Saginaw County Sheriff Office Civil Forfeiture Lawsuit

Gerald S. Ostipow, et al v William L. Federspiel, et al

Civil forfeiture (also known as Civil Asset Forfeiture) is when the government accuses the "property" of being criminal and seeks to deem the property forfeited to the government. Legal scholars, lawmakers, and watchdog groups (even of different political viewpoints) have questioned the legality of these procedures because owners of the property often have to prove their innocence rather than the government proving guilty. In other words, prosecutors can and do use civil forfeiture to take property without having to convict or even charge the property owners with any crime.

Even former public officials in Michigan involved in the civil forfeiture process have questioned its propriety:

from Michigan Capitol Confidential by the Mackinac Center for Public Policy

Local Police Department's New Revenue Scheme

The dirty little secret about civil forfeitures is that local police agencies in Michigan directly benefit from the assets they seize, as they typically retain the proceeds from forfeited property. The prosecutor, who acts as a civil attorney, also sometimes receives ten percent of proceeds. The temptation might be just too great for police departments with budget shortfalls:
    Police departments right now are looking for ways to generate revenue, and forfeiture is a way to offset the costs of doing business. You’ll find that departments are doing more forfeitures than they used to because they’ve got to — they’re running out of money and they’ve got to find it somewhere.
Saginaw County Sheriff William L. Federspiel has even based his reelection campaign on the very issue claiming it "saves" tax dollars:

Saginaw County sells such property via eBay as linked on the Sheriff Department's website. In other words, the Saginaw County Sheriff's Office is using proceeds from the sale of seized property on eBay to pay for their policing operations.

In short, the civil forfeiture laws enable local government and local officials to seize, assume ownership, and then sell private property by merely claiming that the property was involved in or was the proceeds of illegal activity. But how much seizing is occurring in Michigan?

Some Statistics

In the most recent 2015 Asset Forfeiture Report (covering asset forfeitures for 2014), state policing agencies reported seizing $20.4 million "from drug traffickers." Starting July 1, 2017, the Michigan State Police will be required to publish the most detailed reports online and to the Legislature as part of a set of reforms to the law signed by Governor Synder in 2015. Many have said these reform are just not enough.

A pending and yet to be fulfilled Freedom of Information Act request seeks to find out more about the Sheriff Office's practices.

Where's the Problem?

Problematically, civil forfeiture does not require the owner of the property to be convicted of a crime in order for assets to be transferred to the government. And if the government improperly seizes property, it is not required, under state law, to reimburse the innocent owner's incurred attorney fees in fighting to get their property back. Civil forfeiture seemingly is a good idea when valuable ill-obtained property is taken from an actual convicted drug dealer, but what if property is accidentially (or intentionally by rogue police officers) seized from innocent owners?

The Federal Lawsuit

On August 24, 2016, Gerald and Royetta Ostipow, having never been charged or convicted of any crime related to drugs, filed a federal lawsuit (with the help of their attorneys Philip L. Ellison of Outside Legal Counsel PLC and Matthew E. Gronda) against Sheriff William L. Federspiel, his department, and a number of unnamed sheriff deputies who sold the Ostipow's property without a proper and final determination of forfeitability. The lawsuit seeks damages in excess of one million dollars in compensatory, nominal, treble, and punitive damages, together with attorney fees and costs.

The Ostipow's Story

    In April 2008, sheriff deputies from the Saginaw County Sheriff's Office obtained search warrants to search the second house belonging to Gerald and Royetta Ostipow, an old farmhouse, located in neighboring Shiawassee County. Gerald and Royetta did not live in the farmhouse, but rather at their long-time home about a half-mile down the road.

    Gerald Ostipow and his wife purchased the farmhouse with money saved from Gerald's time working at General Motors. He was restoring the farmhouse as part of his retirement activities and was using the various outbuildings (typical in farming country) to store countless tools and equipment he had amassed throughout his lifetime. In addition to restoring this second house, Gerald was in the final stages of restoring a red 1965 Chevrolet Nova.

    It is unclear why the Saginaw County judges issued these warrants to Saginaw sheriff deputies rather than requiring these law enforcement officers to get their warrants from the Shiawassee County courts; nevertheless, these search warrants were executed. Marijuana plants and seeds were found in the farmhouse where their adult son was living. They have consistently denied having any knowledge of Steven's activities. Instead of only seizing the illegal plants and seeds, deputies seized essentially everything from the farmhouse, including, oddly, dozens of animal mounts being kept long-term at the farmhouse by Gerald because Royetta, his wife, simply didn't like these mounted animals in the main house.

    But that is not all the deputies seized. The deputies also went out to outbuildings of the farmhouse and seized all the equipment, deer blinds, hundreds of tools, and many other items which lacked any realistic connection to the pot plants and seeds of Steven's grow. They even seized the '65 Nova and the car trailer it was on.

