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NOT ALL ASSET PROTECTION WORKS. 

BE CAREFUL OF WHAT YOU USE!

 

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO

                                                In re: ASHELY ALBRIGHT

SSN 000-56-9118, Debtor, Case No. 01-11367
ABC, Chapter No. 7, 2003 Bankr. LEXIS 291

April 4, 2003, Decided

DISPOSITION:

Trustee's Motion to appoint Bob Karls as real estate broker for the Trustee granted.

COUNSEL:

For Ashley Albright, Debtor: James H. Hahn, Greenwood Village, CO.
Harvey Sender, Trustee: Charles F. McVay, Denver, CO.

JUDGES:

A. Bruce Campbell, U.S. Bankruptcy Judge.

OPINION BY:

A. Bruce Campbell, U.S. Bankruptcy Judge.

OPINION:

OPINION AND ORDER ON MOTION TO ALLOW TRUSTEE
TO TAKE ANY AND ALL NECESSARY ACTIONS TO LIQUIDATE PROPERTY
OWNED BY WESTERN BLUE SKY LLC

THIS MATTER is before the Court on the (1) Motion to Allow Trustee to Take Any and All Necessary Actions to Liquidate Property Owned by Western Blue Sky LLC ("Motion to Liquidate"); (2) Motion to Appoint and Compensate Bob Karls as Real Estate Broker to the Trustee; and (3) Debtor's Response to Trustee's Motion to Retain Realtor and Liquidate LLC Property. Following a hearing on February 4, 2003, the parties agreed to submit the matter on briefs.

Ashley Albright, the debtor in this Chapter 7 case ("Debtor"), is the sole member and manager of a Colorado limited liability company named Western Blue Sky LLC. n1 The LLC owns certain real property located in Saguache County, Colorado (the "Real Property"). The LLC is not a debtor in bankruptcy.

n1 The Debtor initiated this case on February 9, 2001, under Chapter 13. It was converted to Chapter 7 by the Debtor on July 19, 2001.

The Chapter 7 Trustee contends that because the Debtor was the sole member and manager of the LLC at the time she filed bankruptcy, he now controls the LLC and he may cause the LLC to sell the Real Property and distribute the net sales proceeds to his bankruptcy estate. n2 The Debtor maintains that, at best, the Trustee is entitled to a charging order n3 and cannot assume management of the LLC or cause the LLC to sell the Real Property.

n2 If the Trustee is entitled to control of the LLC, he could, presumably, as an alternative, dissolve the LLC, distribute its property to his bankruptcy estate, and then sell the property himself. The Trustee has not asserted any alter ego theory and has not attempted to pierce the veil of the LLC.

n3 The Debtor further asserts that because the LLC is "non-profit" pursuant to its operating agreement, no distribution of "profit" will ever be made and thus the value of this interest is zero. This argument erroneously assumes that a member of a Colorado limited liability company's distribution rights are limited only to "profits." They are not. Colo. Rev. Stat. 7-80-102(10)("Membership interest means a member's share of the profits and losses of a limited liability company and the right to receive distributions of such company's assets.") See also Colo. Rev. Stat. 7-80-702(1).

Pursuant to the Colorado limited liability company statute, the Debtor's membership interest constitutes the personal property of the member. Upon the Debtor's bankruptcy filing, she effectively transferred her membership interest to the estate. See 11 U.S.C. 541(a). n4 Because there are no other members in the LLC, the entire membership interest passed to the bankruptcy estate, and the Trustee has become a "substituted member." n5

n4 11 U.S.C. 541(a)(1) provides, in relevant part: "The commencement of a case ... creates an estate. Such estate is comprised of ... all legal or equitable interests of the debtor in property as of the commencement of the case."

n5 Colo. Rev. Stat. 7-80-702 provides (emphasis added):

(1) The interest of each member in a limited liability company constitutes the personal property of the member and may be transferred or assigned. However, if all of the other members of the limited liability company other than the member proposing to dispose of his or its interest do not approve of the proposed transfer or assignment by unanimous written consent, the transferee of the member's interest shall have no right to participate in the management of the business and affairs of the limited liability company or to become a member. The transferee shall only be entitled to receive the share of profits or other compensation by way of income and the return of contributions to which that member would otherwise be entitled.

(2) A substituted member is a person admitted to all the rights of a member who has died or has assigned his interest in a limited liability company with the approval of all the members of the limited liability company by unanimous written consent. The substituted member has all the rights and powers and is subject to all the restrictions and liabilities of his assignor; except that the substitution of the assignee does not release the assignor from liability to the limited liability company under section 7-80-502.

Section 7-80-702 of the Limited Liability Company Act requires the unanimous consent of "other members" in order to allow a transferee to participate in the management of the LLC. n6 Because there are no other members in the LLC, no written unanimous approval of the transfer was necessary. Consequently, the Debtor's bankruptcy filing effectively assigned her entire membership interest in the LLC to the bankruptcy estate, and the Trustee obtained all her rights, including the right to control the management of the LLC. n7

n6 This reading of 7-80-702 is reinforced in Colo. Rev. Stat. 7-80-108(3)(a). Section 108 sets forth the effect of an operating agreement and what provisions are non-waivable. Section 108(3) states that "unless contained in a written operating agreement or other writing approved in accordance with a written operating agreement, no operating agreement may [...] vary the requirement under section 7-80-702(1) that, if all of the other members of the limited liability company other than the member proposing to dispose of the member's interest do not approve of the proposed transfer or assignment by unanimous written consent, the transferee of the member's interest shall have no right to participate in the management of the business and affairs of the limited liability company or to become a member." Colo. Rev. Stat. 7-80-108(3)(a). The clause "other than the member proposing to dispose of the member's interest" confirms that the "other members" identified in 7-80-702 does not include the transferee..

n7 Under Colo. Rev. Stat. 7-80-702, supra, the result would be different if there were other non-debtor members in the LLC. Where a single member files bankruptcy while the other members of a multi-member LLC do not, and where the non-debtor members do not consent to a substitute member status for a member interest transferee, the bankruptcy estate is only entitled to receive the share of profits or other compensation by way of income and the return of the contributions to which that member would otherwise be entitled. Thus, Mountain States Bank v. Irwin, 809 P.2d 1113 (Colo. App. 1991); Union Colony Bank v. United Bank of Greeley National Association, 832 P.2d 1112 (Colo. App. 1992) and Prefer v. Pharmnetrx LLC, 18 P.3d 844 (Colo.. App. 2000), cited by the parties, are distinguishable as they relate to multi-partner or member entities.

The Debtor argues that the Trustee acts merely for her creditors and is only entitled to a charging order against distributions made on account of her LLC member interest. n8 However, the charging order, as set forth in Section 703 of the Colorado Limited Liability Company Act, exists to protect other members of an LLC from having involuntarily to share governance responsibilities with someone they did not choose, or from having to accept a creditor of another member as a co-manager. A charging order protects the autonomy of the original members, and their ability to manage their own enterprise. In a single-member entity, there are no non-debtor members to protect. The charging order limitation serves no purpose in a single member limited liability company, because there are no other parties' interests affected. n9

n8 Colo. Rev. Stat. 7-80-703 provides:
Rights of creditor against a member. On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest thereon and may then or later appoint a receiver of the member's share of the profits and of any other money due or to become due to the member in respect of the limited liability company and make all other orders, directions, accounts, and inquiries which the debtor member might have made, or which the circumstances of the case may require. To the extent so charged, except as provided in this section, the judgment creditor has only the rights of an assignee of the membership interest. The membership interest charged may be redeemed at any time before foreclosure. If the sale is directed by the court, the membership may be purchased without causing a dissolution with separate property by any one or more of the members. With the consent of all members whose membership interests are not being charged or sold, the membership may be purchased without causing a dissolution with property of the limited liability company. This article shall not deprive any member of the benefit of any exemption laws applicable to the member's membership interest.

n9 The harder question would involve an LLC where one member effectively controls and dominates the membership and management of an LLC that also involves a passive member with a minimal interest. If the dominant member files bankruptcy, would a trustee obtain the right to govern the LLC? Pursuant to Colo. Rev. Stat. 7-80-702, if the non-debtor member did not consent, even if she held only an infinitesimal interest, the answer would be no. The Trustee would only be entitled to a share of distributions, and would have no role in the voting or governance of the company. Notwithstanding this limitation, 7-80-702 does not create an asset shelter for clever debtors. To the extent a debtor intends to hinder, delay or defraud creditors through a multi-member LLC with "peppercorn" co-members, bankruptcy avoidance provisions and fraudulent transfer law would provide creditors or a bankruptcy trustee with recourse. 11 U.S.C. 544(b)(1) and 548(a).

The Colorado limited liability company statute provides that the members, including the sole member of a single member limited liability company, have the power to elect and change managers. n10 Because the Trustee became the sole member of Western Blue Sky LLC upon the Debtor's bankruptcy filing, the Trustee now controls, directly or indirectly, all governance of that entity, including decisions regarding liquidation of the entity's assets.

n10 See Colo. Rev. Stat. 7-80-402 and 7-80-405.

Because of the Court's ruling herein, the Debtor may be entitled to a claim for her contributions made to preserve an asset of this bankruptcy estate based on post-petition mortgage payments on the Real Property. The parties were asked to brief the issue, but the Debtor has not formally asserted such a claim. Therefore, the Court does not rule on the issue at this time.

Based on the foregoing, it is hereby:

ORDERED that the Trustee, as sole member, controls the Western Blue Sky LLC and may cause the LLC to sell its property and distribute net proceeds to his estate. Alternatively, the Trustee may elect to distribute the LLC's property to [*9] the bankruptcy estate, and, in turn, liquidate that property himself; and it is

FURTHER ORDERED that the Trustee's Motion to appoint Bob Karls as real estate broker for the Trustee is hereby granted; and it is

FURTHER ORDERED that the Debtor may file a claim, subject to objection in the regular course of this case, for her expenditures made to preserve an asset of this estate based on post-petition mortgage or other payments made by the Debtor.

DATED: 4-4-03

BY THE COURT:

A. Bruce Campbell
U.S. Bankruptcy Judge

Federal Liens Now Threaten Marital Property

by Raymond J. Bowie

 

Will Rogers reputedly said of legislatures that no one's life or property is safe when they are in session. The same, unfortunately, may sometimes also be said about the nation's judiciary. Case in point: Even while the nation's public policy focuses on bolstering the institution of marriage, the U.S. Supreme Court has just take a judicial swipe at the very legal foundations of marital property.

 

In a recent decision of major import nationwide, the nation's highest court struck down traditional common law protections afforded real estate owned jointly by husband and wife.

 

In its decision April 17, 2002 in the case of United States v. Craft, the Supreme Court ruled that even when spouses hold title to their own home as 'tenants by the entireties' an IRS tax lien against just the husband would attach to the property they own jointly, giving the IRS power to seize half the marital residence over the wife's objection.

 

This decision overturned a venerable common law doctrine, cherished in many states, that when a married couple hold title to real property, they may enjoy a unique status called an 'estate by the entireties' in which the property is absolutely beyond the reach of any of their individual creditors including government agencies.

 

Prior to the April 17 decision of the Supreme Court, both federal and state courts had consistently ruled that real property owned jointly by spouses was protected against government liens to the same extent as private liens or judgments. Various court decisions have held such 'entireties' property to be beyond the reach of either private judgments, federal or state tax liens, criminal fines or penalties, or other government actions levied against only on e of the spouses individually.

 

Then came the case of U.S. vs. Craft before the Supreme Court. In this case, Don and Sandra Craft owned property in Michigan as tenants by the entireties. Mr. Craft failed to file income tax returns for seven years, and the IRS assessed a lien against him for $482,446 in back taxes. Mr. and Mrs. Craft then jointly deeded the entireties property to Mrs. Craft, who was not liable for any of the taxes. But when Mrs. Craft attempted to sell her property after her husband's death, the IRS asserted that its lien had attached to the entireties property at the time when both spouses owned it, and demanded half of her sales proceeds to pay Mr. craft's tax liability. Mrs. Craft had no income or inheritance from her husband other than the home, and needed all the proceeds to secure her retirement.

 

In upholding the IRS claim, the Supreme Court said that as a matter of federal law, each individual spouse is deemed to own a separate 50% interest in entireties property that can be separately reached by federal government agencies with lien powers.

 

The tremors of this precedent-shattering decisions are just now being felt throughout the country.

