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October 26, 2014

More drug war collateral damage: "Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required"

The title of this post includes my extra bit of spin on the headline of this notable front-page New York Times article, which gets started this way:

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant.  For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.  “How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”  

The federal government does.  Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes.  The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.

“They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia.  “They’re middle-class citizens who have never had any trouble with the law.”

On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”

Richard Weber, the chief of Criminal Investigation at the I.R.S., said in a written statement,  “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities.”  He added that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources.  The new policy will not apply to past seizures.

October 26, 2014 at 01:42 PM | Permalink

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Again, John Oliver has been on the case:

https://www.youtube.com/watch?v=3kEpZWGgJks

Posted by: Joe | Oct 26, 2014 1:57:46 PM

"that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources. The new policy will not apply to past seizures."

This is why I love my gubermint - Not!

Let see, about 100,000,000 million wage earners meet this federal idiot's strict "idea" of structuring, (regular deposts/payments under the limit) unless they make more than $10,000 dollars a month. Only those on welfare probably do not meet this strict definition, where the money comes from the gubermint itself.

I am waiting for all you government apologists to defend this action - Come On You Cowards! This is why we are dying as a country. Not even the cowardly politicians, I mean "Statesmen" are coming to these people's aid or examining their "laws" - yeah Right.

And the judges just go - meh, the legal procedures and process works just the way it is supposed to. I still get MY pay and pension!

Posted by: albeed | Oct 26, 2014 4:25:15 PM

I think its high time everyone join together and get all of the feds trigger points laid out for the country to review.

Then publicize who has acted upon these looser type laws.

Then outsource them and anyone thats puts up a fight. To Iraq. Or Africa where Ebola is.

Posted by: 187Midwest Guy | Oct 26, 2014 6:21:40 PM

This lady has recourse to file a Bivens claim, after showing a lack of probable cause through her income tax returns and business records. So, violence is not justified against these government agents. The IRS will seek summary judgment claiming sovereign immunity. If granted, then violence is justified against the government agent, the judge and the IRS officials. As an owner, I suggest, the best course for the IRS, is to apologize, and to offer $50,000 for her costs and troubles. Make this matter go away.

In Bivens, the Supreme Court invented a course of action, without a shred of statutory support. Good idea. Take away the justification for violence.

Posted by: Supremacy Claus | Oct 26, 2014 7:17:34 PM

Per the law, not only do you lose the money you "structured" but any money that is "involved in" the structuring. The same with money laundering.
The Government can not only claim the "laundered money" but any and all money that the laundered money came into contact with!
I am trying to reclaim money from an account that was in my name. Unknown to me, a check that I accepted from a trusted source turned out to be from a "criminal act". The Government seized MY account that contained the alleged "criminal funds" AND all my other funds in my account as well...as being "involved" in money laundering.

Talk about a nightmare! The seizure was ok'd by a judge because my account "appeared to be involved in money laundering"....I receive "due process" because I can come to court and prove myself to be an "innocent owner"....but in the meantime...I'm out my funds, and have incurred a pile of attorney fees.
I'm sure the IRS filed a complaint that was signed by a judge before there was a seizure. They merely have to allege there was apparent or suspicion of "structuring"...so seizure was with authority...and one day...due process to prove they didn't structure...if they can get thru all the hurdles. (you have to file a claim in a particular form under particular time deadlines. You fail...you lose. Then you have to have "standing"...proof the account is yours and you'll have an "injury" if you can't get it back. You have to file an answer, and answer interrogatories, provide paperwork proof, possibly be deposed...and if the Gov can't knock you out after all that...you THEN have to go to court and defend your money....I know...I've done ALL of this!)
Not only that, structuring is a CRIME...so claiming the money can possibly lead to an indictment, so you might want to take the 5th on those claims...and if you do..you will probably lose the funds.
(I'm not an atty...but I have been a claimant and have gone thru all these steps.,,,)
Google Miguel's Pizza in KY. Feds seized accounts and cash..indicted both husband and wife restaurant owners. They went to trial, and were acquitted...But, gosh, the risk and pain of going thru a Federal trial!
because of the way you deposit money!

Posted by: folly | Oct 26, 2014 8:33:05 PM

The government has lost all moral authority to do any of this given that it did nothing to Eliot Spitzer who deliberately structured his prostitution payments.

This is a disgusting abuse of power, and in any sane society, the people doing this would spend a long time in prison.

Posted by: federalist | Oct 26, 2014 8:47:10 PM

lucky little shits!

my response to this!

"For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000."

would be to pull out a gun and shoot their criminal asses. Then go after the banker who aided them as an accessory before and after the fact.

sorry but taking BEFORE either a charge and conviction has happened is THEFT and will result in my killing you no matter what stupid costume or job you think protects you.

Posted by: rodsmith | Oct 26, 2014 10:27:05 PM

all those steps are very nice and 'STRUCTURED" to flip the whole damn thing toward the federal fuckups. Sorry if your stupid enough to walk up and tell me YOU took my life's savings without benefit of a charge or even a fucking hearing where I can show proof your talking out your ASS BEFORE you act. Your a THIEF. A CONFESSED thief. At that point I have every legal and moral right to blow your ass away and then move up the chain till my funds are returned.

Posted by: rodsmith | Oct 26, 2014 10:32:10 PM

This is quite common. Law enforcement and regulators seem to have more hubris as time goes on. There is very little recourse - especially if you have no resources.

Posted by: beth | Oct 26, 2014 11:28:27 PM

Tort liability shrinks an entire enterprise, not just a defendant. So anyone wishing smaller government should support greater governmental tor liability.

If the lady files a claim, it will cost a great deal to defend, even to summary judgment dismissing it. The head of the IRS criminal division interviewed will almost certainly lose his job, having cost the government more than his worth.

Is that what people want? I have been deterred by that idea from suing a number of offensive government entities. His replacement will then be more cautious seizing terrorist and drug cartel accounts. Is that what people want?

I am not defending his actions against an innocent civilian. I have proposed the remedy in the comment above, return the money plus a settlement for her trouble. However, I am not sure I want my government agent shy about going after bad money funding terror attacks. If discovery shows intentional money grubbing, not mere mistaken negligence, he should go to prison, I agree.

Posted by: Supremacy Claus | Oct 27, 2014 7:25:48 AM

SC:

Your remedy lacks any serious merit. The government has almost an infinite amount of resources through taxes and/or printing money. Now there is a real economic cause of money-laundering, paying the government for theft, and salaries for do-nothing officials and know-nothing office-holders. They should ALL go to prison.

It is government officials who should be the source for your rent-seeking diatribes. Lawyers are the b_______d offspring.

I've been saying this for a long-time. Civil forfeiture laws are unconstutional due to lack of "constitutional" due process, not government make-believe due process.

The same holds with sex-offender laws.

Posted by: albeed | Oct 27, 2014 10:02:35 AM

Really people...this structuring situation is So much Worse than mere "civil forfeiture"...which I view as a money grab by the Gov. ( and which I often feel the Gov can win by mere intimidation. The Gov may accuse the restaurant woman of a crime with the threat of "give up claiming the $...or we'll indict you". This is very real.) For instance, a 2013 11th circuit appeals court case US v. STRELSKI,..where the defendants pled guilty to structuring (one count...and this is the only crime)The court not only sentenced them...but pointed out that there is a possible HUGE FINE per count!...imagine being accused of multiple counts! Here's a quote from the case from just last year...

"The maximum fine authorized by Congress for the Strelskis' offenses is $250,000 per count. See 18 U.S.C. § 3571. Because the Strelskis each pleaded guilty to one count of structuring and one count of conspiring to structure, they faced a combined maximum fine of $1,000,000. Because the amount the Strelskis were required to forfeit — a total of $140,630 — is well below the $1,000,000 statutory maximum, there is a strong presumption that the forfeiture is constitutional."

So, as you can see...the penalties can be enormous...for a crime that most people don't even know exists! There is no warning at your bank...NONE. And the crime is NOT how you deposit per se...the crime is "causing the bank to not fill out the proper form". So if you are depositing more than $10k in cash...and the teller tells you that you'll have to fill out a form...and you decide to break up the deposit...you could be structuring...and if the teller testifies that they remember telling you about the form...you could now KNOW you caused the bank to not fill out the form...and be guilty.
In my mind there are 2 fixes: One: The bank should warn you it could be illegal to cause the bank not to fill out the form...and Two: the amount of cash should be raised to a higher amount (the $10k was put in place some time ago).
People are warned that it is illegal to take $10k cash in or out of the country without filling out forms...why is there not fair warning at a bank?

Posted by: folly | Oct 27, 2014 10:45:49 AM

that's just it folly.

in a situation like this!

"The Gov may accuse the restaurant woman of a crime with the threat of "give up claiming the $...or we'll indict you"

the individual making this criminal threat.... i.e. BLACLMAIL is the real criminal and I reserve the right at the time of the threat to KILL HIS/HER ASS

You might make that threat but I can guarantee you won't LIVE to see it carried out.

Posted by: rodsmith | Oct 27, 2014 10:24:08 PM

Albeed.

When you say, government, you are really saying a wholly owned lawyer profession subsidiary. Lawyers make 99% of policy decisions, even if the elected official figurehead is not a lawyer. They have fully infiltrated and now control the three branches of government. Nothing will get them out except mass arrests, fair one hour trials, and immediate execution of the traitors. There may be 20,000 or maybe up to 50,000.

Posted by: Supremacy Claus | Oct 27, 2014 10:30:12 PM

SC:

Which came first, the chicken or the egg?

Maybe Dick was correct in Henry VI, despite many common, current misconceptions that the subject(s) are a necessity for society. That interpretation is based on self-aggrandizement!

