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Friday, May 02, 2014

Courts - "George Will: Here’s why we distrust the government" and a 7th Circuit opinion

The Indianapolis Star today published an opinion piece by George Will, that you will need to read for yourselves. It contends that small business people, mostly immigrants, who run corner groceries and other stores that deal mostly in case, are being targeted by the IRS. Some quotes:

Terry, who came to Michigan from Iraq in 1970, soon did what immigrants often do: He went into business, buying Schott’s Supermarket in Fraser, Mich., where he still works six days a week. The IRS, a tentacle of a government that spent $3.5 trillion in 2013, tried to steal more than $35,000 from Terry and Sandy that year.

Sandy, a mother of four, has a master’s degree in urban planning but has worked in the store off and on since she was 12. She remembers, “They just walked into the store” and announced that they had emptied the store’s bank account. The IRS agents believed, or pretended to believe, that Terry and Sandy were or conceivably could be — which is sufficient for the IRS — conducting a criminal enterprise when not selling groceries.

What pattern of behavior supposedly aroused the suspicions of a federal government that is ignorant of how small businesses function? Terry and Sandy regularly make deposits of less than $10,000 in the bank across the street. Federal law, aimed primarily at money laundering by drug dealers, requires banks to report cash deposits of more than $10,000. It also makes it illegal to “structure” deposits to evade such reporting. * * *

The IRS used “civil forfeiture,” the power to seize property suspected of being produced by, or involved with, crime. The IRS could have dispelled its suspicions of Terry and Sandy, if it actually had any, by simply asking them about the reasons — prudence, and the insurance limits — for their banking practices. It had, however, a reason not to ask obvious questions before proceeding.

The civil forfeiture law — if something so devoid of due process can be dignified as law — is an incentive for perverse behavior: Predatory government agencies get to pocket the proceeds from property they seize from Americans without even charging them with, let alone convicting them of, crimes. Criminals are treated better than this because they lose the fruits of their criminality only after being convicted. * * *

Civil forfeiture proceeds on the guilty-until-proven-innocent principle, forcing property owners of limited means to hire lawyers and engage in protracted proceedings against a government with limitless resources, just to prove their innocence. Says IJ:

“To make matters worse, forfeiture law treats property owners like random bystanders and requires them to intervene in the lawsuit filed by the government against their property just to get it back. That is why civil forfeiture cases have such unusual names, such as United States v. $35,651.11 in U.S. Currency — the case involving Terry and Sandy.”

ILB: Parts of this column sounded familiar, so I looked back and found a March 19, 2014 2-1 civil forfeiture opinion decided by Judge Hamilton, United States v. Yulia Yurevna Abair, involving a Russian immigrant. The Court reversed the lower court and sent the case back for a new trial. Judge Sykes, in dissent, describes what Abair did:
Yulia Abair, a Russian immigrant and registered nurse, made an unusual series of large cash deposits into her account at a bank near South Bend, Indiana. This attracted the attention of IRS agents and eventually the Department of Justice, but their investigation turned up no evidence of nefarious activity. Abair wasn’t evading taxes or laundering ill-gotten gains; she was buying a home and was having difficulty accessing funds in her Citibank Moscow account. To get around the problem, Abair resorted to the scheme my colleagues have described: She made repeated ATM withdrawals from her Russian bank account and deposited the cash with her local bank in a series of transactions just under the $10,000 threshold that triggers the bank’s reporting requirements for currency transactions. The withdrawals were legitimate, but the deposits landed Abair in big trouble.

Posted by Marcia Oddi on May 2, 2014 02:26 PM
Posted to Courts in general