IRS Shuts Down Another High-Profile Asset Forfeiture Case, Gives $447,000 Back To Its Rightful Owners

from the sadly,-no-interest-will-be-collected-on-this-two-year-'loan' dept

Thu, Jan 29th 2015 9:35am — Tim Cushing

Thanks to our nation's tax laws and liberal asset forfeiture programs, the IRS can seize funds from a bank account if it believes the account holder is attempting to bypass income reporting requirements by making deposits under the arbitrary $10,000 cutoff. The IRS doesn't need to obtain evidence of wrongdoing or even ever press charges against the account holders. It just takes the money, and it's up to those whose accounts have been emptied to prove that they weren't "structuring" their deposits.

Recently, it dismissed a structuring case against Carole Hinder, who had run her small, cash-only restaurant for nearly 40 years without incident before the IRS decided she was hiding money from it. It seized nearly $33,000, but seemed to reconsider its position after her case was covered by national press outlets like the New York Times.

The same seems to have happened here. Many of the reports on asset forfeiture also detailed the plight of the Hirsch family, whose convenience store distribution company's account attracted IRS attention for the same reason. Asset forfeiture went into play and the IRS walked off with nearly a half-million of Bi-County Distribution's money. Over two years later, the case is suddenly being dropped and the money returned to its rightful owners.

The government acknowledged in its agreement to return the money that the Hirsch brothers, who operate Bi-County, were never charged with any crime. In fact, all of the money deposited by the Hirsches was lawfully earned from their small business, according to the Institute for Justice, a libertarian law firm in Arlington, Va., that represented the Hirsches.

The Hirsch case was helped by the family's retention of a forensic accountant, who prepared a report analyzing the company's deposits and financial transactions and handed it over to federal prosecutors. However, it was not helped by the IRS' refusal to make the next move after it seized the family's money back in 2012.

During the two-and-a-half years that the government held the money, federal prosecutors filed no formal action in court to complete the forfeiture, which deprived the Hirsch brothers of an opportunity to contest the seizure in court.

So, media heat or not, it took a lawsuit filed by the Hirsch family to finally regain the $447,000 from the IRS. The settlement doesn't do much for the family who spent more than two years fighting this, as the agreement stipulates each party is responsible for its own legal fees. This will hit the Hirsches harder than it hits the US government since only the former party will be paying out of its own pocket.

In the settlement agreement [pdf link], the government disingenuously dodges admitting wrongdoing and even adds in wording stating that the return of the funds does not release the family or its company from "any potential criminal liability." This leaves room for the IRS to make another run at the Bi-County Distribution if it wishes, although I would imagine the harsh light of unwanted publicity means this will be the last we hear of this particular asset forfeiture case.

Long Island Forfeiture Stipulation of Dismissal 01 20 2015 (PDF)Long Island Forfeiture Stipulation of Dismissal 01 20 2015 (Text)

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Filed Under: asset forfeiture, asset seizure, carole hinder, cash, forfeiture, irs, stealing money
Companies: bi-county distribution

24 Comments

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Ninja (profile), 29 Jan 2015 @ 7:48am

I haven't read anything about what was the impact of such criminal seizures. The cash-only restaurant, did they manage to keep things running? What about this case? Sure getting half a million dollars is great but what if that seizure resulted in bankruptcy? This is very serious and the cases shouldn't be allowed to be dropped at the Govts whim.
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David, 29 Jan 2015 @ 9:57am

What I want to see
I want to see the DOJ's buildings seized for their illegal arms and drug trafficking in the Fast and Furious debacle that Eric Holder permitted perjury over before congress.

But I guess that would be more like civic forfeiture than civil forfeiture.
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mb (profile), 29 Jan 2015 @ 9:59am

Your Country Is Broken
This is just another fine example of how completely broken everything the US government, and legal system is.
There are so many end runs around any sort of reasonable due process, that it is a complete delusion to believe Americans are not living in a totalitarian regime. (unless you are wealthy, then you can just buy your own version of "law")
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Anonymous Coward, 29 Jan 2015 @ 10:02am

The U.S. is "exceptional"
and not in a good way.
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Sneeje (profile), 29 Jan 2015 @ 10:06am

Struggling a bit...
This posting most likely has it right, but the settlement agreement refers to form 8300, which is not the FinCEN form associated with deposits, it is the form associated with the conversion of cash into other assets or services.

In other words, this maybe isn't about deposits, but about the conversion of >=$10K cash into other assets or the conversion of assets into cash.
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smith, 29 Jan 2015 @ 10:24am

Long Island Family
So after 2 years they returned assets to owners..
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wec, 29 Jan 2015 @ 10:29am

What about the interest the government made on this amount of money?
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Anonymous Coward, 29 Jan 2015 @ 10:44am

And how much are they going to fine themselves and recompensate this person for interfering with their life for no god damn good reason........i think in proportion to the stress it may or may not of caused should be suffice..........i think the same math the mpaa use, that equivelates a bunch of songs on an ipod being a value running in the millions should apply.........maybe then they'd take a look at that kinda "math" in the future with more scrutiny and learn to recognise it, instead of being "foolled" every!single!time!
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Anonymous Coward, 29 Jan 2015 @ 11:21am

Re: What I want to see
The ATF Department was responsible for that, not Holder. The reason Holder gets the blame for that is because the ATF has no department head to blame, because the senate has refused to approve a head of the ATF for over a decade, no matter who Bush or Obama nominated.