 

To appreciate better the consequences of the court's ruling, it helps to understand the traditional legal doctrine of tenants by the entireties, at least as it had been understood in this country prior to the Craft decision.

 

In many states, the law automatically creates an estate by the entirety any time property is conveyed to spouses jointly. The deed does not even have to recite that they are husband and wife, or use the words 'tenants by the entireties', although most deeds in fact do. The mere fact that they are married to one another is sufficient.

 

Over the centuries, as part of the social compact to protect the interests of wives and children in the marital home , the common law developed a legal doctrine called the 'estate by the entirety' to protect real property conveyed jointly to a husband and wife. Entirety is the concept that legally, the two spouses own the property as only one entity holding one single indivisible interest in the property. In a way, entireties ownership makes the two spouses into a single entity, almost like a corporation, for purposes of holding title to the property.

 

This means that neither of the spouses acting alone, nor any of their individual creditors, nor any court or government could divide entireties property into two separate individual ownership interests. Only both of the spouses acting together can do anything with or to the entireties property. Neither one of the spouses alone can sell, mortgage, lease, encumber or do anything with entireties property without the joiner of the other spouse.

 

By the same token, creditors to whom only one of the spouses might owe an obligation have not traditionally been able to reach entireties property to satisfy their judgments, claims or liens. Only if the married couple were jointly obligated to the same creditor on the same obligation might their common creditor reach their property.

 

It was this centuries-old legal doctrine that was struck down by the Supreme Court in holding that a federal lien against one individual spouse can indeed attach to half of any property owned jointly by both spouses as tenants by the entireties. In effect, what our highest court did was, for the first time, split an entireties property into two separate ownership interests for purposes of enforcing federal government liens.

 

In its ruling, the court brushed aside "the state law fiction that a tenant by the entireties has no separate interest in entireties property" and held that under federal law, each spouse possessed "individual rights in the estate sufficient to constitute property or rights to property for purposes of the federal tax lien statute."

 

In the aftermath of the Craft decision, entireties property will no longer be entitled to absolute protection from any and all liens incurred by one spouse but not the other. For liens arising under federal law in favor of federal agencies, such liens will now attach to a spouse's interest even in entireties property. 

 

One needs to realize the constantly increasing scope of federal government power in citizens' lives and the lien rights afforded various federal agencies under federal laws. The Supreme Court's ruling will subject entireties property not only to IRS tax liens but also to myriad other liens that can be imposed by other federal agencies for environmental hazards, statutory restitution, improper business practices and federal criminal fines and forfeitures.

 

And considering that federal tax rules now comprise 45,662 incomprehensible pages, increasing in size 74% over the last 16 years with some 7,000 tax code changes over those years, few taxpayers can disregard entirely the prospect of encountering an IRS tax lien sometime over the course of their lives.

 

One of the interesting questions the Supreme Court did NOT answer in the Craft decision was, however, what does the IRS get for its lien on half of an entireties property?

 

This issue was remanded for determination in lower federal courts. Can the IRS force the sale of the property and keep half the proceeds? Or does the tax lien lie dormant until the spouses sell the property themselves?  Or until the innocent wife dies the husband owing the taxes becomes sole owner of the property?

 


 

THE DOMESTIC SECURITY ENHANCEMENT
ACT OF 2003


A PLAIN ANALYSIS

By Greg Kay

I have broken the 33 page summary/analysis down, section by section,  addressing the parts that might pertain to us, in plain English to make it easier to look up the parts of concern. This will make it
easier to evaluate the whole bill, which can be read at http://www.public-i.org/dtaweb/report.asp?
ReportID=502&L1=10&L2=10&L3=0&L4=0&L5=0 .

Please remember that the information here is ONLY from the analysis; the language of the bill itself will undoubtedly contain more surprises.

There's some scary stuff here, folks! FISA, by the way, is another federal alphabet an acronym for Foreign Intelligence Surveillance Act.

SECTION 101: All persons, including unaffiliated groups or individuals, who engage in "international terrorism", will be designated "a foreign power" eliminating any rights that they might have.

SECTION 102: Any person who engages in the legal collection (repealing the current requirement of the collection mode being illegal) of information that may be used by another country, including US reporters, could be deemed "agents of a foreign power", even if the information was used or intended to be used as a standard news media. What information gathered here is not used in foreign
news media?

