Government As Bank Robber: IRS Seizes $107K From Biz Owner For Making Too Many Small Cash Deposits
Disgusting. Hard-working convenience store owner Lyndon McLellan was accused of "structuring" deposits -- depositing less than $10K at a time, supposedly to get out of IRS reporting requirements (for deposits of $10K and more).
About how he earned $107K over 10 years, selling soft drinks, cigarettes, and hot dogs:
"Took 13 years to get it and less than 13 seconds to take it away."
An Institute for Justice video:
As the text with a Vox story about this notes:
The agency hasn't charged McLellan with any crime, but under controversial civil asset forfeiture rules the burden of proof is on him to prove he didn't violate the "structuring" laws.
Yes, he now has to fight the government to get his money back. With zero evidence that he's guilty of anything other than working hard to earn an honest living.
Also from the Vox story:
The New York Times points out that business owners can have legitimate reasons for keeping their cash deposits under $10,000. For example, some store owners have insurance policies that only cover cash losses up to $10,000.It won't be easy for McLellan to get his money back. Many forfeiture targets don't bother to contest seizures under civil forfeiture laws because legal fees would exceed the value of what was taken. But with IJ's help, he might be able to recover the money the IRS took from him.
The IRS declined to comment on the case, citing taxpayer privacy laws.
Check out how the government engages in legalized thuggery -- also from the NYT piece linked above (written by Shaila Dewan):
During a congressional hearing in February, Representative George Holding, a Republican from North Carolina, referred to Mr. McLellan's case, saying no crime other than structuring had been alleged. "If that case exists, then it's not following the policy," John Koskinen, the commissioner of the I.R.S., said.But the prosecutor on the case, Steve West, was unmoved. Notified of the hearing by Mr. McLellan's lawyer at the time, he responded with concern that the seizure warrant in the case, filed under seal but later given to Mr. McLellan, had been handed over to a congressional committee, according to an email exchange provided to The New York Times by the Institute for Justice, a libertarian public interest law firm that has taken over the case.
"Your client needs to resolve this or litigate it," Mr. West wrote. "But publicity about it doesn't help. It just ratchets up feelings in the agency." He concluded with a settlement offer in which the government would keep half the money.
Why, how generous.
Structuring seizures have ballooned in recent years as law enforcement task forces comb through hundreds of thousands of bank reports
There are three problems here, and all three are pretty outrageous.
First, of course, is asset forfeiture. The government should have to prove a case before punishing someone.
Second are the structuring laws, which in the end are subjective: what pattern of deposits counts as structuring? The law should have a clear, objective standard.
Third is the fact that the IRS has access to information about your bank deposits. What happened to the fourth amendment? The government should require a warrant to access your financial information.
a_random_guy at May 3, 2015 1:18 AM
It only adds insult to injury to have your money stolen for supposedly trying to avoid these banking reporting requirements which are obviously obsolete. If they can "comb through hundreds of thousands of bank reports", why are these reporting requirements even needed now?
Oh, right, because it is an easy way to make risk-free money by fleecing the innocent.
Dwatney at May 3, 2015 6:29 AM
"But publicity about it doesn't help. It just ratchets up feelings in the agency."
Just what exactly does the prosecutor mean by that? It sounds to me like:
you embarrassed us so we are going to dig in harder and not admit we made a mistake.
If that is what he means it shows what a jerk he is.
Clearly, his law degree (and his history lessons) failed him - freedom of speech and freedom of the press are intended exactly for this type of situation - publicity is needed to call the government out on this type of crap.
charles at May 3, 2015 6:49 AM
Well said and exactly right, a_random_guy. And DWatney.
And charles.
It is so sick that this has been done and continues to be done.
This guy reminds me of my hard-working dad, who wouldn't jaywalk but who probably had no idea of the laws that could be used to trip him up.
Amy Alkon at May 3, 2015 7:34 AM
Land of the fleeced and home of the slave.
"But publicity about it doesn't help. It just ratchets up feelings in the agency."
Aka we're pissed that you won't let us extort you. Apparently innocent until proven guilty does not exist in that IRS lawyers mind.
Sio at May 3, 2015 7:44 PM
Exactly Sio. In other words, if you tattle on us we won't let you keep half of your money.
Ben at May 3, 2015 8:02 PM
My response to the prosecutor, "What Difference, at this point, does it make?". When you put people into a no win scenario, don't be surprised if they decide to fight you, even if the odds are good they'll lose, because they HAVE NOTHING LEFT TO LOSE anyways.
spqr2008 at May 4, 2015 4:22 AM
When I worked in a restaurant, back in the late '70s, we made deposits every night, and sometimes two on Saturday (usually our busiest day). No retail business owner leaves large amounts of money in the establishment overnight; that's just asking for a break-in or robbery. Our nightly deposits were usually in the $1000 range (would be about $3000 today). So according to today's laws, we were "structuring". (We would likely not have been prosecuted; we were a chain owned by a big foods holding company that was and is known to be a generous campaign donor. The mom-and-pop place down the stree that we sometimes traded food with would not have been so lucky.)
We left a small amount in a safe overnight, usually about $100 in $1 bills, quarters, and dimes, so that the day shift could make change for morning customers. Even that was somtimes too much of a temptation for thugs, who would break in and try to get the safe open. They seldom succeeded, but the damage they caused had to be fixed. They nearly always tore up the cash register despite the fact that we left it open and empty overnight. We never had this hsppen in any of the stores I worked in, but I knew of some others were extensively vandalized by thugs who were pissed because they couldn't get into the safe, to the point where they had to throw out thousands of dollars worth of food, have the buildings extensively sanitized, and undergo days of repairs before they could open again. Criminals, by and large, are stupid and vengeful. Best not to attract their attention. If you are in the habit of leaving money in the store overnight, they *will* find out.
Cousin Dave at May 4, 2015 8:46 AM
@"publicity about it doesn't help. It just ratchets up feelings in the agency"
Wow! Notice how this is actually a veiled threat? West is basically saying, 'Don't try shine a light on our corrupt sociopathic behavior, or we will double down on guys like this'.
Lobster at May 4, 2015 12:00 PM
Policing for profit jaywalking tickets, asset forfeitures, unchecked surveillance. Does anyone notice a pattern here?
I'm beginning to think that my government is out to get me!
Jay R at May 5, 2015 11:57 AM
Not you Jay. Your wallet.
Ben at May 6, 2015 7:57 AM
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