Legislators Send Letter To Treasury Department Demanding Release Of Funds Seized In Bogus Structuring Case

from the IRS:-we-won't-do-this-anymore,-but-probably-not-any-LESS,-either dept

Asset forfeiture finally found its way into the mainstream after years of coverage by media outsiders. The sudden increase in negative attention brought about some needed reform efforts. The DOJ issued new guidelines on civil asset forfeiture, as did the IRS, which announced it would no longer pursue seizure of funds under "structuring" statutes unless there was evidence the money came from criminal sources.

One of the victims of the IRS's bogus "structuring" seizures (made pre-policy shift) is Randy Sowers, a dairy farmer who had $63,000 seized by the agency in 2012. The cash came from sales made at local farmers' markets, but the IRS viewed it as a criminal act simply because Sowers never topped the magical $10,000 mark with his deposits.

The Sowers were "working" with the IRS to have the funds returned (this implies a modicum of due process that doesn't actually exist in civil forfeiture). Then Randy Sowers almost screwed things up, as Melissa Quinn of the Daily Signal reports.

While the couple was in the midst of settlement negotiations with the government, hoping to have most of their money returned, Randy Sowers spoke with a reporter from The City Paper in Baltimore, Md., about his experience with structuring and civil asset forfeiture.

On the day the article was published, Stefan Cassella, the assistant U.S. attorney overseeing Sowers’ structuring case, told the family’s lawyer he had a “problem” and was no longer willing to negotiate a settlement amount, according to court filings.
This attitude seems to be common to IRS prosecutors. They don't mind taking your money for the flimsiest of reasons and they don't mind fighting you every step of the way should you choose to challenge the seizure, but goddamn if it doesn't piss them off if you decide to discuss your situation in public.

If you'll recall, another victim of a bogus structuring seizure took his case (mostly anonymously) to a Congressional hearing. The prosecutor in that case reacted just as badly to the public airing of IRS-related grievances. He sent a letter to the Institute of Justice (which is representing the convenience store owner who had $107,000 seized by the IRS) that basically stated any publicity resulting from this would only harm this person's case. Because vindictiveness.
I do not know who did that, and I am accusing no one, but it was not from our office and could only have come from your clients. That was certainly not my intent in making this available. Whoever made [the document] public may serve their own interest but will not help this particular case

Your client needs to resolve this or litigate it. But publicity about it doesn't help. It just ratchets up feelings in the agency.
The prosecutor then offered a take-it-or-leave-it deal of 50% of the seized cash back. C-store owner Lyndon McLellan chose the latter.

Sowers, however, did eventually settle with the IRS, receiving (coincidence?!) half of the seized funds. Why settle when you're clearly in the right? Because it's tough to run a business when your liquid assets have suddenly vanished. Half is better than nothing, especially if you want to remain solvent.

Now, he wants the other half. And he's brought backup.
A bipartisan group of lawmakers on the House Ways and Means Oversight Subcommittee is coming together to ask the Treasury Department to return nearly $30,000 it seized from Maryland dairy farmers in 2012.

The letter, sent August 11 to Treasury Secretary Jack Lew, calls on the agency to return $29,500 the Internal Revenue Service seized from Frederick-based dairy farmers Randy and Karen Sowers through civil asset forfeiture.

The lawmakers also asked Lew to review similar cases and return money seized by the tax agency under the practice.
The letter reminds the Treasury Department that the seizure program is in place to stop money laundering, drug trafficking and disrupt the funding of terrorist organizations. It is not just a quick and dirty way for the government to take money from cash-heavy businesses who frequently deposit cash in sub-$10,000 quantities. In many of these cases, it appears business owners have received bad advice from well-meaning family members or friends. In other cases, the bad advice comes from the bank employees themselves. What doesn't appear to be integral to these disputed cases is any link to criminal activity.

