IRS can seize your bank account on suspicion – no crime required

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.

“They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They’re middle-class citizens who have never had any trouble with the law.”

…In response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances…”

The new policy will not apply to past seizures.

As much as folks shout about the criminal abuse of the so-called Patriot act, as much as any sensible American has nothing but contempt for unconstitutional star chamber policies from the NSA, CIA – understand that the IRS has been doing this for years.

RTFA for beaucoup examples. Consider trying to wake up your Congress-critter from whichever bed they’re sleeping in, tonight – and suggest they do something principled about the unprincipled behavior they have allowed. Believe me. They already know about it.

Thanks, Mike

US banks can accept legal marijuana money – if you believe?

The Obama administration has sought to lessen the fear of prosecution for banks doing business with licensed marijuana companies, further encouraging US states such as Colorado and Washington that are experimenting with legalising the drug.

The Justice and Treasury departments outlined the policy in writing to federal prosecutors and financial institutions nationwide…

The guidance stopped short of promising immunity for banks, but made clear that criminal prosecution for money laundering and other crimes was unlikely if they met a series of conditions…

Currently, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges, and they therefore refuse to open accounts for marijuana-related businesses, the AP news agency reported.

The guidance was intended to increase the availability of banking services, such as savings and checking accounts, to marijuana shops that typically deal in cash. Forced to deal in cash because of federal policy…

US Attorney General Eric Holder said last month that the administration was planning ways to accommodate marijuana businesses so they would not always be dealing in cash.

“There’s a public safety component to this. Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me just from a law enforcement perspective,” Holder said on January 23…

The American Bankers Association expressed scepticism that the guidance would make much difference…Marijuana sales still violate federal law, so banks are still at risk, said Rob Rowe, a lawyer with the trade group.

“Compliance by a bank will still require extensive resources to monitor any of these businesses, and it’s unlikely the benefits would exceed the costs,”…

I asked my favorite banker about this – and received the same answer given by Rowe. As long as the Feds base their practices on existing law, there’s no one willing to be the test case after being arrested for violating federal banking regulations. Even if the DOJ says go ahead – we won’t bust you.

Why should a bank trust pronouncements from a political body unwilling or unable to change their own regulations?