California Must Pay Actual Interest on Seized Cash - California Case Law
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California Must Pay Actual Interest on Seized Cash

If the state seizes your client’s cash, it has to preserve the value of that cash, just in case your client actually gets his money back.

This week, California’s Second Appellate District offered further insight into how that cash must be preserved.

In 2003, Los Angeles police officers seized 150 grams of cocaine base, 400 grams of marijuana and $10,153.38 in currency from Cyrus Cardan’s hotel room. (He claimed the cash was proceeds from candy, cigarette and soda sales; the state argued that it was drug money.) Cardan was charged with drug possession and sale, and the state started forfeiture proceedings to keep the money.

Cardan was convicted as charged and sentenced to prison, but the state botched the forfeiture action. Because the forfeiture action for the cash was not tried in conjunction with the criminal case, the Second Appellate District court ruled in 2009 the state could not keep the money.

If you think Cardan was happy just to get his money back, think again.

The California Health and Safety Code provides that a seizing agency must preserve the value of seized property. In the case of seized funds, that means placing the funds in an interest bearing account.

Cardan argued that he should have received the principal, plus seven percent interest, (California’s constitutional rate of interest). The Second Appellate District denied his request. According to the appellate court, Cardan was only entitled to the return of the funds plus the interest actually earned by the funds.

Asset seizure is not exactly a path to riches, and it’s not the best way to get an optimized interest rate. If your client wins an asset forfeiture proceeding, it’s unlikely that he will receive more than the actual interest earned on his money while it was under the state’s control.

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