A very long petition for the return of the money has been lodged with the DOJ. It points out that under the agency's current rules, the sort of seizure they've experienced would not even be initiated. It also points out that the couple was apologized to by several members of the Congressional committee and the IRS Commissioner himself. And yet, the Treasury Department refuses to cede any ground on the other half of the Sowers' funds. Hopefully, a three-page letter from a bunch of legislators will compel the return of the Sowers' money -- something their 209-page complaint has yet to accomplish.




Reader Comments

Subscribe: RSS

View by: Time | Thread


  • identicon
    Anonymous Coward, 20 Aug 2015 @ 1:50pm

    hmpff...

    unless there was evidence the money came from criminal sources.

    Still not good enough!!! Evidence is in the eye of the beholder!

    Innocent until proven guilty, but not these days eh?! Really speaks volumes about our broken society where automatic guilt is the order of the day upon accusation!

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

  • identicon
    That One Other Not So Random Guy, 20 Aug 2015 @ 2:12pm

    Wont someone please think of the officers that wont be able to pay their student loans and live rent free? The humanity.

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

  • identicon
    Any Mouse, 20 Aug 2015 @ 2:12pm

    I'm really curious as to why asset forfeiture hasn't faced a major constitutional challenge yet.

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

    • identicon
      Anonymous Coward, 20 Aug 2015 @ 2:23pm

      Re:

      Because those who have had their assets seized have difficulty paying the lawyers.

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

    • icon
      That One Guy (profile), 20 Aug 2015 @ 2:24pm

      Re:

      The original excuse they used to justify it was drug related, taking away property and/or money gained from illegal actions, and you can be sure that anyone who challenged it would be accused of being pro-drugs and/or pro-crime by the numerous government and police agencies who use it to line their own pockets or pad out the budget.

      Basically it hasn't been challenged because none of the politicians feel like committing professional suicide.

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

    • identicon
      PRMan, 20 Aug 2015 @ 2:48pm

      Re:

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

    • identicon
      Joe, 24 Aug 2015 @ 8:29am

      Re:

      You DO NOT rock the boat, if you're a practicing lawyer. And if you are your own advocate, the judges (read: attorneys) pretty much find any excuse to dismiss your 'wild and unfounded claims'. Any mistake and you're sharkchow, and that's if the judge is trying to be fair. Watch the scene in the movie Selma where they do a 'voter intelligence test' for a dramatized version of how this works. This is how the system works when you're not a chosen one, whatever that means in the specific time and place.

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

  • icon
    lars626 (profile), 20 Aug 2015 @ 2:31pm

    If they were to dig just a little I bet they would find that most of this comes from just a small number of people at the IRS. Determine the worst ones and fire them. The word would get around.

    If you are rewarded for bad behavior you will just keep behaving badly; on the other hand ...

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

    • identicon
      Anonymous Coward, 20 Aug 2015 @ 2:36pm

      Re: Not just the IRS!

      If they were to dig just a little I bet they would find that most of this comes from just a small number of people at the IRS.
      I think you have not read up on how widespread the problem is. I can't say that everyone at the IRS does it, but I can say that I have read numerous reports of forfeiture-related abuses from non-IRS agencies. Firing people at the IRS is a nice idea (esp. if they deserve it, for example, for working for the IRS), but it's nowhere near a full solution.

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

    • identicon
      Joe, 24 Aug 2015 @ 8:40am

      Re:

      They probably have some nice skeletons in their closets. A sex scandal or two would clean out some petty people. Spending a few hours a week after hours with a coworker? A little too friendly with the family dog? Like to share legally questionable pictures of your kids? You don't need better lawyers, you need better private eyes! Best part is because it's considered blackmail to keep this secret, you can 'leak' this information all over the web without a guilty conscious!

      Too bad that psychopaths (Look up the medical definition) don't learn from punishment of themselves and only poorly of others. If they keep their jobs, they'll just get more vicious when called out on this nonsense. This is morally no different than Indian women being intimidated into not filing rape charges. Abuse like this is vile and if left unchecked, only gets more brazen.

