Asset Forfeiture

Suspiciously Small Deposits Trigger Legalized Bank Robbery

The IRS seized $242 million between 2005 and 2012 based on allegations of "structuring."

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Institute for Justice

The week before her confirmation hearings, Loretta Lynch, President Obama's choice to succeed Eric Holder as attorney general, quietly dropped a forfeiture case involving $447,000 seized from Bi-County Distributors, a family-owned business that sells candy and cigarettes to convenience stores on Long Island. Although there was no evidence that the money came from illegal activity, the IRS thought the way it was deposited, in amounts below the $10,000 threshold for mandatory bank reports to the Treasury Department, suggested that Bi-County was trying to evade that requirement, which is a federal crime known as "structuring." According to a new report from the Institute for Justice, which represented Bi-County's owners, the IRS seized $242 million based on suspected structuring in more than 2,500 cases from 2005 to 2012. During that period, the number of cases rose fivefold and revenue increased by 166 percent, but the gap between the amount seized and the amount ultimately forfeited also grew, suggesting the IRS has becoming increasingly reckless with the rights of innocent owners like Mitch, Richard, and Jeffrey Hirsch, the brothers who run Bi-County Distributors.

"Using civil forfeiture," I.J. says, "the government is increasingly treating legitimate small-business owners like criminals just because they make frequent cash deposits." More than four-fifths of the IRS cases related to structuring were civil forfeitures, which do not require accusing the owner of a crime, let alone proving that he committed one. At least a third of the seizures "arose out of nothing more than a series of transactions under $10,000, with no other criminal activity, such as fraud, money laundering or smuggling, alleged by the government." Of the $242 million seized during the period covered by the report, almost half, $116 million, was not ultimately forfeited, meaning the government agreed to return it, as in the Bi-County case and several others that I.J. has handled, or tried and failed to prove its case in court. The share of seized money that was eventually forfeited fell from 90 percent in 2005 to 59 percent in 2012, indicating that the IRS became more aggressive, leading to more seizures based on flimsy evidence.

Challenging these seizures can be prohibitively expensive. I.J. found that half of the structuring-related seizures between 2005 and 2012 involved less than $34,000, which means owners often would have found that paying a lawyer cost more than the government took. One I.J. case involved a Michigan grocer who lost about $35,000 to the IRS; another involved an Iowa restaurateur who lost $33,000. After I.J. took on those cases, the government agreed to return the money. But without pro bono help, the owners might have felt compelled to give up.

Fighting forfeitures can leave owners in financial limbo for months or years. In civil forfeiture cases involving structuring, I.J. found, the average time between seizure and forfeiture was more than a year. Bi-County's owners, the Hirsches, struggled to keep their business afloat, relying on credit extended by longtime vendors, for 32 months. During that time, they did not get a single hearing before a judge. Instead Lynch's office offered to return some of the money, ranging from $171,000 to $396,000, if they surrendered the rest.

I.J. concludes that the best way to avoid injustices like these, short of abolishing civil forfeiture, is to guarantee prompt probable-cause hearings, increase the burden of proof on the government, and allow forfeiture only in cases where deposits were deliberately structured to conceal the proceeds of illegal activity. All three reforms are included in a bill introduced last week by Sen. Rand Paul (R-Ky.) and Rep. Tim Walberg (R-Mich.). 

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  1. Bi-County Distributors

    I bet they’d make a cake for that couple from earlier today.

  2. Want to see the mask slip a little farther?

    It’s in the story and the comments, so take your pick.

    1. From the comments:

      Michael Rinella ? Top Commenter ? Senior Acquisitions Editor at State University of New York Press
      There will be no hiding from the Labor Spring.
      Reply ?
      ? 15 ? 6 hours ago

      Wow, Labor Spring, what does that sound like? http://en.wikipedia.org/wiki/Cultural_Revolution

      1. A real gem:

        Steve Bennett ? Top Commenter ? Volunteering at Retired
        The elite are too inept and fearful to lead. Hence the wealth hoarding.
        Reply ? ? 11 ? 6 hours ago

        See, they’re smart enough to amass fortunes and whatnot, but not smart enough to lead.