    The deputies later that day obtained a second search warrant (again, from the Saginaw courts instead of the Shiawassee County courts) for the Ostipow's main house down the road in Shiawassee County. No drugs were found. However, again, the sheriff deputies seized everything they could including the money in Gerald's wallet. Despite the search warrants and state law requiring a detailed inventory tabulation, the later drafted reports lack any detail of the items taken. Instead, it listed merely "the contents" of the home--a tactic designed to thwart full knowledge of what was seized.

    In the weeks that followed, deputies from the Saginaw County Sheriff's Office would arrive, off duty, in their personal vehicles and would continue to take more items long after the completion of the execution of the search warrants. No inventory tabulation exists for these items taken and there appears to be no records of these "self-help" items being officially sold. (The federal lawsuit will seek to discover where these items went.)

    Acting as civil attorneys for the Saginaw County Sheriff and his department, the Saginaw County Prosecutor's Office initiated civil (not criminal) forfeiture proceedings. The case was spearheaded by Assistant Prosecuting Attorney George Best (now deceased). Initially, Best told the Ostipows to simply give him a list the things they wanted back and he would see what he could do; the Ostipows complied. Yet shockingly, after the deadline passed, Best tried to argue in court that the Ostipows had not used the correct legal procedure and could no longer contest the seizure of all the items taken. A Saginaw judge agreed, which was later overturned on appeal to the Michigan Court of Appeals. Best appealed the Court of Appeals' reversal to the state's highest court but it was rejected by the Michigan Supreme Court.

    On remand, the case was assigned to Judge James Borchard of the Saginaw County Circuit Court. At trial, Best had two main witnesses: Saginaw County Sheriff Deputy Nathan Van Tifflin and DEA Agent David McGovern. Both testified that they lacked any evidence of Gerald or Royetta Ostipow's involvement with Steven's drug activities. Judge Borchard ultimately ordered the return of most personal property but ruled the farmhouse and its contents (i.e. the animal mounts) were completely forfeited because Gerald and Royetta, as his parents, knew of their son's prior convictions and that he had a drug problem. Judge Borchard also surmised Gerald failed to inspect the farmhouse after a burglary or report the burglary to police. Gerald testified at trial that his son, Steven, told him of a break-in at the farmhouse but nothing was taken. As such, Gerald concluded there was no need to call the police. Prosecutor Best could not present any actual evidence or proof that the Ostipows knew of, benefitted from, or participated in their son's activities. The legal standard required to be proved by the prosecutor is "actual knowledge."

    On appeal, the Court of Appeals concluded that there was not enough evidence to deem Royetta's interest in the farmhouse forfeited, but concluded as to Gerald that when a person spends a significant amount of savings to purchase a nearby house, he has "a continuing interest in ensuring that the house remains in good condition and should investigate for damages of a secondary house" if informed of a burglary. The Court of Appeals concluded that when Gerald fixed the tornado doors damaged by the burglary, he neither investigated the residence for further damage nor reported the burglary to police, and such action was enough "circumstancial evidence" to show Gerald was aware that the farmhouse was used for illegal activity and wanted to avoid exposing the interior to himself or law enforcement.

    All told, the Court of Appeals required the repayment of Royetta's ownership portion in the farmhouse, but Gerald's portional ownership of the farmhouse was forfeited. Again, the prosecutor appealed to the Supreme Court and again the appeal was rejected.

    After the case returned to the trial court months later, a final judgment was entered determining that Royetta's portion of the farmhouse and most of the personal property seized was improperly taken and was ordered non-forfeitable, including the 1965 Nova. The Ostipows should have received most of their property back.

    However, the injury inflicted upon the Ostipows was not complete. After the final judgment was entered, it was discovered that all of the Ostipow's property had been sold by Sheriff Federspiel (he himself having signed the vehicle title transfer document for the Nova) and members of his department before their was a final determination about forfeitability of items seized and held. After eight years of legal fighting to get their property back, Sheriff Federspiel's action of believing his department was going to ultimately "win" the case (and perhaps why two appeals to the Supreme Court were taken) proved false and the Ostipows have now lost everything with no hopes of getting back the items they spent a lifetime amassing with hard work and long hours.

For Editors and Reporters:

Other Related Stories in Michigan
All media interviews related to this case are being exclusively coordinated through Outside Legal Counsel.

Philip L. Ellison
(989) 642-0055

Federal Lawsuit: Sheriff Illegally Sells and Keeps Proceeds From Improperly Seized Property
Outside Legal Counsel PLC, together in concert with attorney Matthew E. Gronda, filed a federal lawsuit against Saginaw County Sheriff William Federspiel, ten unnamed deputies, and the sheriff's office challenging the controversal use of civil asset forfeitures.
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