No Crime Committed, But Feds Seize Bank Account Anyway

Published October 4, 2013

Can the government use civil forfeiture to take your money when you have done nothing wrong—and then pocket the proceeds?

That is the question to be answered by a major federal lawsuit that has been filed by Terry and Sandy Dehko—owners of Schott’s Market, a family grocery store in Fraser, Mich.—and the Institute for Justice. In January 2013 the Dehkos were astonished to discover the federal government had seized their entire checking account without warning, even though the Dehkos did nothing wrong.  

“Federal forfeiture law allows the government to take your entire bank account just because it doesn’t like the way you deposit or withdraw your money,” said IJ Senior Attorney Clark Neily. “The government should not be allowed to just show up at your doorstep like a playground bully and take away your milk money. But that’s exactly what the government did to Terry and Sandy.”

Like most grocery store owners, the Dehkos receive cash every day from their customers. Their commonsense practice has always been to avoid letting too much cash accumulate in their store. Moreover, their insurance policy specifically limits coverage for theft or other loss of cash to $10,000—a common provision for small-business policies. So the Dehkos have routinely deposited amounts smaller than $10,000 in a nearby bank.

A New Violation Called ‘Structuring’

Over the past several years, however, the federal government has been collecting vast amounts of private information about Americans, including entrepreneurs like the Dehkos who deal in cash. In 2001, the Patriot Act amended federal law to make it easier for the government to seize money and other private property through civil forfeiture. Federal law requires banks to report cash transactions above $10,000, and it is illegal to “structure” cash deposits for the purpose of avoiding this requirement.

In 2010, the IRS visited the Dehkos and reviewed their banking practices. In 2012, the IRS conducted an anti-money-laundering examination of their store, thoroughly reviewing their books and policies, and gave the Dehkos a clean bill of health. After the audit, the IRS sent them a letter stating “no violations [of banking laws] were identified.”

But nine months later, the IRS obtained a secret warrant and cleaned out the Dehkos’s entire bank account (more than $35,000) on the grounds their frequent cash deposits—deposits of which the IRS should have been well aware when it issued its clean bill of health—violated federal “structuring” law. The government never charged Terry and Sandy with any crime and refuses to return their money. 

No Charges or Hearing

The Dehkos are still waiting for a hearing before a judge. Unfortunately, civil forfeiture allows the government to violate due process by seizing private property without convicting or even charging the individuals with wrongdoing. The government then pockets the proceeds while providing no prompt way to get a court to review the seizure.

“Last year alone, the government took in more than four billion dollars in forfeiture money,” said IJ Attorney Larry Salzman. “Taking money from innocent people like Terry and Sandy is wrong. Thankfully, the Dehkos are prepared to go all the way to the Supreme Court if that’s what it takes to vindicate the right to private property for Americans everywhere.”

“We didn’t do anything wrong,” said Sandy Dehko. “That’s why we teamed up with the Institute for Justice, to protect the rights of all Americans against civil forfeiture.”

The Institute for Justice has documented billions of dollars of property the federal, state, and local governments have seized from persons who have never been convicted of a crime or even charged with one. In 2010 the IJ published “Policing for Profit: The Abuse of Asset Forfeiture,” which notes, “Americans are supposed to be innocent until proven guilty, but civil forfeiture turns that principle on its head. With civil forfeiture, your property is guilty until you prove it innocent.”

Internet Info

“Policing for Profit: The Abuse of Asset Forfeiture,” by Marian R. Williams, Ph.D. Jefferson E. Holcomb, Ph.D. Tomislav V. Kovandzic, Ph.D. Scott Bullock, the Institute for Justice: