On the heels of the Pennsylvania Commonwealth Court’s decision that common law forfeiture requires a criminal conviction (see our post on it here), the New York Times’ Shaila Dewan reports in a fascinating article about the related federal practice of civil asset forfeiture and the havoc it wreaks on those innocent of any criminal wrongdoing.
In a “take action first and ask questions later” manner, the I.R.S. and other federal agencies have been utilizing civil asset forfeiture to seize the funds of individuals who may be in violation of the law, or at the very least, financial reporting requirements. The burden of proof to prove otherwise is then placed on those seeking the return of their assets. It doesn’t take any formal criminal charge, let alone a criminal conviction, to freeze your bank account, but only a warrant from a federal judge on suspicion of wrongdoing.
What is it that these individuals are doing wrong to have their funds seized? Possibly nothing.
Under the Bank Secrecy Act, banks are required to report cash deposits greater than $10,000, as well as any suspicious transactions that appear to be an attempt at evasion of the rule. This practice of making cash deposits in an amount less than $10,000 in an attempt to avoid reporting requirements, known as “structuring,” is a federal crime. Without the actual purpose of evading reporting requirements, there is absolutely nothing wrong with making the deposits.
The federal “structuring” dragnet clearly captures many run-of-the-mill small business owners, who must then pay for a lawyer to fight the seizure, or else attempt to voluntarily settle the matter out of court. These defenses can cost tens of thousands of dollars. Dewan reports that the median I.R.S. seizure dollar value in alleged structuring cases is $34,000. No wonder why many call the practice of civil asset forfeiture “legal robbery.”
There are legitimate business reasons why deposits might be made on a regular basis in an amount less than $10,000. For instance, insurance policies often cover only to that amount. In fact, it is not unusual for some banks and financial advisers to advise the lower amount so as to lessen burdensome paperwork associated with the required financial reporting.
While Pennsylvania’s courts might be stymieing the advance of overzealous state prosecutors using civil actions to combat alleged crime, this New York Times article lays bare that civil forfeiture remains a significant problem in our nation’s justice system.
If you are concerned that you may be targeted for civil asset forfeiture, contact a Fairlie and Lippy attorney today to discuss your situation.