Radley Balko on structuring/”smurfing” laws

by Walter Olson on April 22, 2014

I’m a little late in getting to this, but last month Radley Balko wrote the definitive blog post on the appalling state of federal bank structuring law, which makes it a felony to arrange bank transactions in quantities of less than $10,000 so as to avoid reporting requirements that kick in at that threshold. He hits virtually every point we’ve made in this space over the past couple of years, including the trend toward “freestanding” structuring prosecutions not arising from any underlying criminal activity, the close connection to forfeiture law, the enlistment of banks as a covert surveillance/informant network not disclosed as such to customers, Congress’s removal of willfulness as a condition of the offense, the unusual concentration of cases coming out of the state of Maryland, the white-knight role played of late by the public-interest law firm Institute for Justice, and of course the jarringly atypical leniency extended to the most famous structurer of all, New York’s Eliot Spitzer.

The immediate news event that prompted the coverage, summarized by Eugene Volokh: a Seventh Circuit decision, in U.S. v. Abair, reversing and remanding for retrial the conviction of an Indiana woman convicted for withdrawing her own money from her bank in violation of the statute so as to finance her purchase of a house; the government took the house from her in forfeiture.

{ 9 comments }

1 shg 04.22.14 at 7:36 am

Posts like this remind me how insular people can be when there is a political aspect involved. It disappoints me deeply. Yes, you are late. About 30 years late. Radley is too, though he’s young so it’s unfair to expect him to know things that happened when he was still playing with GI Joe, SWAT team edition.

There is a wealth of content about forfeiture and structuring going back to the development of some truly bad law, but you make no mention of any of it. Instead, it’s as if libertarians just discovered this problem and are leading the fight to fix it. While it’s nice that you guys have finally decided to hop aboard the caboose, and your help is certainly welcome, don’t break an arm patting yourselves on the back.

This fight has been going on for decades, fought by criminal defense lawyers without any political/ideological group offering a helping hand. But now that it’s touching businesses and “innocent” people, it’s of interest to you. Great.

But the insularity of this post, where you make yourselves the hero of your own little fantasy, is a smack in the face to those who battled this cause long before you knew it existed. You’re on the tail end of this problem. If you had cared at all for the first 30 years, maybe it wouldn’t be the disaster it is today.

2 Walter Olson 04.22.14 at 7:54 am

Actually, shg, if you’re talking about the forfeiture-law side of it, Cato has been on it for years and years and years, before almost anyone. My colleague Roger Pilon was cooperating with Rep. Henry Hyde to publicize the topic in the late 1990s:

http://www.cato.org/sites/cato.org/files/serials/files/policy-report/1999/7/forfeiture.html

And if you’re talking (as I was in my post) not about forfeiture generally, but about the menace of the bank structuring statute, I myself have been writing about that since 1999, which was very, very early as commentators go, and long before the Spitzer episode:

http://reason.com/archives/1999/03/01/lost-in-the-wash

Nonetheless, there *is* a narrative that has changed significantly (so far as I can see) in the past few years, and that is prosecutors’ widespread rolling out of structuring charges not linked to any underlying illegalities, as with farmer’s market vendors and the like. If you’ve actually been defending clients who bring you fact patterns of that sort for 15 years but I only jumped in to cover it three years ago, then I suppose I’m being insular, though I think you’d still welcome the support. But if, as I suspect, you ran into structuring back then as an add-on charge, then do understand that this expansion of prosecutorial practice provides a massive opening to get many more people to care about the issue as it begins to affect people with whom they find it easier to identify.

And if you still imagine people like me and Roger P. didn’t “care at all” back in 1999, shg, there’s not much I can do to help you.

3 shg 04.22.14 at 8:03 am

The Hyde Amendment was the product of efforts going back to the early 1980′s, largely by organizations like the NACDL and the ACLU that put this before Henry Hyde, after more than a decade of criminal defense lawyers battling forfeiture in the trenches.

No one would sign on as amicus. No one would provide support to fight these cases. Defendants would be stripped bear of assets and then prosecuted, and everyone applauded how the government was taking the profit out of crime. Everyone except criminal defense lawyers, who worked pro bono because our clients were impoverished by forfeiture. The Hyde Amendment came much later.

We had no friends back then. I was there. I remember.

4 Walter Olson 04.22.14 at 8:09 am

One way to encourage allies to flock to you sooner and in greater numbers, shg, is to be welcoming and gracious when they do come on board.

5 shg 04.22.14 at 8:27 am

That’s certainly true, even if a bit post hoc ergo propter hoc. Unfortunately, I suspect that no matter how gracious I am about history being rewritten now, it won’t change what happened 30 years ago when we were very welcoming and gracious, and still no one would take our phone calls.

6 Robert Swirsky 04.22.14 at 10:17 am

What makes me spitting mad is a tangential issue. They punished this woman for doing oddball transactions, but ones that weren’t for the purpose of laundering money or beating taxes.

Meanwhile, tens of millions of people LIED on government-backed mortgage applications to buy houses they can’t afford, and what does our government do? They FORGIVE income tax on canceled mortgage debt (outrageous! http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation- )–a one trillion dollar handout to the lower- and middle- class that the “99%” won’t even acknowledge as they campaign to raise my taxes.

7 Shtetl G 04.22.14 at 1:01 pm

Mr. Olson is obviously a splitter from the People’s Front of Judea when it comes to asset forfeiture. 15 years working on reform is definitely some post hoc justification for practically being a prosecutor. I’m with shg, 30 years or bust otherwise I’m sticking Judean People’s Front. Splitter.

/I’m sorry for making this issue a goof, shg. Thanks for being right on asset forfeiture for so long but you could stand to lighten up a little and welcome allies where you can get them even if they are some johnny come lately libertarian splitters.

8 Allan 04.22.14 at 2:22 pm

Forgiveness of income tax debt gets you spitting mad? I envy you for being able to ignore a lot of things that are much more outrageous (such as jailing people for innocently putting $9,999 into a bank account).

I am not real excited about that one either, but there are many, many, many, more govermental caused problems that are worse.

9 David Schwartz 04.24.14 at 6:52 pm

Many institutions have transaction limits that are less than $10,000. Is it really a crime to split a transaction up into pieces if you could not possibly have performed a single transaction of $10,000 or more? ATMs don’t let you withdraw more than $10,000.

Or is it a crime because she could have used something other than an ATM to perform the transactions? She could have not bought the house too. It can’t be that the law hinges on some sort of “necessity” of the transaction, can it?

Does this law just totally not make any sense at all? Or am I missing something?

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