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

  • identicon
    Anonymous Coward, 20 Aug 2015 @ 2:32pm

    And to think, it was IRS that was able to get Capone put in jail.

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

  • identicon
    Anonymous Coward, 20 Aug 2015 @ 2:58pm

    5th Amendment

    "No person shall...be deprived of...property, without due process of law; nor shall private property be taken for public use, without just compensation."

    What part of that don't you understand, Mr. Government Man?

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

    • identicon
      Mr. Government Man, 20 Aug 2015 @ 3:30pm

      Re: 5th Amendment

      The part where it specifically lists how the rules don't apply to us obviously. Don't bother looking, our copy of the Constitution has a few 'tweaks' not in the public version, but trust us, it's just as, if not more, valid as the 'regular', un-classified version.

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

    • icon
      Bergman (profile), 23 Aug 2015 @ 6:37am

      Re: 5th Amendment

      The theory goes that people have rights, but they're not suing people, they're suing property which has none.

      The fact that that property has an owner and that owner has rights is simply ignored.

      By the logic of asset forfeiture laws, you could legally mug someone -- and it would not be armed robbery -- so long as you only pointed your gun at their wallet, not them.

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

  • identicon
    Digitari, 20 Aug 2015 @ 2:59pm

    IRS? what about the TSA?

    the TSA found a bunch of cash in some guys luggage, they let it through the airport but tweeted a picture of it. The DEA was at his destination, and took his cash.


    http://www.washingtonpost.com/news/wonkblog/wp/2015/06/30/why-the-tsa-posted-a-photo-of-cash-fi lled-luggage-on-twitter/

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

  • icon
    Richard (profile), 20 Aug 2015 @ 3:05pm

    Feelings in the Agency

    . But publicity about it doesn't help. It just ratchets up feelings in the agency.

    What! - Agencies are supposed to be professional - they aren't supposed to have "feelings".

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

  • identicon
    Anonymous Coward, 20 Aug 2015 @ 3:08pm

    Make them pay 100% penalties on top

    If we owed money to the IRS, they would be adding penalties and interest. Do the exact thing back and compound it 100% a month that it goes unresolved. I am willing to bet the agencies losing their golden goose eggs will suddenly find they can return any suspect funds within the day.

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

    • identicon
      Quiet Lurcker, 20 Aug 2015 @ 7:04pm

      Re: Make them pay 100% penalties on top

      The penalties on $63k, even compounded at 100% monthly (effectively doubling the amount owed every month), would be effectively chump change.

      A million dollars a day, might get someone's attention.

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

  • identicon
    Personanongrata, 20 Aug 2015 @ 3:50pm

    Amend the Law Stuff the Letter

    Sternly worded letters from congress are nice but amending the law to prevent this from occurring in the first place would be best.

    Monitoring a persons bank deposits are the actions of a totalitarian government.

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

  • icon
    sorrykb (profile), 20 Aug 2015 @ 4:36pm

    A bipartisan group of lawmakers on the House Ways and Means Oversight Subcommittee is coming together...
    The combination of "bipartisan", "House", and "together" might actually be shocking enough to get Treasury's attention.

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

  • identicon
    Nomad of Norad, 20 Aug 2015 @ 5:30pm

    on the subject of Money Laundering

    I notice that one of the supposed legitimate reasons for seizing money is cases of money laundering. The thing that disturbs me about this is that I have seen a number of instances that have happened in recent years where it is clear they've widened the definition of "money laundering" so far that it no longer has any meaningful distinction. It used to be that money laundering meant you had physical currency that had serial number on it that could be tracked along its path through the banking system, so criminal enterprises would take that block of money to an outside outfit that would switch that physical stack of folding money with another, same-value physical stack of folding money, which they could then spend freely without it being tracked, then that other outfit would take the original stack of currency and splatter the individual units of currency across 10,000 different, independent transactions so no two pieces of physical currency were spent at the same establishment. Now, they've slowly expanded the definition of it now so far that "money laundering" == "this outfit SPENT THE MONEY that we allege they gathered through criminal activity..." And yet the alleged criminal still gets the full legal punishment as if they DID do the above, switch-the-stacks-of-currency-to-lose-the-trackable-serial-numbers shenanigans, EVEN THOUGH THAT'S NOT WHAT THIS "CRIMINAL" DID. That way is the path to tyranny.

