IRS Drops Its Asset Forfeiture Case Against Owner Of Small, Cash-Only Restaurant
from the the-beginnings-of-shift-in-priorities? dept
Some of the recent heat surrounding asset forfeiture seems to have gotten to the IRS. Late last week, it moved to dismiss one of its more high-profile cases -- one that had received extensive coverage from the New York Times and countless other sources. [via Michael Scarcella's (of the National Law Journal) invaluable Twitter feed]A brief refresher:
Carole Hinder had run a small, cash-only restaurant for nearly 40 years without incident before the IRS decided to step in and seize $33,000 from her bank account. Shortly after that, it acquired a warrant to seize another $150,000. The IRS's case hinged on the fact that every deposit made to the account totalled less than $10,000.
From the dismissal order [pdf link]:
As reflected in the affidavit in support of the verified complaint, from April 2012 through February 2013, more than $315,000 in currency was deposited into Mrs. Lady’s, Inc. bank account in approximately fifty-five separate deposits. No individual currency transaction exceeded $10,000 during that period. A sample of cash transactions between May 2012 and August 2012 showed a pattern of deposits consisting of frequent large deposits in amounts under $10,000 that were near in time to smaller deposits that, taken together, would have triggered bank reporting requirements.Hinder's defense was that her mother had advised her to break up the deposits into smaller amounts as a "convenience" to the bank. Staying below the reporting requirements does actually make the bank's work easier (and the customer's), but the IRS (and law enforcement) view this sort of behavior, no matter if it's linked to criminal activity or not, as "structuring" -- deliberate attempts to avoid reporting large amounts of cash to the government.
The dismissal order indicates the IRS may have had evidence on its side. (That is, evidence that someone broke up deposits to avoid hitting the $10,000 mark. Not evidence that Hinder was involved in criminal activity or somehow intentionally screwing the IRS.) Despite this, it moved to drop the case, using the old "we have better things to do" excuse. It also maintains it did nothing wrong.
Pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure, the United States hereby moves to dismiss, without prejudice, the instant case. Despite two judicial probable cause finding supported by Claimant’s clear pattern of manipulating bank deposits below $10,000 in order to evade the reporting requirements of 31 U.S.C. § 5313, plaintiff believes, in the exercise of its prosecutorial discretion, that allocating its limited resources elsewhere would better serve justice in this case. Notwithstanding, the request herein, the request should not be construed as an acknowledgement or admission to any liability or wrongdoing whatsoever.The dismissal is without prejudice, meaning the IRS is still free to pursue this in court in the future. The court also notes that this voluntary dismissal does not remove the IRS's claim to the disputed assets seized by the agency. So, it's not a complete win for Hinder, but it does at least indicate the IRS is somewhat responsive to negative press. The IRS does have limited resources, and it's going to be better off pursuing clearly illegal actions than chasing down fringe cases and fighting battles in two courts (federal and public opinion). The IRS has also announced that it will no longer pursue apparent "structuring" if there's no indication the money comes from illegal sources. This is a step in the right direction, especially considering asset forfeiture has become shorthand for government abuse and the agency's pursuit of small business owners seemingly nothing more than the intersection of vindictiveness and greed.
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Filed Under: asset forfeiture, carole hinder, cash, forfeiture, irs, legalized stealing
Reader Comments
The First Word
“Let me see if I got this right:
If you regularly deposit more than $10K in cash, that's suspicious and might be criminal, and so must be reported.If you regularly deposit less than $10K in cash, that's suspicious and might be criminal, and so must be investigated.
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Let me see if I got this right:
If you regularly deposit less than $10K in cash, that's suspicious and might be criminal, and so must be investigated.
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Re: Let me see if I got this right:
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Re: Let me see if I got this right:
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well, here's what gets me...
so-o-o-o, the 'lesson' is: forget about whether you are doing anything actually illegal or not (AND who knows these days?), but simply APPEARING to be suspicious is enough to get your life's savings confiscated with no effective method to fight it...
AND she STILL has the sword of damocles hanging over her head for -what?- FOREVER ? ? ? dog almighty, we are so fucked...
