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.
Would that other newspapers were as forthright as calling for an end to “policing for profit” as the Grand Forks Herald. North Dakota is already considered to be one of the states that does best at curbing the abuse of civil forfeiture; adjoining Minnesota does less well.
Last week the Department of Justice announced a deal with Toyota in which the Japanese automaker would fork over $1.2 billion and place itself under supervision for allegedly not being forthcoming enough with information at the height of the 2009-2010 panic over claims of unintended acceleration in its cars. The acceleration claims themselves had turned out to be almost entirely bogus, and were refuted in a report from the federal government’s own expert agency, NHTSA. Instead, the prosecution relied on a single count of wire fraud: Toyota had supposedly given regulators, Congress and the public an erroneously positive view of its safety efforts. It should therefore have to “forfeit” a huge sum supposedly related to the volume of business it did over a relevant period.
I’ve got an opinion piece in Monday’s Wall Street Journal (unpaywalled Cato version here, related Cato post here) about this whole appalling affair, which should frighten other businesses that might face draconian charges in future not just for compliance infractions, but more broadly for defending their products in the court of public opinion. Meanwhile, the Justice Department’s grandstanding and demagogic press release goes to some lengths to leave the impression “that unintended acceleration is some mysterious phenomenon of auto design unrelated to flooring the accelerator.” Someone here is irresponsibly misleading the motoring public and withholding vital safety information, but it’s not Toyota.
A few related links: NHTSA unintended acceleration report, Car & Driver’s coverage, and my 2010 opinion piece. And Holman Jenkins at the WSJ (paywalled) compares the still-unfolding story of ignition problems at GM, also discussed by Paul Barrett at Business Week.
Radley Balko has a roundup of critical reactions to what he calls the “astonishingly awful” 6-3 Supreme Court decision last week. Cato had filed an amicus brief on the side that did not prevail, urging recognition at least of an opportunity to challenge the seizure after the fact. Earlier here.
Someone must have deactivated the Dallas Morning News’s B.S. detectors [Amy Alkon] The paper’s editors uncritically cheer new proposals from Texas Sen. John Cornyn and Rep. Ted Poe for legal changes including wider use of forfeiture and more draconian sentences for johns. More: “There have been two compelling-prostitution cases filed in Harris County this year. Not 300,000. Two.” [Mark Bennett] Yet more: the paper corrected 11/24.
Headline, from WWJ: “Sterling Heights Gas Station Owner Says IRS Grabbed $70K From His Bank Account For No Reason” Mark Zaniewski, “owner of Metro Marathon in [suburban Macomb County], said the IRS emptied out his bank account twice over the course of a week this spring.” No charges have been filed; Larry Salzman of the Institute for Justice, representing Zaniewski, says the accounts were seized on suspicion of bank “structuring” (knowingly arranging deposits to fall below $10,000), even though some deposits were over that threshold. Salzman says his client has been waiting seven months for his cash and in the mean time is unable to get a hearing before a judge. IJ recently took on a structuring case involving a grocer in nearby Fraser, Mich. Earlier on structuring and its intersection with forfeiture law here, here, here, etc.
Update via Dan Alban on Twitter: “BREAKING: IRS voluntarily dismisses Michigan forfeiture cases, will return seized money to owners of family grocery store and gas station. Doesn’t get feds out of IJ’s separate constitutional lawsuit re: right to prompt hearing, Dehko v. Holder.”
“South Dakota v. Fifteen Impounded Cats” is one of those fairly common in rem cases with an amusing caption. Would you really be surprised if the cats won? [Lowering the Bar, which has the best list I've seen of comical case names]
P.S. On a more serious note, many of these cases are attempted forfeitures with the associated due process problems [The Economist]
This isn’t the first time Fulton County, which includes Atlanta, has come under suspicion of turning forfeiture proceeds into what one might call seizure slush funds. “According to guidelines published by the U.S. Department of Justice, agencies that participate in the federal equitable sharing program (like the Fulton County DA), must ‘avoid any appearance of extravagance, waste, or impropriety’ when spending forfeiture funds.” [Nick Sibilla, Institute for Justice]
P.S. In other forfeiture news, the U.S. Department of Justice has dropped efforts to seize/forfeit the property of landlords renting to California legal medical marijuana dispensaries [Nick Schou/OC Weekly, Reason] And [h/t commenter Gitarcarver] South Florida’s Sun-Sentinel has an expose of forfeiture doings in Sunrise, Fla. Yet more: Baltimore judge aims stinging criticisms at assistant U.S. attorney Stefan Cassella in seized-Mercedes case [Van Smith, City Paper]
The Institute for Justice is defending the owners of a grocery store in Fraser, Mich. who saw their bank account seized under forfeiture law on suspicion of structuring deposits (keeping them below $10,000 on purpose to avoid reporting). Video here. We’ve been covering the results of structuring law, and its intersection with forfeiture powers, for a while now, and its nice to see the issue attracting the notice of a group as formidable and high-profile as IJ.
“…can be stripped of their cash, cars, and even homes.” Sarah Stillman’s new article in the New Yorker is making a stir, and I write up some of its highlights at Cato at Liberty, including the traffic-stop scandal in Tenaha, Texas, a curious raid on a Detroit art museum, and the plight of a Philadelphia couple whose son sold $20 of pot from their front porch (& Don Boudreaux, Cafe Hayek).
Bonus: “The Civil Forfeiture Implications of the DEA-NSA Spy Program” [Eapen Thampy, Americans for Forfeiture Reform]
“Washington D.C. city council members are considering a bill that would give D.C. residents the strongest protections against the abuse of civil asset forfeiture in the country.” [John Ross] “Court Ruling Forces Nebraska Police to Return $1 Million Seized from a Former Exotic Dancer by Asset Forfeiture” [Ilya Somin, Lincoln Journal-Star] The American Bar Association, admittedly not a wholly disinterested party, “is supporting the right to a pretrial hearing to challenge court orders freezing assets that a defendant needs to retain counsel.” [ABA Journal] And not necessarily a forfeiture story, but worth pondering even if not: “Undercover Informant Plants Crack Cocaine in Smoke Shop, Business Owner Saved by Tape” [Scotia (Schenectady County), N.Y.; Krayewski]
Asset forfeiture operations with private helpers working on contingency fee:
After seizing more than $1 million in cash in drug stops this year, a district attorney has suspended further roadside busts by his task force because of growing criticism over a private company’s participation.
District Attorney Jason Hicks, whose territory includes four Oklahoma counties, hired Guthrie-based Desert Snow LLC with a deal to pay it between 10 and 25 percent of seizure proceeds, depending on whether its “trainers” were present or only department officers. “Sometimes, no drugs were found and no one was arrested, but task force officers took money found in the vehicles anyway after a drug-sniffing dog got excited.” Now criminal charges arising from the stops are being ended, an investigation has been launched into allegedly missing funds, and “some” money is being returned to motorists. A judge said he was “shocked”
after learning the private company’s owner pulled over a pregnant driver along Interstate 40 and questioned her even though he is not a state-certified law enforcement officer….
Forfeited funds are split among the law enforcement agencies of the task force after Desert Snow is paid.
It bears repeating again and again: contingency fees and law enforcement authority don’t mix. Not ethically, anyway. (via Ed Brayton; more from Eapen Thampy, Americans for Forfeiture Reform).