After months of uncertainty, Lyndon McLellan was finally vindicated in his battle against the IRS.
Lyndon had his entire bank account seized in July 2014 after the IRS accused him of “structuring” because he deposited money in the bank in amounts under $10,000. Despite policy changes by both the IRS and the Justice Department, the government initially sought to avoid returning Lyndon’s money, only offering to return 50 percent of the money seized.
After the case was brought to national attention, the government agreed to return Lyndon’s savings, but it sought to have the case dismissed without prejudice as a way to avoid paying attorneys’ fees, costs and interest on the money it had seized.
However, U.S. District Judge James Fox rejected the government’s attempt, and dismissed the case with prejudice stating in his decision:
Certainly, the damage inflicted upon an innocent person or business is immense when, although it has done nothing wrong, its money and property are seized. Congress, acknowledging the harsh realities of civil forfeiture practice, sought to lessen the blow to innocent citizens who have had their property stripped from them by the Government. Through [the Civil Asset Forfeiture Reform Act of 2000] Congress provided for relief in such cases. This court will not discard lightly the right of a citizen to seek the relief Congress has afforded. The court concludes that deprivation of such a right would work a substantial legal prejudice.
This does not guarantee Lyndon will be reimbursed, but it signals that he should be entitled to attorneys’ fees, costs and interest related to the case.
The decision came just as the 8th U.S. Circuit Court of Appeals is considering a similar maneuver by the government against Carole Hinders, an Iowa restaurant owner who also had her entire savings seized and then returned.