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

    • icon
      El Mariachi (profile), 20 Aug 2015 @ 11:32pm

      Re: on the subject of Money Laundering

      That’s not at all what money laundering means. It has nothing to do with serial numbers or physically tracing fat stacks.

      Basics of Money Laundering:

      You receive a large amount of cash income from your criminal enterprise. You can’t use it to buy or invest in anything significant without raising red flags with the cops and/or taxman. You can’t just put it in the bank, because the bank has to report large deposits. Either way, the IRS will come around asking questions about where that money came from and why didn’t you declare it on your tax return. (Of course you couldn’t declare it, because you can’t account for how you got it without getting in even more trouble.)

      So what you do is you open a legitimate business that routinely deals in a lot of smallish cash transactions — a strip club, a car wash, a pool hall, a bar — and you add chunks of your dirty money to the clean declarable income the front business brings in. If your bar legitimately grosses $50,000/month, it becomes $58,000, it’s not going to raise any eyebrows. Now your dirty money has a clean source that you can report on your tax return, and you’re free to spend how you like (minus Uncle Sugar’s cut.)

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

      • identicon
        Joe, 24 Aug 2015 @ 8:52am

        Re: Re: on the subject of Money Laundering

        One trick is to deliberately have a business where people can pay way more than something is worth, using cash. Say, the most expensive dry cleaner in town, a video arcade, 'accidentally' playing poor at a casino, pawn shops (reason many places make you provide ID for larger purchases but they don't check too hard - they all have cameras though), weapons (you trade your drugs for guns thus avoiding the cash issue in first place), and so on. These are all small potatoes compared to getting government contracts, though. You can literally 'lose' billions that way, and best of all, it's legal.

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

  • identicon
    Anonymous Coward, 20 Aug 2015 @ 5:34pm

    I wonder what the odds are that the funds seized from law abiding citizens are being used to create and help the drug trade, illegal arm deals and terrorism.

    Since the money seems to vanish rather fast and these agencies seem to have their fingers in a lot of criminal related pies that they should be stopping but seem to be encouraging.

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

    • identicon
      David, 21 Aug 2015 @ 7:16am

      Re:

      "Fast and Furious" is on record, so there is no point in talking about "odds" here. Money stolen under the presumption of the "war on drugs" is being used to equip drug dealers with weapons and other benefits.

      The question is not if this is done, but rather how much from illegal seizures goes into illegal ventures.

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

  • identicon
    Rekrul, 20 Aug 2015 @ 5:46pm

    A bipartisan group of lawmakers on the House Ways and Means Oversight Subcommittee is coming together to ask the Treasury Department to return nearly $30,000 it seized from Maryland dairy farmers in 2012.

    That right there is the problem; They're asking the treasury department to return the money that they stole.

    Our government is supposed to have checks and balances to prevent any one portion from abusing their power, but as this incident proves, there are no meaningful checks or balances. One portion of the government abuses it's authority and all the rest of the government can do is send a strongly worded request and hope that they comply.

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

  • identicon
    Justme, 20 Aug 2015 @ 11:52pm

    Just a thought. .

    My understanding is that they actually bring a court case against the seized items or cash with the claim it was engaged in a criminal act.

    I hate to quote the N.R.A. but, if guns don't kill people, people kill people ; then money doesn't commit crimes, people commit crimes.

    They would probably charge your suit with a crime if it was expensive enough.

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

  • identicon
    Joseph M. Durnal, 21 Aug 2015 @ 7:35am

    I'm a customer

    When I buy from local companies, I like to spend cash, for the same reason I prefer taking cash, CC processing fees are outrageous for small businesses, an overhead expense nobody likes to pay. I generally buy from their local store, but my wife sometimes buys from their market stands. They have the best milk and ice cream I've ever consumed, and their other local farm products are great too!

