Posted on 12/02/2013 9:02:40 AM PST by Kaslin
“I’ve always paid my taxes and have never been arrested or charged with any crime in my life. I am a successful small-business man. But in January of this year, I woke up to find that my business’ entire bank account — more than $35,000 — had been wrongly seized.”
These are the words of Terry Dehko, who since 1978 has owned Schott’s Supermarket in Fraser, Michigan. His daughter, Sandy, began working with her dad at the store when she was 12, and now helps him run the business. Last year, the IRS conducted an audit of the store, and on January 22nd of this year, Terry woke up to his entire bank account – $35,000 – suddenly vanished. While the money disappeared, Terry was never charged with a crime.
The Institute for Justice, after taking Terry’s case and threatening to file another suit in Michigan against the federal government, recently scored a victory for innocent property owners such as Terry. The IRS quietly retreated, and Schott’s Supermarket is as thriving as ever.
But justice for Terry Dehko does not mean justice for all similarly harmed Americans, or to the reputation of law enforcement itself. And why did this happen to Terry in the first place?
It’s a regime called civil forfeiture, and it could happen to you.
In civil forfeiture, government doesn’t even accuse people – but rather “stuff” such as real property, cash, and cars - of being guilty of a crime. This perverse practice often is used for eyebrow-raising lavish perks for local law enforcement agencies. More seriously, it severely undercuts the historical assumption in American jurisprudence of “innocent until proven guilty.” Civil forfeiture is a prime example of an unjust imbalance of state power against individuals, and through such, harms the overall credibility of law enforcement.
Civil asset forfeiture is a decades-old regime, instated during the Reagan Administration through the Comprehensive Crime Control Act of 1984 as a way to bolster the then-new war on drugs. Law enforcement, through this regime, can seize one’s cash, car, or even home on suspicion of the property being associated of a crime, without ever charging the corresponding owner.
And it’s growing. Last year, the Department of Justice seized over $4 billion in assets, a far cry from the mere $27 million obtained at the outset of the program in 1985. These funds are used directly for forfeiture-related expenses and, far more broadly, for other general law enforcement purposes.
On a certain level, the regime’s rationale may sound viable. Proponents note that the practice enables law enforcement to confiscate cash or property and funnel the proceeds directly into their efforts. For instance, police in Tulsa, Oklahoma, bolster their “tough on crime” reputation by driving a Cadillac Escalade triumphantly stenciled, “THIS USED TO BE A DRUG DEALER’S CAR, NOW IT’S OURS!”
However, it’s not that rosy.
First, because one need not be even be charged with a crime (let alone be found guilty) before forfeiture occurs, this turns the long-held American doctrine of “innocent until proven guilty” on its head. Studies have shown that a mindboggling 80 percent of such impacted individuals are, indeed, never charged with a crime.
“The protections our Constitutional usually affords are out the window,” rightfully concludes Louis Rulli, a University of Pennsylvania law professor and national forfeiture expert. Unlike in criminal forfeiture, in which a person must be first convicted before property is confiscated, civil forfeiture requires an individual to come into court and bear the burden of proving that his or her “stuff” is not guilty. The presumption of innocence is nowhere to be found. And litigating is not cheap, so very few property owners, and almost zero low-income individuals, even attempt to regain their forfeited property.
Examples abound of proceeds not faithfully funneled into any semblance of meaningful police work. For instance, the DA’s office in Fulton County, Georgia, recently celebrated forfeiture profiteering with $5,600 on a Christmas party, $1,100 on flowers, and $3,200 on “sirloin beef tip roast, roasted turkey breast and mini crab cakes with champagne sauce.” Police in Pittsburgh used the proceeds for almost $10,000 worth of Gatorade. The Milwaukee County Sheriff’s Office recently used forfeiture to purchase nine flat-screen TVs for $8,200.
All of this clearly detriments the property owners, but also has a dangerous effect on law enforcement.
The government acknowledges that factors which build a positive public image of the police include solving problems in communities and helping victims and social cohesion marked by informal police contacts. A doctrine in which the government arrives at doors and kicks people out of their homes, takes modest to large amounts of cash, or impounds cars without ever charging the property owners with a crime does nothing to foster trust. Add this with the rising militarization of the police, especially in the past decade, and our nation is left facing a police force that is a far cry from fostering voluntary “social cohesion.”