SECTION 103: This would extend the government's right to unfettered (Without FISA court approval) searches and taps for a period of 15 days after a declaration of war by congress to also be invoked after Congressional authorization of the use of force or an attack, while SECTION 104 extends the term from 15 days to one year, and expands the scope of the surveillance.

SECTION 105: This would make it easier for FISA collected information to be made available to law enforcement.

SECTION 106: Gives immunity to agents who engage in searches without court approval.

SECTION 107: Eliminates the tighter restrictions on conducting investigations against US citizens than against foreign nationals in the US.

SECTION 109: Gives the FISA court the same powers as a regular court to force cooperation.

SECTION 110: To prevent sun-setting of certain aspects of the USA Patriot Act.

SECTION 111: Removing different rules between foreign nationals and US citizens in terrorism investigations.

SECTION 122: Allows electronic surveillance and monitoring without a court order in `emergencies' and makes it easier to allow foreign law enforcement requests for investigations in the US to be carried out.

SECTION 123: Extends tapping and surveillance and further minimizes judicial oversight and involvement.

SECTION 124: Extends a single search's legality over all functions of multi-function devices.

SECTION 125: Expands the types of crimes for which a federal judge in one district may issue a nationwide warrant valid in all areas.

SECTION 126: Allow Federal agents to obtain anyone's credit report, consumer records, and other financial records on request, and prevent the reporting agency from revealing to their customer that their records had been accessed.

SECTION 128: Allow the Justice Department, independent of a judge, to issue subpoenas.

SECTION 129: Would make compliance with the above subpoenas and other requests for records mandatory, and would make refusal or disclosure of the demand a felony punishable by 5 years in prison.

SECTION 201: Allows the government to hold people "detained in the investigation of terrorism" secretly and, apparently, indefinitely.

SECTION 202: Limits the safety information presented to the public on the potential hazards of chemical spills, releases, etc.

SECTION 203: Eliminates public release of the layout of government buildings.

SECTION 204: Makes it easier for the government to present secret, classified information to the court alone.

SECTION 205: Eliminates tax assessments on the value of private security systems and measures used by federal employees and officials for their protection. No such exemption extends to anyone else.

SECTION 206: Would impose on counsel contacted by those subpoenaed by a Grand Jury the same demand or secrecy that is imposed on those who
are actually subpoenaed.

SECTION 302: Would establish a DNA database, the identifying information to be taken from the following people: persons SUSPECTED of conspiring, attempting, or engaging in terrorism; enemy combatants and POW's; persons suspected of being members of a terrorist organization; aliens engaged in activity that endangers national security.

SECTION 303: Would require all law enforcement agencies to provide the above identifying data to the attorney general, would allow him to establish a database and either use the information or share it with other law enforcement agencies, specifically including foreign ones.

SECTION 311: Allows the sharing of credit, consumer, and financial information with foreign governments.

SECTION 312: Would make void most consent decrees issued by State and local governments that protect against unreasonable search and
seizure, thus allowing State and local law enforcement to operate under federal regulations rather than the restrictions of their own
localities, EXCEPT those consent decrees based on accusations of racism or racial profiling.

SECTION 313: Protects businesses and personnel from civil liability for voluntarily sharing information with federal law enforcement.

SECTION 321: Would eliminate the treaty clause and allow the federal government to engage in an investigation in the US on the request of any foreign power.

SECTION 322: Would allow, at the will of the attorney general and secretary of state, the extradition of suspects to a foreign country
for crimes not covered by extradition treaties, or even to those countries with whom we have no extradition treaty at all.

SECTION 401: Would make it a crime to "knowingly convey false or misleading information, where such information may be believed" and increases penalties for terrorism hoaxes.

SECTION 402: Provides definition for the material support of terrorism to include materials, instruction or teaching, or personnel to a terrorist organization.

SECTION 403: Extends federal jurisdiction over Weapons of Mass Destruction laws to cover virtually everything, including property within the US owned, leased or used by a foreign government; if any
form of interstate or foreign commerce is used in setting up the attack, if the property attacked relates to or is used in any activity that affects interstate or foreign commerce, or if the perpetrator travels or causes another to travel in interstate or foreign commerce in furtherance of the crime.