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Terrorists
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Re: Re: Let me see if I got this right:
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Bank Secrecy Act
The BSA dictates that for each deposit of 10K+ in cash, a Currency Transaction REport (CTR) be filled. It is a form covering a statement of fact. If structuring is suspected, a Suspicious Activity Report must be filled, which is more like a tip.
If the banks don't comply with these expectations, they can be subject to significant fines and penalties.
These fillings are also expected for securities, for conversion of assets to cash or vice-versa, when bringing cash or taking it out of the country, etc. So, for example, if you pay an attorney 10K in cash, they have to file a CTR.
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Re: Let me see if I got this right:
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Today, NSA is asking for permission to spy on everyone just for terrorism purposes. Guess what it will look like in 20 years?
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And automatic payroll deposits?
But collectively go over $10,000.....
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Re:
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Re: And automatic payroll deposits?
If your employer pays you $9,125 every two weeks it just means you earn a lot of money.
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Re: Re: And automatic payroll deposits?
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Re: Re:
In fact one of problems that firms of skilled professions have (is:accountants or even IT) is that many of their best employees quit and go independent or start their own independent business. It's usually more profitable to work for yourself than someone else.
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Re: Re: Re:
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But it IS reported to the government
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Remember People
Whether you are an actual criminal or not.
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Re: Remember People
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Re: Re: Re: And automatic payroll deposits?
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Re: Bank Secrecy Act
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Re: Re: Re: Re: And automatic payroll deposits?
I wasn't clear, but I meant that CTRs would not be submitted for automatic deposits. But you are correct that structuring could be associated with deposits if the bank has a reason to believe they are suspicious.
There is quite a bit of guidance around this, though, and automatic salary deposits (for example) are well-established non-suspicious behavior.
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Re: Re: Let me see if I got this right:
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Re: Re: Bank Secrecy Act
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What does this mean?
Does this mean that she's not getting the money back? So this is just another case of theft?
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and
... from April 2012 through February 2013, more than $315,000 in currency was deposited...
So the take-away is that the bank and federal agencies didn't care about her depsoits for nearly 40 years, until April 2012. What happened then? The IRS and FinCEN have been around for much longer than 2012.
But what this also shows is that any company that makes large cash deposits is also vulernable, no matter how long it's been in business.
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The IRS Was Correct
The problem is not the IRS. The problem (as usual, it seems) is congress. Congress wrote a law that made life difficult for non-criminal banks and business owners. Congress made a law that made typical behaviour criminal. The IRS does what the law told it to do. No doubt, congress either ignored the implications of their law (most likely), or expected the IRS to use discretion to ignore non-criminal transactions that violated these rules.
Where does this stop? The intent was to track EVERY transaction of $10,000 cash and make it illegal to evade the reporting.
the solution, it seems to me, is to make the form incredibly simple and hassle-free for established, regular businesses so people don't avoid it to "remove the hassle" of reporting. Once you've filed one CTR, it seems the rest should be "See first filing" if the source is the same... i.e. restaurant daily proceeds.
And what if the person, for example, says "oh, I have $8,000 in the till. I better deposit now instead of waiting until tonight." Is that legal, but once the amount in the till exceeds $10,000 a deposit of under $10,000 is illegal? It's just too confusing. Perhaps the law could say money is only forfeit in evidence of criminal proceeds... Otherwise, structuring would be like a speeding ticket - pay your $400 fine and begone with you.
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Re: The IRS Was Correct
I'm continually confused about the "hassle of reporting" stuff, though. In my own businesses, I regularly deposited checks that exceeded $10k. If there was any hassle involved, my bank shielded me from it so well that it had zero impact on me.
That said, I would certainly do my best to avoid cash transactions of $10k or more with my personal accounts. Not because of hassle, but because I would prefer not to appear on those government lists. With my businesses, I don't care because the reporting I have to do for them is more intrusive than that in the first place.
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Re: Re: Let me see if I got this right:
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Re: The IRS Was Correct
In this case the business owner had a legit, valid reason for making deposits before the amount reached $10,000. His insurance policy against theft only covers amounts under $10,000.
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Re: Re: The IRS Was Correct
Based on this post, you are now guilty of structuring. The IRS can arrest you at any time and make your transaction history appear to violate the statute with your admission in this post.