Holder has done a lot that he deserves blame for, but Fast and Furious isn't one of them.
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Derek Kerton (profile), 29 Jan 2015 @ 11:26am

Re: Your Country Is Broken
Yeah. Forget encyrption backdoors. This is a private property rights backdoor.
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Anonymous Coward, 29 Jan 2015 @ 11:41am

It's stories like this which makes me scared to deposit money into banks. I'd rather come up with my own secure deposit location hidden from the IRS. Who wouldn't after reading these horror stories?
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RD, 29 Jan 2015 @ 11:48am

Re: Re: What I want to see
"Holder has done a lot that he deserves blame for, but Fast and Furious isn't one of them."

Happened on his watch - it's his responsibility. After all, if it's a good enough way to place blame for Presidents (shifting the blame from the actual person to the successor just because it came to light later) then it's good enough for that criminal.
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Vincent Clement (profile), 29 Jan 2015 @ 12:12pm

This is just an example of legislative and enforcement creep. You create a law in response to a supposed problem, say like reporting cash transactions of $10,000 or more. So people start depositing $9,999. Well, the government doesn't like that you figured out how to comply with the law. Only in the eye of the government can someone be breaking the law by following it.

The same applies to those jurisdictions who have a 'warn range' for blood alcohol levels. 0.08 is the legal standard in most jurisdictions that results in a criminal offence.

Well, people started to drink less, which meant less people being charged with drunk driving. So governments came up with the 0.05 to 0.08 warn range and can suspend your licence (in the Province of Ontario, the first warn range offence is a three-day suspension and a $150 penalty) if you blow in that range. No blood test has been taken and you haven't done anything criminally wrong, but you are doing something 'illegal' in the eye of the government, so pay up.
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Anonymous Coward, 29 Jan 2015 @ 12:41pm

They got their money back...
...but was there any 'penalty' included?

If you underpay - or fail to pay for any reason - you will owe a penalty to the IRS. Since the IRS was at fault (whether they admit it or not) why don't they get to pay a penalty to the rightful owner of the money?
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Anonymous Coward, 29 Jan 2015 @ 1:31pm

Easy CHEAT!
They shutdown the forfeiture to avoid summary judgement.

Most corrupt judges would dismiss a client case against them because they are just that kind of a dirt bag.

The government needs to take not that this is why the Ferguson Riots happened... not 'JUST' because a minority was shot, but because there is a systemic and progressive corruption that has corroded the entire system of justice here.

People are getting to close to snapping and before we all know it, all fucking hell will have broken loose and the people in power just seem to give zero fucks about it.
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alternatives(), 29 Jan 2015 @ 2:59pm

Re: They got their money back...
If you underpay - or fail to pay for any reason - you will owe a penalty to the IRS.

Bullshit. Fill out the form explaining WHY you have made the decision you made - no penalty.
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Padpaw (profile), 29 Jan 2015 @ 3:10pm

Committing crimes with the intent to harm and nothing happens to them as a consequence other than having to give back what they stole.

That's really someone people should continue to trust and work with. As they have no incentive to stop being criminals
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Anonymous Coward, 29 Jan 2015 @ 3:24pm

Re: What I want to see
Fast and Furious began before Holder took office.
Facts are not your friends, boy.
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Anonymous Coward, 29 Jan 2015 @ 3:27pm

Re: Re: Re: What I want to see
"Happened on his watch - it's his responsibility. After all, if it's a good enough way to place blame for Presidents (shifting the blame from the actual person to the successor just because it came to light later) then it's good enough for that criminal."

The Great Recession happened on Bush's watch, but Republicans act like everything was great until the day Obama took office.
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Personanongrata, 29 Jan 2015 @ 3:30pm

The Fish Rots from the Head
The fractions of Americans operating within the IRS (US government) are sickening to behold.

These baseless US government seizures of American citizens property is what a person would expect to occur in the Peoples Democratic Republic of Korea (North Korea) and/or other locales governed by totalitarian governments.
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Anonymous Coward, 29 Jan 2015 @ 3:59pm

Re: Re: What I want to see
Began before, and was not prosecuted by Holder even when proof of murders with those weapons started coming in. He is hated for not bringing Justice equally. Justice is impossible if it is not equally applied.
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Pragmatic, 2 Feb 2015 @ 5:33am

Re: Easy CHEAT!
Excuse me while I adjust my tinfoil hat: it's not that they don't know that America is becoming a powder keg, it's that they do. The private prison industry is counting on it.

At that point you'll realize that your Second Amendment gun rights aren't worth a damn because the Establishment own the national media outlets. Anyone who questions the status quo NOW is considered a POTENTIAL terrorist. So what do you think will happen if you take up arms against it?

That's your problem.

We need to get the numbers and fight this at the ballot, not with bullets. Any attempt at open, armed revolt would result in the authoritarian crackdown they've spent DECADES preparing for.

/tinfoil
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