SECTION 404: Any person using encryption during or related to a federal crime will be sentenced to an extra 5 years in prison.

SECTION 405: Automatically denies bail to anyone charged with terrorism related activities.

SECTION 407: Extends interstate or foreign commerce jurisdiction similar to that described in SECTION 403 to virtually all terrorism-related crimes.

SECTION 408:  Allows for the placing of convicts on parole or probation for life, and eliminates re-sentencing violators for anything less than the original sentence. These provisions also apply
to computer virus makers and those who have donated money to terrorist groups.

SECTION 409: Any person suspected (not necessarily charged) of being
a terrorist-related threat may have his pilot's license suspended or revoked.

SECTION 410: Provides no statute of limitations for terrorist crimes, including cyber-terrorism or donating money to terrorist groups.

SECTION 411: Increases number of acts subject to the death penalty.

SECTION 421: Increases penalties for "financing terrorism" or for "trading with prohibited persons" to $50,000 per offence.

SECTION 422: Makes it easier to charge people with money laundering.

SECTION 423: Removes tax-exempt status from terrorist organizations (?).

SECTION 424: Anyone convicted of terrorism may be denied federal benefits.

SECTION 425: Defines financing terrorism.

SECTION 426: Adds RICO procedure to terrorist financing.

SECTION 427: Allows for the seizure of assets of persons committing or planning terrorism.

SECTION 428: More asset forfeiture.

SECTION 501: Americans can lose their citizenship if they serve in or provide material support to any organization designated as a terrorist group, and that the intent to relinquish nationality can be inferred from conduct.

SECTION 502: Allows increased penalties for immigration related crimes.

SECTION 503: Allows the Attorney General to bar admittance to or remove from the US "individuals" (aliens?) that he has reason to believe would be a danger to national security.

SECTION 504: Allows for the attorney general to automatically remove criminal aliens who have been convicted of certain crimes, expressly included among which is draft evasion.


"When the government fears the people you have Liberty. When the people fear the government  you have Tyranny." -Thomas Jefferson

 

 


 

Analysts worry about Patriot Act II

By Christian Bourge
UPI Think Tanks Correspondent
From the Think Tanks & Research Desk
Published 3/10/2003 7:54 PM
View printer-friendly version
 

WASHINGTON, March 10 (UPI) -- Think tank experts are concerned about indications that the administration of President George W. Bush wants to broaden government powers of domestic intelligence gathering, surveillance, and prosecution beyond the expanded powers granted last year by the USA Patriot Act.

Their worries about further restrictions being placed on constitutionally guaranteed rights in the name of national security were sparked by a draft bill leaked from the Justice Department last month, which detailed plans for a bold and sweeping expansion of the controversial law signed into law in the aftermath of the Sept. 11, 2001, terrorist attacks.

"I am appalled by the draft," Robert Higgs, a senior fellow in political economy at the Independent Institute told United Press International.

"I thought the Patriot Act was atrocious, and adding to it only makes the situation worse," he said. "It (the draft legislation) is the potential embodiment in law of a thorough, ongoing police state apparatus."

The USA Patriot Act gave federal law enforcement officials much broader authority to conduct electronic surveillance and wiretaps, and tightened federal oversight of financial and banking activities. Among the law's many provisions were changes to the Foreign Intelligence Surveillance Act that allow the FBI to share information gathered in terror investigations with local law enforcement -- a reversal of decades of practice.

The leaked draft measure -- "The Domestic Security Enhancement Act of 2003" -- is dated Jan. 9 and has earned the nickname "Patriot Act II."

Although Attorney General John Ashcroft said last week that a final bill has not been developed, the very existence of the Patriot Act II draft has raised red flags. The most contentious provisions in the draft would allow the government to collect DNA from suspected terrorists or other individuals involved in terror investigations, and the power to revoke the citizenship of, and deport, naturalized citizens suspected of terror activities or of providing "material support" to terrorist groups.

Higgs said the denaturalization and deportation provisions are the most egregious components of the draft because they would allow the removal of citizenship without the individual being convicted of a crime, and under terms so broad that almost anything could be defined as an applicable offense.

"In my mind, if that doesn't absolutely epitomize totalitarianism I would like to what does," said Higgs. "They can categorize the most innocent action -- from signing a petition or making a chartable contribution -- as an act of terrorism."