Because of the growth of the forfeiture regime, and the resulting increased awareness of this absurd regime in recent years, there is far more than dollars at stake. Morale is on the line. Credibility is on the line. The doctrine of innocent until proven guilty, and the resulting long-held public assurance of this being the rightful relationship of the state to individuals, is on the line. And if law enforcement truly values these dire social and philosophical concerns, they will not forfeit their own credibility for the mere sake of profit.
The statists never did much like that Constitution thing. So they just ignored the part about unjust seizure, gave it a different name, and kept right on doing what they were doing. It’s the American way.
In the case of the grocery store, the gentleman’s daily deposits happened to fall below the $10k reporting level, so the IRS accused him of bundling. The weird thing is that they had just done an audit on him so they should know what his cash receipts are and how much should be deposited on an average day. Plus, who bundles to hide an amount of $35,000. Wtf, I have more money than that in my private accounts.
>> so the IRS accused him of bundling.>>
Would you please be good enough to explain what bundling is to me?
IIRC - Banks are required to report cash deposits of more than x amount.
The idea is to catch those who illegally run a cash business (ostensibly drug dealers, etc.).
The ‘bundle’ then occurs when someone has (e.g.) $18K to deposit; but to avoid this large deposit being reported, they will it into smaller individual bundles, each of which can then be deposited without triggering the report.
dang - once again no ‘edit’ button...
Exactly right.
I’m not in favor of these laws, but if we are going to keep them then there should be some restrictions to prevent abuse:
1. Assets are frozen for 180 days or until charges are filed.
2. Assets are unfrozen if charges are dropped or the defendant is acquitted
3. Forfeiture is only permissible after a felony conviction
4. The federal government is not allowed to work with police in districts with local laws banning forfeiture (Using the federal forfeiture program as an end run around local policies is wrong).
With these in place, the only way for the police to get a windfall... is to do their job and bust bad guys.
Thank you so much Jonno. I couldn’t find it on the internet.
Thank you, wafflehouse, for your answer to bundling.
Much appreciated.
Although it was done under Reagan, it was Rudy Giuliani's pet project at the DOJ.
For a business like this family-owed market, freezing his bank account for 180 days would likely lead to bankruptcy. He would have no funds to pay his suppliers or to meet his payroll.
Not all cases are as bogus as this. Let's say a rich fellow is bored with his wife and wants to procure some company. We won't use real names, so let's call our rich guy Elliot Spitzer. Now Elliot Sptizer (not his real name) wants to buy a $15,000 prostitute so to avoid the banking reporting requirements he makes two payments to the procurer of $9000 and $6000. Despite the fact that is illegally done for purely criminal intent, and that he also violates the long standing Mann Act by procuring said prostitute across state lines, our hypothetical Mr. Spitzer is not prosecuted. Why? Because he is a high ranking democrat and the (democrat) prosecutor doesn't feel prosecuting the sitting governor of the hypothetical state of "New York" is in the interest of (democrat) justice.
Also had something to do with insurance coverage according to the article I read in the paper. Coverage max for 10 grand maybe.
Silly USNBandit! Laws are for peasants!
I would further add that "commissions" for entities which seize assets are inherently corrupting and should be forbidden. At minimum, they encourage cases which could generate a large windfalls by targeting people who are relatively harmless, to be given priority over cases involving crooks who do much more damage, but have nothing of value to seize.
If someone is in a situation of naturally having smaller amounts which total over $10,000, is there can one preemptively file a form to say in essence "I am making this transaction, and I'm telling you I'm making this transaction. Any claim by the government that this transaction is under $10,000 simply because I don't want to report it would should be regarded as a clear an obvious lie?"
And don’t forget Tip O’Neill and the democrats in control of Congress loved it ‘cause it made them look “tough” on crime.
The bill was passed in the House and then the Senate with a lot of fanfare and little opposition. Ole Tip saw that it was pushed from committee to final floor vote in a flash.
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