        These prog-warriors are laughable in their idiocy. I’m going long on body bags if this is the best they’ve got.

        1. Jesus.

    2. Also from the comments:

      “Susan Jones ? Top Commenter ? Western Carolina University

      I know unless change comes soon; there will be a bloodbath just like the French Revolution. The rich will not be safe in their castles, no more than the aristocracy was then. Hungry, homeless and hopeless people will arise against their oppressors – no matter where they hide.”

      “Sharon Jarvis ? Top Commenter

      As I’ve said before, my knitting needles are ready. And I won’t need a front row seat to smile over headless CEOs.

      Top Commenters for the bloody win!

    3. In the classic, 1937 movie version, Shangri-La’s High Lama says to the hero, a British diplomat, “Look at the world today. Is there anything more pitiful? What madness there is! What blindness! What unintelligent leadership! A scurrying mass of bewildered humanity, crashing headlong against each other, propelled by an orgy of greed and brutality.” Sounds like a typical night at Fox News.

      FEAUX NEWZ!!!11!1!!elventy!!11!!!!

      In other words, they’re getting ready to run away from the mess they’ve helped create. But instead of holding off the barbarians at the gates, they are the barbarians. Take your ill-gotten gains behind the walls of your Fortress of Solitude, you ubermensches, and pull up the drawbridge behind you.

      WRECKERZ!!!!!1!!!!!!!! KULAKS!!!111!!!!! HOARDERZ!!11!11!!!!!!

      the wealthy have been granted a ten-fold increase in campaign contribution limits, a weakening of the Dodd-Frank bank reform law, proposed legislation to hinder environmental and other safety regulations by weighing them down with burdensome cost-benefit analyses

      Couldn’t make it much further than that. Too much DERP. Who needs cost-benefit analyses when you have the certaintity and self satisfaction of your own convictions?

      DEEEERRRRRRRRPPPPPPP!!!!!!!11!!11!!!!!!

      1. “the wealthy have been *GRANTED* a ten-fold increase in campaign contribution limits,”

        I have a feeling this twit does nothing without official approval.

      2. Those commenters all inadvertently explained a good portion of ‘wealth inequality’: people that stupid don’t deserve to make 7.50 an hour. That they haven’t drowned in their saliva for having to forgotten how to swallow is a miracle in itself, and they think they deserve to make 30k a year?

        1. How do they propose to make anything happen? Team Red has all the guns and training to use them, plus skill and experience in hand to hand combat.

          Prog pussies can riot and bitch, but if push comes to shove, I see them being carried off face down by the dump truck load.

        2. They believe the ultra-rich just stole their money, instead of believing they are the people who gave them money by working in those people’s companies.

          Taking the money away has been tried before, such as the shithole that Venezuela is descending into.

        3. They don’t want 30k a year. They want more, and for others to pay for it. Give them 30k a year, they want more. Give them 100k, they want more. As long as there are others with more than they have, they want MORE than they have now. Always.

    4. These people are idiots. Yes, Thomas Jefferson and the founders were wary of the elites and supportive of a progressive tax. I’m actually okay with a progressive tax as well. The problem is that the freaking IRS is acting like the damn SS these days. They are thugs.

  3. What a fucking country this is, where an agency which knows it is probably taking hard-earned money from innocent people does so because “it can.”

    1. Every single federal agency does. They’re all fucking evil.

    2. innocent people

      3 felonies a day. There are no innocent people in the eyes of the bureacracy, just people who haven’t been caught yet.

  4. So how much flair do I need to wear?

    20 pieces? OK. I’ll wear 20. Oh wait, what? wearing exactly 20 pieces of flair is a felony? shit. Why didn’t you tell me to wear 21 pieces then? You dicks.

    1. Look, we want you to express yourself, okay? Now if you feel that the bare minimum is enough, then okay. But some people choose to wear more and we encourage that, okay? You do want to express yourself, don’t you?

    2. But wearing *21* pieces looks suspicious, since you might be trying to avoid wearing 20 pieces.

      1. Wearing 20 pieces is required, but wearing 20-24 pieces is structuring.

  5. During that period, the number of cases rose fivefold and revenue increased by 166 percent,

    Excuse me?

    1. Looks like they’ve decided to go after a lot more cases of small-time targets. Yu know, the kind of person that hasn’t got the financial means to fight back when the government comes and steals every penny he owns.

      1. I was bitching about referring to this blatant thievery as “revenue”.

        1. Well, that’s what it is. A bank robber’s take is also revenue.

      2. And yes, agree with your point.

        1. I think for missing that point you are going to have to turn in your Monocle.

  6. Also, require the government to pay attorney’s fees, and pay interest on the stolen money.

    1. Using taxpayer dollars, which is a disincentive how?

      I would say “take any settlements out of their operating budget”, but I know that’s equally laughable.

      1. Personal liability on the part of the prosecutor.

        1. Criminal charges against the IRS agents who steal the money. The amount of money taken is grand larcency and wire fraud. It should only take about 10 IRS agents getting raped in a prison cell to sent a message to the rest.

    2. Not good enough. Treble damages.

      1. I think federal employees should be bull whipped.

    3. That wouldn’t help. Require the offending bureaucrats to pay it, then you’ll see change.

      1. Exactly. Any penalty, interest, and legal fees have to come out of the salary and benefits of our tireless civil servants. And no, they don’t get a bonus when they get it right. I bet the number of seizures takes a sudden shift down.

        Of course abolishing the whole obscenity would be even better.

        1. Penalty should be a noose in front of the bank.

    4. Yeah, the results from these policies have been instrumental in curtailing police officers violent conduct. Just make them (i.e.: the taxpayers) pay damages and they’ll stop abusing their authority.

      Nope. You make it to where they lose a digit for every $10,000 they took from somebody without legal grounds. And you do not allow them disability pensions.

      1. The first two digits should be testicles. The third should be the penis. Then you start on the fingers/toes.

        For the female agents, ovaries and FGM.

        1. Or drinks with Bill Cosby.

    5. HAHAHAHAHAHAHAHAHAHA!!!

  7. All three reforms are included in a bill introduced last week by Sen. Rand Paul (R-Ky.) and Rep. Tim Walberg (R-Mich.).

    Yeah well, at least one of those guys is a science-hating anti-vaxxer, so we can ignore his existence.

  8. Please stop repeating that canard that civil forfeiture is “legalized” robbery. There is nothing legal about about it. It’s very clearly prohibited by the fifth amendment.

    -jcr

    1. I guess it’s “legal” in the Nixonian sense?

    2. Unfortunately, the 5th amendment didn’t include an enforcement provision.

      1. How many divisions does the Supreme Court have? Of course first they would actually have to rule that this shit is unconstitutional – fat chance of that happening.

  9. “….the number of cases rose fivefold and revenue increased by 166 percent…”

    This article reads like an expose on the extortion activities of the mafia.

    1. Is there a difference?

    2. I can’t help but notice that the dates given coincide pretty closely with the years the present administration or its party have been in power. Democrats: party of liars, beggars, and thieves. And whoremongers.

  10. I’m thinking that there’s a bit more to this stepped-up practice of looting small businesses on flimsy pretexts than just stealing the money. Government has a nasty habit of fucking over small business for the benefit of larger businesses.

    -jcr

    1. But I hear all the time that they’re out for the middle class and corporations are evil hoarders.

      You mean all those people Obama has brought in from Wall Street didn’t leave because they had an epiphany?

    2. Or to help out the competitor that’s a prominent donor.

      “Last week federal marshals raided the Gibson Guitar Corporation in Tennessee. It wasn’t the first time.
      ..
      “We’re in this really incredible situation. We have been implicated in wrongdoing and we haven’t been charged with anything,” he says. “Our business has been injured to millions of dollars. And we don’t even have a court we can go to and say, ‘Look, here’s our position ”

      http://www.npr.org/blogs/there…..department

      “One of Gibson’s leading competitors is C.F. Martin & Company. The C.E.O., Chris Martin IV, is a long-time Democratic supporter, with $35,400 in contributions to Democratic candidates and the DNC over the past couple of election cycles.”

      http://landmarkreport.com/andr…..ican-donor

    3. It’s an easy way to make money without officially raising taxes, and without driving the larger government-partnered companies out of business.