Timothy Lynch, director of the Project on Criminal Justice at the libertarian Cato Institute, said that the citizenship-stripping provisions are important because citizenship has become a determining factor in Justice Department decisions about whether to classify a terror suspect as an enemy combatant.

This classification determines whether someone is given access to counsel and other legal protections afforded by Constitution; is kept in a military brigade and tried in military court; or even sent to the government's overseas holding camps for an indefinite period without prosecution.

"If the government can strip people of their citizenship before they are convicted of a crime, they might do it to send people outside of the civilian court system," said Lynch.

However, there are policy analysts who do not find the Patriot Act II draft problematic.

Michael Scardaville, a policy analyst for homeland security at the conservative Heritage Foundation, said that the citizenship provisions would only codify that those citizens who take up arms against the United States as terrorists would be treated as traitors.

"I don't think you have anyone who disagrees that if someone decided to fight on behalf of (Iraqi leader) Saddam Hussein, or for the former Soviet Union in the Cold War, they no longer consider themselves an American citizen," Scardaville told UPI.

Other problematic provisions in the draft include a measure allowing federal investigators to conduct wiretaps without a court order for 15 days following an attack on the United States, or after congressional approval of the use of military force.

The draft bill would give the government the power to secretly detain citizens and to strictly limit those subpoenaed by a grand jury from speaking about their testimony publicly. The draft bill would also eliminate the 2005 expiration of key intelligence powers provided under the Patriot Act. These sunset provisions were a concession to critics of the bill in Congress.

It addition, the new bill would further ease restrictions on the use of secret evidence in the prosecution of terror cases, and further expand authorization periods for secret government Internet surveillance and wiretaps.

Lynch also said other provisions -- such as one that would immunize federal agents from prosecution when they engage in illegal surveillance acts, and another that would allow for the collection of DNA from anyone connected to an investigation -- are particularly troublesome.

"I think we seem to be slipping into a situation where the government is going to want a comprehensive DNA database on just about everybody," he said. "It is not called for specifically in Patriot II but it seems to be another step toward the government wanting to have a DNA sample from everybody."

Scardaville said that the draft should not be eliciting the level of concern raised by civil libertarians, because it is simply a review of the authority granted to the Justice Department under the Patriot Act. He said that such reviews are important because the United States must continually adapt to the challenges it faces following Sept. 11. And, he said, it remains only a draft.

"We have to evaluate which laws are appropriate and adjust to the paradigm shift," he said. "We did this after World War II and in the years between the two world wars. We did it after the Civil War."

Scardaville said that a provision that places terrorist organizations on a par with foreign governments in the U.S. legal code exemplifies how the Justice Department is only attempting to fix holes in existing law.

He added that a provision that would make information about possible terrorist targets --such as chemical plants -- available solely in read-only format on Web terminals in public reading rooms is an example of where the draft strikes a good balance between the need for public information about such facilities, and national security controls on potentially dangerous information.

Lynch said the notion that the draft was merely a review does not hold water.

"I don't see anything about repealing or surrendering any power that was conveyed under the Patriot Act," he said. "In fact it (the draft) seems to be ideas for accruing more power."

Higgs also said that Patriot Act has shown that limiting civil liberties does little to promote domestic security.

"Although it (the Patriot Act) has had the result of setting aside many established Fourth Amendment protections, it has not played an important role in the government apprehension of terrorists or prevention of terrorists from operating in this country," said Higgs.

Lynch added that although the draft bill has little chance of passage if introduced on Capitol Hill in its current form, he fears such a measure will be promoted by the administration in the event of another major terrorist attack on U.S. soil.

"I think if these provisions are debated in a calm, reflective atmosphere most of them will not be enacted into law," he said. "But I am afraid that if we are in the immediate aftermath of an attack, Congress will not give these provisions the scrutiny they deserve, and they might rush into it like they did with the Patriot Act."

Higgs echoed Lynch's concern.

"I can only hope people will wake up to what is happening," he said. "It seems to me that when we enacted the USA Patriot Act, the United States came closer to being a police state. If Patriot II is enacted we have kissed the Constitution goodbye."

Copyright 2001-2003 United Press International

 
 
 
 

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