By Stephen J. Dunn
Don’t get me wrong. I love my country. The United States is the greatest country on the face of the earth.
But the U.S. Department of Justice is executing a civil asset forfeiture program without foundation in law, in shocking violation of entrepreneurs’ civil and constitutional rights.
The Bank Secrecy Act, 31 USC § 5313(a), and regulations thereunder, provide that when a domestic financial institution is involved in a cash transaction of $10,000 or more, it must report the transaction to the U.S. Treasury Department. A required report must be filed by the financial institution within 15 days after occurrence of the reportable transaction.
The Omnibus Drug Act of 1986 added §§ 5317 and 5324 to title 31 of the United States Code. Section 5324(a) provides that no person shall, for the purpose of evading the currency transaction reporting requirement, cause or attempt to cause a domestic financial institution to fail to file a required currency transaction report, or structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.
An example of “structuring” would be instead of making a deposit of $12,000, making one deposit of $9,000 and another of $3,000, with specific intent to evade the bank’s currency transaction reporting requirement. In other words, the depositor must know of the bank’s currency transaction reporting requirement, and specifically intent to evade it.
31 USC § 5317(c)(2) provides that any property involved in a violation of §§ 5313 or 5324, or any conspiracy to commit such violation, and any property traceable to any such violation or conspiracy, may be seized and forfeited to the United States, in accordance with procedures prescribed for money laundering cases pursuant to 18 USC § 981(a)(1)(A).
It is clear from the legislative history of the Bank Secrecy Act and the Omnibus Drug Act of 1986 that Congress intended the currency transaction reporting requirement of § 5313 and the asset forfeiture provision of § 5317(c)(2) as weapons in the war on drug trafficking.
In the current civil asset forfeiture program, however, Treasury agents are seizing entrepreneurs’ bank balances where it appears that the entrepreneur has endeavored not to make deposits of $10,000 or more, without any evidence that the entrepreneur knew of the bank’s currency transaction reporting requirement, or specifically intended to evade it, or that the entrepreneur was involved in drug trafficking.
I currently have two such cases. In one case, an entrepreneur operates two Chinese restaurants. The restaurateur tried to keep her business deposits under $10,000 because she mistakenly believed that she was thereby avoiding a reporting requirement which she would otherwise have. The restaurateur did not know of the bank’s currency transaction reporting requirement, or care about it. Without the warning that the U.S Treasury regarded her conduct as “structuring” and that continued such conduct could result in seizure of her bank balances, Treasury seized over $135,000 from the restaurateur’s business bank accounts. The seizure left the restaurateur without working capital needed to purchase inventory, pay payrolls, pay administrative expenses, pay real property taxes, or maintain their restaurant properties.
The other case involves a grocery store. The owner tries not to accumulate cash of more than $10,000 because his business insurance policy limits claims for loss of cash to $10,000. Moreover, the bank is across the street from the grocery store, and there is little trouble in making a deposit.
In this case, a Treasury agent appeared at the grocery store in 2010 and gave the grocer a document entitled “Notification of Law,” stating the law against structuring, and that structured funds may be seized from bank accounts, and forfeited. The grocer did not understand the Notification of Law—English is not his first language. He signed a receipt for it to make the Treasury agent go away.
That Treasury provided a Notification of Law to the grocer but not to the restaurateur evinces uneven application of the law, further underscoring the lack of due process in this area.
In April, 2012, Treasury completed a Bank Secrecy Act audit of the grocer, and informed him that it found no violations. Then, in January, 2013, without any notice to the grocer, Treasury seized over $35,000 from his bank accounts. The seizure has convulsed the grocer’s business, in which margins are tight. Lack of cash has damaged the grocer’s credit standing with vendors, who now require him to pay cash for food and beverage purchases.
The seizures in each case violated the Due Process Clause of the Fifth and Fourteenth amendments to the U.S. Constitution, and the Excessive Fines Clause of the Eighth Amendment. The civil asset forfeiture law did not apply in either case, as neither entrepreneur engages in drug trafficking.
We are litigating both seizures in Federal court. In the usual civil case, stiff legal bills bring about early resolution of the case. But not so with the Unites States, which can put unlimited resources into litigation without batting an eye. Fortunately, a nonprofit, public interest law firm will represent the grocer, and will litigate the case for only the prospect of recovering attorney fees and costs at the end of the case. I will serve as local counsel for the grocer.
So far the restaurateur is not so fortunate. I will continue prosecuting the case for her, even if she cannot pay me. It is the least I can do. The Founding Fathers risked everything they had in rising up against British tyranny. Had the Revolution failed, they would have been “attained’ for high treason—legislation would have been enacted declaring all of their property confiscate to the Crown, and requiring their execution (Article I, Section 9 of the U.S. Constitution outlaws bills of attainder in this country).