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After cash has been seized, property owners must wait a minimum of 120 days to get into court, and they must file two separate claims to preserve their right to their property. Even once the property owner is before a judge, litigation can stretch on for months, even years. The Institute for Justice report found that the average structuring case between 2005 and 2012 took almost a year to resolve, with the longest case taking more than six and a half years. Throughout that period, the property remains in possession of the government.
About a third of structuring forfeitures are resolved via "administrative" forfeitures that are not overseen or approved by a federal judge. In the case of North Carolina convenience store owner Ken Quran, for instance, a group of IRS agents and local police went directly to his store after seizing over $150,000 from his bank account, and demanded that Quran sign a form "voluntarily" agreeing to forfeit the seized funds. Intimidated, he agreed to sign. When he later took his case to a local lawyer, the lawyer advised him there would be no point in seeking to contest the forfeiture. "I feel like the United States government stole my money," Ken says. "I did nothing wrong."
Even where a judge is involved, the court's role is often little more than approving a settlement negotiated by federal prosecutors. Against the time and expense of litigation, the government typically offers property owners a tempting proposition: Settle with us, let us keep half of what we seized, and we will return half your money today. Business owners, struggling to keep their businesses running without needed funds, often have little choice but to agree.
After the IRS agents left his farm, Randy Sowers contacted a lawyer. His lawyer, in turn, reached out to the responsible federal prosecutor, Stefan Cassella, who explained right off the bat that the case would be resolved by negotiation. Both sides would propose a number below the total sum seized by the government, and the parties would then agree on a forfeiture amount.
This approach was no accident. Justice Department policies expressly state that "settlements to forfeit property are encouraged."
The Sowers needed the seized money to buy supplies for that year's crops. Their bank had closed the farm's account, and Randy was left explaining to his business partners why scheduled transactions were not going through. Meanwhile, fighting the case could easily end up costing more in legal bills than the amount of money that had been seized.
Sowers also had to consider the consequences if he refused the settlement. The same day that the government seized his account, it served him with a grand jury subpoena, raising the possibility that he could be charged criminally for structuring—and face up to five years in prison. The government's proposed settlement confirmed this implicit threat: In exchange for Sowers giving up his money, the government would agree not to pursue criminal charges.
Frustrated, he gave an interview to the Baltimore City Paper explaining that "we had no idea there was supposedly a law against" making small cash deposits. "Now we just feel like putting [our cash] in a can somewhere," he added.
Amid the settlement negotiations, Sowers' words became a sticking point. Cassella demanded he agree to less favorable terms than the prosecutor had offered in a similar case. When Randy's lawyers asked for an explanation, he wrote in an email that the other property owner "did not give an interview to the press."
Lacking any realistic route to fight the government, in May 2012, three months after the government seized his money, Sowers signed an agreement to forfeit $29,500.
'They Need to Give It Back'
Not long after Sowers agreed to settle, the mainstream media began scrutinizing structuring more, causing the government to start a hasty retreat. A decisive turn appeared to come in October 2014, when the IRS announced a new policy change. Absent proof that the property owner was engaging in some other criminal activity, it would no longer pursue "legal source" structuring cases.
The IRS announced this shift when The New York Times ran a front-page investigation into two structuring cases litigated by the Institute for Justice on behalf of the Hirsch brothers from Long Island and Carole Hinders, who ran a Mexican restaurant in rural Iowa. Five months later, the Justice Department announced a similar shift "restricting civil or criminal forfeiture seizures for structuring until after a defendant has been criminally charged or has been found to have engaged in additional criminal activity."
Yet those policy changes are purely voluntary. Since structuring laws still remain on the books, a future administration could easily reverse course and start seizing Americans' hard-earned money again. Moreover, while the shifts may prevent these types of cases from arising in the future—assuming the new policy is faithfully applied—they do nothing for the victims whose money was seized before the guidelines changed.
Between 2007 and 2013 alone, the IRS seized over $43 million from over 600 property owners in cases involving no allegations of wrongdoing apart from the mere act of evading bank reporting requirements. For those individuals, the government's policy change came too late.
Hoping to establish a precedent that other property owners could follow, the Institute for Justice in July 2015 filed petitions with the government on behalf of Ken Quran and Randy Sowers, seeking the return of their confiscated cash.
A bipartisan coalition in Congress has lined up behind that effort. In August 2015, members of the House Ways and Means Oversight Subcommittee sent a letter to Treasury Secretary Jacob Lew urging the agency to "return funds as appropriate in cases that do not meet the IRS's current policy that the funds must have come from an illegal source."
Fortunately for Quran, in February 2016 the agency agreed to return the entire $153,000 that it had unjustly seized.
Sowers still hasn't heard an answer to his petition. The federal government has never explained why, if it is willing to return the money that it seized from Quran under the structuring laws, it is not willing to do the same for him.
"I'm just waiting for the government to do the right thing," he says. "Not just for me, but for everyone in this same situation. The government shouldn't have taken our money, and they need to give it back."
Photo Credit: Jason Keisling