The Daily Signal recently ran a story about civil asset forfeiture and the abuse of power that are turning law enforcement and law-abiding citizens in adversaries for no good reason.
This past July, an employee working at the L&M Convenience Mart in North Carolina urgently summoned owner Lyndon McLellan to the store to deal with an emergency.
When he arrived, more than a dozen federal and state law enforcement agents from the Federal Bureau of Investigation (FBI), North Carolina’s Alcohol and Law Enforcement and the local police department greeted McLellan.
Two federal agents asked to speak with him in private. In a stock room at the back of the store, the agents asked him if he was familiar with the term “structuring.” He said no but that didn’t matter.
The law requires banks to report cash deposits over $10,000 to federal authorities for further review since illegal activities like drug smuggling and money laundering are cash based crimes – and “structuring” is a cash deposit strategy used by criminals to avoid the reporting requirement.
Criminals break up cash deposits below the $10,000 reporting threshold but do so on different days to conceal criminal activity.
With this as background, the federal agents showed McLellan bank records that revealed that he made two cash deposits totaling $11,400 over two days to his store’s account at Lumbee Guaranty Bank.
The agents also had numerous other bank statements showing he had a history of making cash deposits below $10,000 – a red flag for “structuring” under federal law.
That’s when the agents told him that the Internal Revenue Service (IRS) had seized all of the money he had in his store’s bank account – $107,702.66. McLellan remembers asking the agents:
“Are you telling me you took my money?” …”I can’t believe that y’all guys can walk in here and tell me y’all took every bit of my money out of the bank.”
McLellan told The Daily Signal:
“It’s my livelihood…” “This is all I know how to do. I’m 50 years old, and if I had to do something else, I’d probably be in trouble. This is what I was brought up in. This is all I know.”
After agents left his store, McLellan drove to Lumbee Guaranty Bank where bank officials confirmed that the agents had emptied his account earlier in the day leaving the building with a cashier’s check for the full balance in his account. McLellan left with nothing.
Although he didn’t know it at the time, McLellan committed structuring violations.
What’s more, those who have their cash and property seized due to structuring violations have no recourse. Agents do not need to charge those involved with a crime and victims have no opportunity to clear their names.
And those who seize assets believe most people will give up rather than go through the process of getting their property back because it could cost them more than what they lost in the first place with no guarantee of success.
While the original intent of “structuring violations” was to take the cash out of crime, the practice is now being used to entrap innocent Americans who make deposits that look like structuring. The resulting in “civil asset forfeiture” of cash and property go to fund law enforcement activities that have increased dramatically in recent years.
In 2005, the IRS made 114 structuring seizures. In 2012, the IRS made 639 structuring seizures resulting in a $242 million payday for law enforcement agencies.
Robert Johnson, a lawyer for the Institute for Justice and McLellan’s attorney, told The Daily Signal said:
“When an agency like the IRS takes money under the forfeiture laws, that money goes back into the pockets of the agency and it’s available to the IRS to fund law enforcement activities without appropriation from Congress. It’s a powerful incentive for law enforcement to abuse civil forfeiture laws.”
Months after seizing McLellan’s money, the federal government offered him 50 percent of his money back if he agreed to a settlement deal by March 30 thinking McLellan would rather settle and undergo years of litigation and lawyers’ fees. McLellan declined.
“I guess I’m old school. If you’re wrong, you’re wrong. If you’re right, you’re right. And in this case, I feel like they’re wrong,” he said. “And I was raised on – preached to about – what would be right and what would be wrong.”