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

    • identicon
      Random Conspiracy Theoryist, 21 Aug 2015 @ 7:59am

      Re: I'm a customer

      This is why I'm thinking they are using CAF in order to force us to a credit/debit card society. Where all transactions are logged in databases, and the Big Banks (that the government is beholden to) get their 2-3% cut of everything.

      But maybe my tin-foil hat is a little snug.

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

      • identicon
        Anonymous Coward, 21 Aug 2015 @ 9:29am

        Re: Re: I'm a customer

        Random Conspiracy Theorist: I don't think your hat is too snug. I've marveled at people who insist on using a debit card for one dollar transactions. I've never understood the reasoning why one cannot carry a few dollars of cash for such transactions. And it's getting worse: the past few years I've seen debit/credit card readers installed on water dispensing machines. Yes, those 25 cents per gallon machines for one and five gallon jugs!

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

    • icon
      John Fenderson (profile), 21 Aug 2015 @ 8:06am

      Re: I'm a customer

      "When I buy from local companies, I like to spend cash"

      Me too, and not just for local companies, but for all companies. Using a card at a store is essentially the same as using an affinity card (which I avoid like the plague): it's one of the primary ways that stores spy on you.

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

      • icon
        Gwiz (profile), 21 Aug 2015 @ 8:24am

        Re: Re: I'm a customer

        How long before this sign starts becoming prevalent at checkouts:

        CASH ACCEPTED
        with proper I.D.

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

      • icon
        El Mariachi (profile), 21 Aug 2015 @ 1:53pm

        Re: Re: I'm a customer

        What sinister purposes do you imagine a grocery store has in spying on the highly classified data of items you buy from that very store itself?

        “That John Fenderson sure is buying a lot of ham lately… Let’s blackmail him by threatening to pass this info on to his Orthodox rabbi”

        Believe me, nobody cares about tying your groceries to your real identity. My Safeway card has a made-up phone number and for some reason thinks my name is Mariana Ramos. The only reason they keep track is so they can try to sell you more stuff. If ham consumers statistically tend to also buy eggs or Swiss cheese, the store guesses you’d be interested in those products too and prints out special coupons to entice you. That’s all. Without the affinity card data you get no coupons, or random coupons for things you have no interest in.

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

        • icon
          John Fenderson (profile), 24 Aug 2015 @ 8:24am

          Re: Re: Re: I'm a customer

          "What sinister purposes do you imagine a grocery store has in spying"

          Who said I thought they had a sinister purpose? Their purpose is obvious: marketing. That doesn't make it any less spying, though.

          Also, that data has been used for sinister purposes. There have been cases where customers have sued stores and the stores have brought up their purchasing history in an attempt to smear their character ("this guy buys an awful lot of beer...")

          Also also, it's a dead certainty that that data is being provided to others, where it is combined with all the other data gathered about you, which amounts to an extreme and dangerous invasion of your privacy.

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

  • identicon
    GEMont, 21 Aug 2015 @ 1:13pm

    Best Job I Ever Had!!

    Return the 29 grand!!!!!

    but.... but....

    That'll mean that the IRS will have to draw the 29 grand from petty cash, because hookers and coke dealers do not do refunds.

    But not to worry, cuz after all, even the 3 million in petty cash is just more of the tax payer's money. :)

    ---

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

  • identicon
    President Obama, 22 Aug 2015 @ 12:26am

    Criminal = DOJ

    DOJ flunkies like Stefan Cassella don't like the publicity because it makes them looks like the criminal organizations they purport to be against. Instead, they seize money from honest businesses then force them to litigate to get their own money back. If it wasn't the DOJ doing it, it would be called an extortion business. Instead we get DOJ flunkies like Stefan Cassella who act like 2nd grade turds who steal other kids lunch money. Douchebags

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


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Special Affiliate Offer

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.