      If they actually taxes the big companies like this, and those companies went out of business, then people would get angry because they wouldn’t be able to buy the stuff the big companies produced.

      That, I think, is the last fig leaf of socialism: confiscating property from the government’s erstwhile partners, the monopolists, thereby driving them under. The the government comes in and takes over production of the goods directly.

  11. This is all so absurd. We all get treated like criminals so that the federal government can catch a few criminals. Completely at odds with our criminal justice tradition.

    1. It’s like the financial equivalent of a DUI checkpoint.

      1. How dare you deposit money, you criminal!

        1. How dare you have any money to deposit in the first place, you criminal!

          1. Obviously an enemy of the proletariat.

      2. It’s actually worse, because it forces banks and other institutions to act in the role of law enforcement. Huh?

        1. My bank teller told me they would have to report my deposits to the IRS when I deposited a couple checks at the same time into two different accounts because they totaled over $10k.

          Also, even though I was depositing it into a business account, I always had them ask for my SSN when I made drops after auctions that were routinely in excess of $100k. They were relaying my personal information to the Tresury Dept AS I WAS MAKING THE DEPOSITS for an employer I was not even a principal of in amounts that were to automatically be reported.

          I was not too keen on that, so I hired Loomis to start picking the money up.

          1. But we’re freer than ever.

            1. If all the progressives were……’gone’ ……..think how wonderful things could be.

          2. “Banc of Amerika” put a 2 week hold on a check from sale of mutual fund, on a check printed by that investment house (one that dates back nearly a century, and is as yet untouched by scandal). They claimed there was “nothing they could do about it” as it was a federal law to help stop money laundering. Meanwhile, who has access to the $$$ and gets the interest thereupon?

            I had confirmed that this was all moose candy when I cleared out my B of A account, and moved to a local, privately owned bank. There was no hold, nor was there a hold when I made subsequent transactions.

            The problem at this point is collusion between the large banks and the Federalistas.

            1. Oh, but I’m sure Bank of America was kind enough to give you the interest rate for a CD while your money was ‘on hold,’ right? Right?

              Joe Pesci’s character from casino accurately summed up what bankers do nowadays: fuck people out of money and get away with it.

  12. The Institute for Justice (or somebody) needs to cut to the chase and challenge the Constitutionality of civil forfeiture laws altogether and take it all the way to the Supreme Court.

    1. You mean again. Because the Supreme Court quite brilliantly already signed off on this blatantly unconstitutional practice, years ago.

      1. As long as there is some post-deprivation remedy, asset forfeiture is constitutional.

  13. Let me see if I get this straight:

    If you deposit more than $10,000 the banks are required to report it to Treasury because you’re most likely a criminal, and if you make deposits of less than $10,000 at a time, you’re most likely a criminal?

    Why don’t they just pass a law decreeing that everyone is a criminal until proven innocent. We can just move everyone to special camps to live in until such time as they’ve proven themselves to be innocent of any crimes and sufficiently loyal to the State to be trusted with “freedom.” Although still subject to round the clock surveillance upon release, and still subject to being sent back for re-education at anytime for insufficient fealty to the state.

    I know, I know: stop giving them ideas.

    1. I am a self-employed attorney, who routinely takes deposits of more than $10k into my retainer account, and I have been harassed on several occasions with this shit. It’s so goddamn frustrating. I have to keep $20k of my own money in the account to prepare for the shortfall should a deposit not clear in time because it’s held up by the Gov.

    2. If the bank is only required to report deposits of more than $10k, how does the IRS know that you’ve made deposits of less than $10k?

      1. Because employees are required to disclose any time a deposit is made in under-but-close-to amounts of 10k. Deposit a check for 9k? Gets reported.

        And one lame part is, bankers (that is, those who work in a bank, usually for very little pay) HATE this paperwork, it is a pain for them, so they often (illegally) encourage depositors to not do so, to save themselves work.

  14. “The IRS thought the way it was deposited, in amounts below the $10,000 threshold for mandatory bank reports to the Treasury Department, suggested that Bi-County was trying to evade that requirement, which is a federal crime known as ‘structuring.'”