Posted by: albeed | Oct 28, 2014 7:23:55 AM

In August 2013, the U.S. Attorney's Office for the Eastern District of Kentucky last all counts of a 56 count "structuring" indictment brought against Miguel and Susan Ventura, who for 30 years have owned "Miguel's Pizza and Climbing Shop" in Powell County, Kentucky, at Red River Gorge. Notably, the Government never alleged that any of the money came from an unlawful source or business. After the defendants were acquitted on all counts, the Government had to return more than $300,000 it had seized from the Venturas in 2011. The Venturas' defense counsel was Mark Wohlander, a former AUSA. Unfortunately, they were unable to secure an award of Hyde Amendment attorneys' fees, so they still lost more than $100,000 in the attorneys fees they paid to defense counsel.

Posted by: Jim Gormley | Oct 28, 2014 2:03:37 PM

how nice jim. I think they are now legally allowed to take that 100k loss out of the da's ass

Posted by: rodsmith | Oct 28, 2014 4:09:22 PM

Was the $100,000 tax deductible as a business expense? In that case, the taxpayer footed a $50,000 tab for IRS shenanigans.

Posted by: Supremacy Claus | Oct 28, 2014 7:34:53 PM

Congress has to address the immunity of the IRS by ending it. it should be liable for all damages to innocent people. Employees generating any settlement will be working outside government within a yyar, I can guarantee that. So they will be less careless.

Posted by: Supremacy Claus | Oct 29, 2014 6:57:01 AM

Here's the Results from what appears to be a civil forfeiture/structuring case. Note Provision F...also note that these people lost more than HALF the seized $ in a "settlement" with the Government:

UNITED STATES OF AMERICA, Plaintiff, v. $25,147.17 IN IN BANK FUNDS SEIZED FROM ONE JP MORGAN CHASE BANK ACCOUNT, Defendant. JUAN M. REYNOSO AND ARYANNA REYNOSO, Claimants.
United States District Court, C.D. California, Western Division.
October 27, 2014.
STEPHANIE YONEKURA, Acting United States Attorney, ROBERT E. DUGDALE, Assistant United States Attorney, Chief, Criminal Division, STEVEN R. WELK, Assistant United States Attorney Chief, Asset Forfeiture Section, JOHN J. KUCERA, Assistant United States Attorney Asset Forfeiture Section, Los Angeles, California, Attorneys for Plaintiff United States of America.
CONSENT JUDGMENT OF FORFEITURE

CHRISTINA A. SNYDER, District Judge.

This action was filed on September 16, 2014. Notice was given and published in accordance with law. Claimants Juan M. Reynoso and Aryanna Reynoso ("Claimants") filed the only claims to the defendant $25,147.17 in bank funds (the "defendant funds"), which was seized on or about April 21, 2014. No other statements of interest or answers have been filed, and the time for filing such statements of interest and answers has expired. Plaintiff and Claimants have reached an agreement that is dispositive of the action. The parties have requested that the Court enter this Consent Judgment of Forfeiture.

WHERE, IT IS ORDERED, ADJUDGED AND DECREED:

A. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1345 and 1355 and over the parties hereto.

B. The Complaint for Forfeiture states a claim for relief pursuant to 21 U.S.C. § 881(a)(6).

C. Notice of this action has been given in accordance with law. All potential claimants to the defendant funds other than Claimants are deemed to have admitted the allegations of the Complaint. The allegations set out in the Complaint are sufficient to establish a basis for forfeiture.

D. The United States of America shall have judgment as to $15,000.00 of the defendant funds, together with all interest earned by the government on that amount of the defendant funds since seizure, and no other person or entity shall have any right, title or interest therein.

E. $10,147.17 of the defendant funds, together with all interest earned by the government on that amount since seizure, shall be paid to Claimants no later than sixty (60) days from the date of entry of this judgment, through their attorney, Mike Ayaz, by electronic transfer directly into the account entitled "Rick A. Blake Attorney-Client Trust Account." Claimants agree to provide the appropriate financial institution account information with 10 days of execution of this consent judgment. Said payment shall be subject to applicable federal law.

F. Prior to the return of the $10,147.17 of the defendant funds, Claimants shall each sign an IRS "Notification of Law" regarding structuring (attached hereto and incorporated herein).

G. Claimants have released the United States of America, its agencies, agents, and officers, including employees and agents of the Internal Revenue Service, from any and all claims, actions or liabilities arising out of or related to this action, including, without limitation, any claim for attorney's fees, costs or interest which may be asserted on behalf of the Claimants, whether pursuant to 28 U.S.C. § 2465 or otherwise. Nothing in this proposed consent judgment is intended as, nor should anything in this proposed consent judgment be interpreted as an admission by claimants of any liability or wrongdoing.

H. The court finds that there was reasonable cause for the seizure of the defendant funds and institution of these proceedings. This judgment shall be construed as a certificate of reasonable cause pursuant to 28 U.S.C. § 2465.

Posted by: folly | Oct 30, 2014 10:44:13 AM

yea and if that was my money the court house would be full of dead gov't stooges.

Posted by: rodsmith | Oct 30, 2014 1:16:23 PM

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