Indiana Supreme Court justices

The justices of the Indiana Supreme Court are, from left, Mark Massa; Steven David; Chief Justice Loretta Rush; Christopher Goff; and Geoffrey Slaughter, a Crown Point native.

INDIANAPOLIS — The Indiana Supreme Court heard oral arguments Thursday over how to distribute proceeds from the sale of property seized by the government due to its connection to criminal activity.

Six Marion County taxpayers asked the state's high court to end a decades-old practice that allows Indiana police and prosecutors to divert for "expenses" some or all of the money they collect through civil forfeitures — a system that critics call "policing for profit."

Their attorney, Samuel Gedge, argued to the five justices that the Indiana Constitution unambiguously requires "all forfeitures which may accrue" be deposited exclusively in the Common School Fund that provides loans to school districts for building safety upgrades, technology purchases or other urgent needs.

Records show not one cent of the $17.5 million seized between 2003 and 2017 through civil forfeiture in Marion County, which includes Indianapolis, was paid to the Common School Fund.

Instead, the money was entirely retained and divvied up by police (70 percent) and prosecutors (30 percent).

"(The Constitution) should be read to mean what it says: All forfeitures which may accrue have to go to the school fund. All means all," Gedge said.

In response, Donald Morgan, chief litigation counsel for the city of Indianapolis, argued that provision of the Constitution only applies to forfeiture revenue accrued by the state.

He said because localities are not the state — notwithstanding the fact that they are established as political subdivisions of the state — cities and counties do not have to send their forfeiture receipts to the Common School Fund.

"Nothing in the Constitution requires forfeitures to accrue to the state. It just says that if they do there's only one state fund they can go in," Morgan said.

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Questions from the justices focused on whether the plaintiffs had standing to challenge Indiana's civil forfeiture statute, which was rewritten earlier this year to require up to 10 percent of all forfeitures be paid to the Common School Fund.

The justices also wondered what the practical result might be if they rule that all civil forfeitures, at every level of government, must be deposited only in the school fund.

Justice Geoffrey Slaughter, a Crown Point native, suggested the Common School Fund might end up a loser in that instance if police and prosecutors no longer pursue civil forfeitures since they're not getting a cut of the revenue.

"Ten percent of something, isn't that better than 100 percent of nothing?" Slaughter asked.

Gedge said he doubts law enforcement will entirely give up on civil forfeitures just because the revenue is going to Indiana schools.

"Most police work and most prosecutorial activity operates without the agencies having to self-finance through seizing property, and ruling for the taxpayers here would simply make sure that forfeitures proceed the way that all other law enforcement activity proceeds," Gedge said.

A ruling by the Indiana Supreme Court is expected early next year.

On Nov. 28, the U.S. Supreme Court will hear oral arguments in a separate Indiana civil forfeiture case looking at whether the state violated the constitutional prohibition on excessive fines by seeking to seize a drug dealer's $42,000 Land Rover in connection with a crime whose maximum fine was $10,000.

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