Oh Suk Kwon, an immigrant from South Korea who spent four decades serving in the U.S. military, had his life and business destroyed by the Internal Revenue Service in 2011—on nothing more than a hunch.
After getting out of the Army in 2007, Kwon and his wife purchased a gas station in Ellicott City, Maryland. Four years later, the IRS targeted Kwon's station as part of a now-discredited effort at catching money launderers making large cash deposits. The investigators seized more than $59,000 from Kwon, forcing him to shutter his business. His wife died soon after.
"But after the investigation ended, after the gas station went under, and Kwon's wife died amid the stress of it all, after he moved from his neighborhood in shame and the Internal Revenue Service changed its policy so no other small business would get steamrolled this way—the agency won't give Kwon his money back," writes columnist Petula Dvorak in The Washington Post.
What happened to Kwon is a tragedy. That the IRS won't now admit its mistake and return his money is a travesty.
Kwon was one of hundreds of individuals and businesses targeted by the IRS for nothing but a supposedly suspicious pattern of deposits. A Treasury Inspector General for Tax Administration report released in April detailed how the agency seized more than $17 million from innocent business owners as part of an effort at targeting so-called "structuring," in which criminals will make cash deposits of less than $10,000 in order to avoid detecting by federal banking regulators. Under the terms of a 1970 federal law, banks must report all deposits of more than $10,000.
But the IRS's anti-structuring investigations were seriously flawed. In more than 90 percent of the cases, the inspector general found, the seized money turned out to be completely legal. The report also found that investigators violated internal policies when conducting interviews, failed to notify individuals of their rights, and improperly bargained to resolve civil cases.
That seems to be what happened to Kwon. An IRS spokesman told Dvorak that Kwon pleaded guilty to a charge of structuring, even though the agency failed to produce any other criminal charges against him.
There is hope for Kwon. Other victims of the agency's anti-structuring investigations have been made whole, but only after years of legal battles. Last year, the IRS returned $29,500 they had stolen in 2012 from a Maryland dairy farmer. The farmer, Randy Sowers, was represented by the Institute for Justice, a nonprofit libertarian law firm, in his challenge to the seizure.
"I couldn't believe…they would just come in and take my money with no prior notice," Sowers told a congressional committee in 2015 during a hearing on the "structuring" crackdown. "I thought the government was supposed to protect me. I didn't think they were supposed to come out and try to put me out of business."
The same thing happened to Carol Hinders, an Iowa woman who ran a small, cash-only Mexican restaurant. In 2013, two IRS agents showed up at Hinder's door and told her the agency was seizing $33,000 from her bank account for structuring violations. She was never accused of a crime. She later became the face of an investigative report by The New York Times that showed how the IRS was targeting innocent Americans and abusing its asset forfeiture powers. After that, she got her money back from the IRS.
"The government is seizing billions of dollars of cash and property from Americans often without charging them with a crime," said Rep. Jim Sensenbrenner (R-Wisc.) at the 2015 congressional hearing where Sowers testified. Civil asset forfeiture, he said, "has proven a far greater affront to civil rights than it has a weapon against crime."
In response to public outrage over how the IRS was targeting businesses with anti-structuring investigations, the agency announced in 2014 that it would change how those investigations operated, focusing only on cases where there was actual evidence of criminal activity.
But that's little consolation to Kwon, who is still facing an uphill legal battle to get his money back. Dvorak reports that the IRS refused his most recent request in August.
"There was no good policy purpose for the prosecution. They did it for money, and they destroyed a good and honest man," Kwon's attorney tells Dvorak. "It is shameful."