged him a restitutional fine of about $17.7 million. However, an October 2014 land record and a 2013 IRS lien show that McManus owns a third property: 8721 Montgomery Avenue, which his located in the Pennsylvania suburb of Glenside. This third property went untouched. Homes.com values it at about $1.25 million.
  2. Police this past January served a warrant at Doila Welch’s 1718 Montrose Street home. Officers confiscated from her husband 181 grams of marijuana, valued at about $1,810, according to the arrest report. Welch soon learned that her house, valued this year at $224,900, had also been seized via civil forfeiture. Unlike McManus’s, Welch’s case is still pending. She has joined as a plaintiff in the suit mentioned above.

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