 No, it wasn’t the burritos or enchiladas that caught the eye of a hungry federal
agent. Instead, it was the fact Hinders’ restaurant was cash only, meaning she
had to make large cash deposits to her bank account on a weekly basis.
Photo curtesy Institute for Justice
Photo curtesy Institute for Justice
HINDERED BY THE FEDS: Carol Hinders owns a Mexican restaurant in Iowa, but her
cash-only business landed her in hot water with the IRS despite not breaking any
federal laws.
Those deposits never exceeded the federal limits of $10,000 at a time, and in
the eyes of the taxman that only made her more suspicious.
When the IRS seized her business and bank accounts in August 2013, the feds
argued her deposits seemed like the kind of metered efforts made by drug
traffickers and dealers who also deal with large amounts of cash and are known
to “structure” their deposits carefully to avoid that same $1,000 daily limit.
That might seem like flimsy evidence to anyone who is familiar with America’s
judicial system — where the government must prove guilt “beyond a reasonable
doubt” before anyone can be jailed or otherwise punished — but thanks to federal
forfeiture laws, the IRS was able to effectively shut down her business and
freeze her assets without ever setting foot in a real courtroom or facing the
same burden of proof as would happen in a trial.
There’s plenty of reasonable doubt about what the IRS did to Hinders. And now,
thanks to dozens of cases like that around the country, there are members of
Congress and, maybe soon, justices of the Supreme Court with similar doubts
about how federal law enforcement agencies use forfeiture laws.
“The government is seizing billions of dollars of cash and property from
Americans often without charging them with a crime,” said U.S. Rep. Jim
Sensenbrenner, R-Wisc.
Civil asset forfeiture “has proven a far greater affront to civil rights than it
has a weapon against crime,” he said.
Photo via Wiki Commons
Photo via Wiki Commons
TALKING SENSE: U.S. Rep. Jim Sensenbrenner, R-Wisc., says forfeiture has proven
a far greater affront to civil rights than it has a weapon against crime.
Sensenbrenner chairs a legislative subcommittee on crime, terrorism and homeland
security, which earlier this month examined the forfeiture issue. He hopes the
hearing is part of a process that will correct Congress’ failure to pass
adequate laws to limit how federal law enforcement uses forfeiture.
States have been battlegrounds over forfeiture laws in recent years, but the
issue has only bubbled up at the federal level in the past few months.
In addition to the recent congressional hearing, outgoing U.S. Attorney General
Eric Holder announced some, most cosmetic, changes to how the Department of
Justice would be allowed to use forfeiture. President Barack Obama’s pick to
replace Holder, U.S. Attorney Loretta Lynch, faced tough questions during her
confirmation hearing about the aggressive use of forfeiture by attorneys working
under her in New York.
Watchdog.org has previously reported on one of those cases — eerily similar to
Hinders’ situation — in which a Long Island business was effectively shut down
by Lynch after making cash deposits the feds said resembled drug dealing
activity, with no proof of drugs actually being sold.
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At her confirmation hearing, Lynch defended the use of forfeiture
and said those procedures are done “pursuant to the court.”
Kenneth Blanco, deputy assistant attorney general, told
Sensenbrenner’s committee forfeiture is “a critical legal tool” and
the department was committed to “ensuring that federal asset
forfeiture laws are appropriately and effectively used consistent
with civil liberties and the rule of law.”
And it’s being used much more often than it used to be.
The Department of Justice seized more than $550 million in 1993, a
total that ballooned to more than $4 billion in 2013, according to
Sensenbrenner.
Other federal agencies are in on the game too.
The IRS, which went after Hinders’ Mexican restaurant in 2013,
seized more than $240 million between 2005 and 2012, according to
the Institute for Justice, which challenges forfeitures in court and
presses for legislative changes.
“Current federal law incentivizes forfeiture by allowing law
enforcement agencies to keep 100 percent of the proceeds,” said
Darpana Sheth, an attorney with IJ. “At a time when government at
all levels face serious budget shortfalls, it’s no surprise that
forfeiture has become ever more attractive.”
At least a third of those cases were based on nothing more
substantial than a series of cash transactions of less than $10,000.
Those deposits are entirely legal under federal law.
The issue could soon be before the Supreme Court as well. This week,
the court announced it would hear oral arguments in a case that
deals with the FBI’s seizure of guns from a man who was convicted of
selling marijuana. Though federal law says it’s illegal for a felon
to possess firearms, Tony Henderson had agreed to sell his guns
before his conviction — but the government seized them and refused
to allow the sale to go through.
Reformers like the Institute for Justice are hopeful the Supreme
Court will use the case to place limits on how forfeiture laws can
be used.
The courts have been the biggest check on forfeiture abuses so far.
Hinders, with help from IJ, recently got the government to settle
her case and return the money that was seized years ago.
But real reform lies with Congress, said Sensenbrenner. He sees the
problem as being one of inadequate laws, not abusive law
enforcement.
On that point, there is a growing bipartisan consensus. At the
hearing on Feb. 11, U.S. Rep. Sheila Jackson Lee, D-Texas, said
there needs to be a better balance between law enforcement and
constitutional protections for those accused of a crime.
“Unfortunately, it is increasingly apparent that our laws are not
sufficient in this regard,” she said.
[This
article courtesy of
Watchdog.]
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