That's why this law needs to be stricken.
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Re: Re: Re: Re: Re: And automatic payroll deposits?
being good little droids, we reported that money in our loan app, and were taken aback to find out *THEY* wanted to give us the third degree where they money came from, a copy of the will, blah blah blah...
all for money that was distributed by check from a trust account, NOT a will or anything involved...
fucking creeps, dog damn i hates me some banksters...
as per usual, bullshit that THEY DO gets blamed on US; just like how NEGATIVE interest rates are becoming reality; *supposedly* to get big money holders to get their money out of savings accounts and put it in the stock market where The They (tm) can steal it fair and square...
um, just one tiny detail: IT IS THE BANKS who are sitting on tons of money they refuse to lend out; why isn't the Fed charging *them* negative interest to -you know- 'encourage' them to lend out the money ? ? ?
one racket on top of another...
i'm investing in pitchforks FTW ! ! !
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Curtailing
That's not what the article actually says. The New York Times wrote:
Merriam-Webster: Curtail: “to reduce or limit (something).”
A reduction or limitation is not the same as utter and complete cessation. Diminishment is not arrest.
They're just going to limit themselves to cases which are unlike Ms. Hinders, insamuch as her case got way too much damn publicity.
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Re: Re: Re: The IRS Was Correct
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This site is going to the crapper...
Seriously? Since when?
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Re: well, here's what gets me...
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Re: Bank Secrecy Act
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Re: Re: well, here's what gets me...
"If you don't have anything to structure, then you don't have anything worth seizing. Oh, your money is still presumed guilty, even if your flat broke and can't afford a lawyer, because we took your money. Don't expect it back any time soon."
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Re: Re: Re:
Not usually. All other things being equal, it's always more profitable to work for yourself. When you do so, you've cut out a whole bunch of middlemen who each take a cut.
On the other hand, that extra profitability doesn't come for free. Working for yourself is a lot more work than working for someone else. Forget about 8 hour workdays, for starters. You're never off the clock. Things like getting sick become hugely problematic. Every little problem with the business is your problem and you will lose at least some nights to worry and the resulting insomnia. Especially if you have employees. Oh, and all of the risk of the business is your risk.
Personally, I think working for yourself is the best way to go. It both maximizes return and maximizes satisfaction. However, it's certainly not for everybody. Whether or not I'd recommend anyone else do it depends almost entirely on their temperament.
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Re: Curtailing
And that, right there, is the real reason they dropped it, too many eyes watching what they were doing.
Grabbing a couple hundred grand from someone you know isn't guilty to pad the budget, no problem. Doing so when the public is watching you rob someone? Suddenly it was 'just a mistake', though by not having the case dismissed with prejudice, they're not even admitting that, but most likely just holding off until there's not so much press covering it before continuing.
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The whole point of the law is to uncover illegal activity. If they don't think there's illegal activity why would they pursue it?
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You hear that illegal stealers of money, theres a career ladder
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Re: This site is going to the crapper...
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Re: Re: Re: The IRS Was Correct
Or, you might just simply not want to be carrying larger amounts of hard cash to the bank on any sort of regular, predictable schedule...
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Re: Re: well, here's what gets me...
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Re: Re: Re: Re: The IRS Was Correct
Actually, they don't even need to frame you. Given your written admission it is more than likely that your house has been built using illegitimate means and so it better be forfeited for the good of everyone.
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Re: Re: The IRS Was Correct
They probably wanted to avoid having to cover thefts occuring as a consequence of the bank notifying the government about a large payment.
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Re: Re:
Can I break up my currency transactions into multiple, smaller amounts to avoid being reported to the government?
No. This is called “structuring.” Federal law makes it a crime to break up transactions into smaller amounts for the purpose of evading the CTR reporting requirement and this may lead to a required disclosure from the financial institution to the government. Structuring transactions to prevent a CTR from being reported can result in imprisonment for not more than five years and/or a fine of up to $250,000. If structuring involves more than $100,000 in a twelve month period or is performed while violating another law of the United States, the penalty is doubled.
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Re:
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IRS antics
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