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Asset Forfeiture in Drug Cases is Hurting Investment in the Inner Cities

One of our readers sent in the following observations about asset forfeiture and its impact on investing (and consequently economic development) in neighborhoods that are perceived to have illegal drug problems. (Forfeiture is not solely limited to drug cases, but drugs are the mainstay.)

I am in the real estate investment business. Increasingly I find investors staying away from investing in rental properties and neighborhoods perceived to have illegal drug problems. Investors more frequently state police can too easily forfeit their real estate because of one tenant's illegal activity at a rental property, e.g., selling drugs, even when it is unknown to the owner. Consequently investors' fears of forfeiture are depressing property values in certain neighborhoods and cities, driving downward the property tax base needed for tax revenues to support the infrastructure of the community.

Consider: As governments more and more force landlords to act as attorney generals policing the lives of their tenants, and hold landlords accountable to police for not stopping their tenants from committing unknown or foreseen illegal acts, more investors say, "who needs this!"

Constant police raids in certain neighborhoods may actually result in a financial net loss to a community where investors retreat, causing assessed property values and property taxes to decline. There is little incentive for investors to spend money upgrading rental property in neighborhoods where drug problems exist if the police are targeting rental property for asset forfeiture.

I think that pretty much speaks for itself. But it would be a shame to stop there. So, a few links:

  • click here to read how the Fulton County (Atlanta, GA) DA's office spent forfeiture funds on banquets and balloons and a superman costume;

  • click here to read about the Austin, Texas police department's criminal inquiry into possible misuse of forfeiture funds; and
  • click here for a recent report over what is basically an act of theft via forfeiture committed by New Mexico police. (Make them stop, Gov. Richardson!)

Read our asset forfeiture reporting on an ongoing basis here, or subscribe to it by RSS here. And of course, check out the organization Forfeiture Endangers American Rights (FEAR).

Drug War Issues Asset Forfeiture

Chasing the Wrong Criminals

In Knoxville TN, a couple (The Wests, I believe) who have been responsible for keeping the momentum (and funds) behind the revitalization of the downtown area were arrested for marijuana trafficking and money laundering. They own several local businesses that bring in a LOT of tax revenue for the city. Talk about shooting yourself in the foot!

Glad to know that the state that's the meth capital of the country, we wasted that drug policy enforcement money & effort to bust these guys... clearly a MAJOR THREAT to society. I know I'll sleep easier.

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Re:Asset Forfeiture in Drug Cases is Hurting Investment

One of the depressing property values of investors in inner cities is that their fears of forfeiture once they establish their businesses into a place where there is an illegal affair particularly drug war. It would be a very unpleasant place for them. But, how about the economic state of that said city or community? Property tax goes to help the government needed for the infrastructures and services provided for the people itself. Community needs good investors who would help their place save from economic recession. The world's most successful investor or all time, as an example, Warren Buffett, chairman of the Berkshire Hathaway group, has been under fire of late. I say this is possibly due to a case of sour grapes that he's rich, which makes him a bigger target during a recession. He will never need a quick payday loan, despite losing $25 billion over the last year. He lost money, after nearly 20 years of unfettered profit. However, he still has almost $40 billion in the bank – which still makes Warren Buffett quite the success.

Asset that you had invested

Asset that you had invested for a long time which could suddenly be forfeited is quite disappointing.Anyway if you don't want your asset to be forfeited by banks or any other financial institution well I guess it's about time to ask for some help with Financial Accounting Standards Board or FASB.Essentially, they are making it acceptable for companies heavily invested in the questionable asset to write them off as having long-term value, and get cash advances for them, but in reality they are toxic mortgage assets.Written off is to charge an asset amount to expense or loss, in order to reduce the value of that asset and one's earnings. Basically, what this boils down to is that companies that got bad investments (because they didn't want to do something traditional, like sell something to customers that want what they sell) get to fix their books so that what is known to be bad is good.

If you plan to invest.......

If you plan to invest large amounts of money in a small business, you should consider investing smaller amounts in several small businesses. Business investments are part of the backbone of American commerce. Good business investments are how the greatest of business pioneers such as Carnegie, Vanderbilt, and Rockefeller built their empires. Installment loans, from banks or investors, are often how small business outfits pursue business growth and expand their reach, and therefore, revenue potential. Investors are free to structure the loan, so that cash is dispensed in the best way to aid the business, and also receive payments, and business owners looking for investors can also find people that have compatible visions. All mega firms started out as small shops, looking for cash advances as business investments at one point or another.

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