IRS Drops Forfeiture Case, Returns $107,000 Taken In Bogus 'Structuring' Prosecution

from the teaching-old-thieves-new-tricks dept

The streak continues. A highly-dubious IRS asset forfeiture case receives some media attention, closely followed by the agency dropping the case.

Federal prosecutors have dropped an attempt to seize $107,000 from a North Carolina small business owner using asset forfeiture laws following several weeks of media scrutiny.

According to the Institute for Justice, a public interest law firm, the Internal Revenue Service and Justice Department moved Wednesday to voluntarily dismiss their case against Lyndon McLellan.
McLellan's case was raised (as a "hypothetical") by Rep. George Holding during IRS testimony in front of the House Ways and Means Committee. Holding asked IRS Commissioner John Koskinen why the agency was continuing to pursue a questionable "structuring" case against McLellan, considering both the IRS and the DOJ had issued policy revisions stating the government would not do this unless there was evidence the deposited money originated from criminal activity.

Koskinen agreed that McLellan's case should be dropped and promised to look into it. Meanwhile, the prosecutor overseeing McLellan's case contacted the Institute for Justice, claiming that its release of case details to House members would not only not help McLellan's case but could actually make it worse for him -- citing the vaguely-threatening "ratcheting" of "feelings" within the IRS by this public disclosure. He then offered McLellan a "final offer" of half his money back.

McLellan didn't take the offer. Now, he's getting all of his money back -- which he'll need, considering he's already racked up plenty of expenses fighting the IRS and DOJ.
McLellan still had to pay for a lawyer, not to mention $19,000 to have his business audited. The government also refuses to pay for interest earned on money after it has been seized.
While the IRS may be curbing its dubious forfeitures, there are still problems that need to be addressed within the DOJ itself.
Last week, the Justice Department said it would investigate two other prosecutors after one business owner whose assets were seized said he had been punished more harshly after publicizing his case and another said he had been threatened with a felony charge if he did not agree to give up some of his money.
Kind of dispels the notion that asset forfeiture has anything to do with "justice." As these programs continue to suffer from mainstream exposure, those heading up prosecutions seem unwilling to scale back their efforts accordingly. They can see the revenue stream drying up and they're getting desperate. There will be more than a few forfeiture victims whose cases will stay off the radar. Unfortunately for them, these "zealous" prosecutors appear willing to do whatever they can to ensure funds seized with no evidence of criminal intent or origin remain inaccessible to those who actually earned them.


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  • identicon
    Anonymous Coward, 15 May 2015 @ 1:02pm

    "He then offered McLellan a "final offer" of half his money back."


    Well, he wasn't wrong about that. It was a final offer.

    reply to this | link to this | view in chronology ]

  • identicon
    JustShutUpAndObey, 15 May 2015 @ 1:09pm

    Zealots paid?

    Given how zealous these DOJ prosecutors are, it seems reasonable to ask to what degree their promotions and job performance rating are based on the number of seizures they accomplish and the total amount they rake it.
    Conflict of interest?

    reply to this | link to this | view in chronology ]

  • identicon
    Whoever, 15 May 2015 @ 1:10pm

    "feelings within the IRS"

    citing the vaguely-threatening "ratcheting" of "feelings" within the IRS by this public disclosure.
    So the emotional state of IRS agents is a valid reason for the IRS to be intransigent?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 May 2015 @ 1:40pm

    How is this not a 4th amendment violation? Is it just an issue where it has not been reviewed in front of a court with enough "justice" to strike it from the books?

    reply to this | link to this | view in chronology ]

    • identicon
      JustShutUpAndObey, 15 May 2015 @ 1:58pm

      Re:

      "...How is this not a 4th amendment violation? ..."
      The courts HAVE ruled on this and said it does not violate the fourth amendment.
      The courts are wrong.
      Not for the first time.

      reply to this | link to this | view in chronology ]

    • icon
      James Burkhardt (profile), 15 May 2015 @ 2:24pm

      Re:

      Unfourtunately, the Supreme court has bought into the "but, but, DRUGS!" reasoning of law enforcement. They have however had a back and forth history with Civil Forfiture, accepting it while drawing very vague lines in the sand on occation. The biggest problem is that clear abuses of the system are rarely challenged to the degree necessary to reach the Supreme Court. Either the funds are too little to matter, or the forfeiture is never challenged, or the government admits its wrong and returns the funds, and there is little recourse for the victims.

      reply to this | link to this | view in chronology ]

  • identicon
    Mary Ann Ludwig, 15 May 2015 @ 2:31pm

    Asset Forfeiture

    Every bit of asset forfeiture is an absolute violation of the Fourth Amendment. I don't care where the money came from the Constitution spells it out very clearly: "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and SEIZURES (emphasis mine) shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the person or things to be seized." This is copied directly from the constitution so the odd comma placement is from the quote. In fact, the government has so overstepped its reach that we need to seriously revisit all laws involving constitutional issues and rid ourselves of every law that infringes on our precious rights.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 May 2015 @ 8:57pm

      Re: Asset Forfeiture

      Hate to play devil's advocate here, but the Constitution only prohibits unreasonable seizures. It all comes down to your definition of what a reasonable seizure is.

      Personally, I think that proving reasonableness in a court of law (e.g. due process of law) should be a minimum threshold. Even showing evidenciary support prior to seizing property would be a step in the right direction.

      reply to this | link to this | view in chronology ]

      • identicon
        DigDug, 16 May 2015 @ 6:19pm

        Re: Re: Asset Forfeiture

        Until then, any person regardless of government I.D. is a thief and should spend time behind bars, preferably at the bottom of the bay where the sewage runs into the ocean. Of course, that might start a die-off of epic proportions.

        All ABC Government entities are terrorists to the public of this nation until proven otherwise by a court made up solely from the people, not the government, not the judges, certainly not the fraking lawyers nor corporations.

        reply to this | link to this | view in chronology ]

      • identicon
        Just Another Anonymous Troll, 18 May 2015 @ 5:20am

        Re: Re: Asset Forfeiture

        It's mostly a Fifth Amendment issue:
        "nor shall private property be taken for public use, without just compensation."
        Seizing my money (private property) and using it to fund your agency (public use) without some just compensation is shown to be illegal right here. There's no 5 1/2 Amendment that says; "Unless you're a drug dealer or owner of a cash-based business, in which case you have no rights."

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 May 2015 @ 4:10pm

    Authorized Wealth Redistribution.

    reply to this | link to this | view in chronology ]

  • identicon
    KRA, 15 May 2015 @ 5:59pm

    Sick of this

    Why does it take the media to effect change? Who, besides law enforcement sociopaths, supports asset forfeiture? Where the hell is Congress?

    reply to this | link to this | view in chronology ]

    • identicon
      DigDug, 16 May 2015 @ 6:14pm

      Where the hell is Congress you ask??

      Riding on piles of cash pilfered from from us, their constituents, on their way to the Lehman Brothers to deposit their ill-gotten gains in secret accounts.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 May 2015 @ 8:09am

    Not just a revenue stream for the DOJ and IRS, as a large percentage of these snatched funds go directly into the higher-ups pockets and are never seen again.
    Usually covered as 'processing / admin fees'...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 May 2015 @ 8:10am

    Whats needed is a full independent investigation of the finances of every single person in the DOJ and IRS above the lowest level of worker.

    You'd suddenly find DOZENS if not hundreds of managers and supervisors lining their pockets with other peoples money.

    reply to this | link to this | view in chronology ]

  • icon
    Spaceman Spiff (profile), 18 May 2015 @ 6:47am

    One hopes

    One hopes that McLellan sues the IRS, and wins, for mispression of a felony (I think that's the right term) in that they illegally deprived him of his income and assets and are trying to hide it under a plethora of legal BS. That is theft under color of authority. I'm not a lawyer, but I know a lot of legal terms! :-)

    reply to this | link to this | view in chronology ]


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