    Congress set the limit at $10,000, and then the IRS just arbitrarily decided that deposits below that limit need to be scrutinized, too?

    If Congress wanted to set the limit lower, they could have; in fact, they could change the limit today if they want–but they don’t.

    Where in the Constitution does it say that the IRS gets to rewrite laws to make them say whatever they want?

    1. C’mon- surely you’ve heard of the FYTW clause that the Founders wrote in lemon juice just above their signatures?

      1. And you can only see it with special glasses that can be found in a brick of an old building in Philadelphia…

    2. Lol, Congress abdicated it’s power years ago. The little mindless stooges in the bureaucracy have the power now.

    3. Where in the Constitution does it say that the IRS gets to rewrite laws to make them say whatever they want?

      More de facto amendments by SCOTUS, allowing delegation of legislative authority to executive agencies, and deferring like crazy to whatever lunatic bullshit the agency peddles.

  15. If they KNOW how much you are depositing and when why the fuck does anyone need to report it to them?

  16. What is so fucking difficult about saying, proposing, and defending a new asset forfeiture regime, namely, no assets are forfeited until the owner is convicted of a crime. Full stop. Easy, intuitive, yet I never see it proposed. Why is that?

    1. See, I thought we already had that in the Fifth Amendment, and if that weren’t already enough, I thought we had it in the Fourteenth Amendment, too!

      Somethin’ about deprived, property, due process…

      I thought the Constitution was the supreme law of the land, too.

      I mean, it says it is, but apparently you have to pass laws through Congress, and then Congress has to care enough to make the IRS obey the law.

      And that seems like it should be easy enough, but they can’t even get anybody to do anything about Lois Lerner–even after finding her in contempt. …and she isn’t even working at the IRS anymore!

      I mean, if Congress can’t even get the IRS to return their phone calls, then why would we expect Congress to be able to make the IRS do what the law or the Constitution says?

    2. Perhaps because it serves as an unofficial tax, a way to generate revenue without upsetting the electorate, and the politicians can always just blame the IRS even while their legislation gets funded with confiscated money. Of course the revenue may not be significant.

      It may also be because reforming it would be seen as being ‘pro-criminal.’ You’re making life easier for drug dealers, money launderers, evil space aliens, or whoever is supposedly washing money in their bank accounts.

      Or in the case of the leftists, they would spin any reform as ‘helping the rich get away with tax evasion.’ That’s why Obama will veto it. The IRS is actually going after those wealth-hording tax-evading 1%ers, why would you want to stop that?

  17. isn’t structuring sort of like making it illegal to intentionally avoid a speeding ticket by not speeding?

      1. Damn cheap computer!

    1. No. Structuring is not “not speeding.” It is driving 63 in a 65 zone, because, so goes the assumption, only a drunk drug dealing child rapist would drive slower than the legal limit hoping to be ignored.

      Or, closer to the truth, it would be driving 63 down a 55 road where you know cops only stop folks for going 10 miles above the limit, because they get paid more for tickets higher than 10 mph.

  18. This shit pisses me off to no end. EVERY TIME I read one of these fucking stories I realize that THIS IS THE TYRANNY we have been waiting for. But no one sees it as TYRANNY. Because it is “legal”.
    Consider: The IRS has a law on the books that says that any amount of money you deposit (above OR below 10k) suggests you are a criminal and they can seize your assets, with no proof or charges or due process.
    WHAT ABOUT THAT IS NOT TYRANNICAL?
    Christ, can you imagine if a bank or a credit card company tried that?!?!

  19. Nothing is really illegal with statism. Inevitably pursuant to a monopolized justice system are euphemisms to mask the crime. Concepts like extortion, theft, kidnapping, and murder are all colored with a variety of euphemisms to legitimize those acts in public perception.

  20. I guess I can’t see it happening, but wouldn’t it be awesome if Lynch’s nomination was rejected specifically over this issue?

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  23. They should consider themselves lucky. Kent Hovind is serving a decade in federal pound you in the ass prison, and most of his charges were for structuring. Reason should do an article on all the charges for victimless crimes he’s had against him, but he’s a political pariah in the form of a Creationist.

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