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Ending Forfeiture

IJ Files Lawsuits in Iowa and New York

By Larry Salzman

As IJ supporters know, civil forfeiture laws allow the government to take cash, cars and other property merely suspected of being involved in a crime. The proceeds are then given to the very agencies that seize the money and property, creating an incentive to abuse the power. And the government is increasingly using these laws to treat legitimate small businesses like criminals just because they make frequent cash deposits at the bank. That is what happened to Carole Hinders, who owns a restaurant in Iowa, and Jeff Hirsch, whose family business operates on Long Island.

Carole owned and operated Mrs. Lady’s Mexican Food, near Spirit Lake, Iowa, for more than 38 years. She started the restaurant with her mother, and, at 67 years old, worked there six days a week for decades. The restaurant was Carole’s livelihood and employed about 15 people year-round and more during busy summer seasons. Mrs. Lady’s only accepted cash, which means Carole made frequent trips to the bank to avoid having large sums of cash at the restaurant. In August 2013, two federal agents knocked on Carole’s door to tell her the government had seized more than $33,000 from her bank account, even though Carole did nothing wrong.

Jeff and his brothers have run Bi-County Distributors for 27 years, selling candy and other goods to convenience stories on Long Island. It is common for their customers to pay cash on delivery, straight from the cash register; like Carole, it is not safe for them to keep substantial amounts of cash on hand and so they make frequent cash deposits. But one morning, the government seized more than $446,000 from Jeff and his brothers.

Carole and Jeff were shocked to learn that their deposits triggered a secret review of their accounts by the IRS, which then recklessly seized all the money in those accounts without further investigation merely because they suspected their deposits to have “broken the law.” Carole and Jeff received no warning from either their bank or the government that their money was taken. They were left scrambling to find ways to pay vendors and other bills.

Federal law requires banks to report to the U.S. Treasury cash transactions larger than $10,000. It is illegal to deposit or withdraw less than $10,000 in cash for the purpose of evading these reports. The government calls this “structuring” cash deposits, which is a forfeitable offense.

But neither Carole nor the Hirsch brothers did anything wrong. It is not illegal to deposit less than $10,000 in cash in the bank when you have legitimate business purposes for doing so, as Carole and the Hirsch brothers do, and when one has no specific intent to evade federal reporting requirements.

Worse, because civil forfeiture does not provide even the basic due process of a prompt hearing to contest wrongful seizures, the government has kept Carole’s and the Hirsch brothers’ money—for more than a year-and-a-half in Carole’s case, and more than two-and-a-half years in the Hirsch brothers’—without charging them with any crime or even alleging that they did anything wrong beyond making suspicious deposits. The seizures have put their businesses into tailspins, causing untold stress to both of their families. Carole has been unable to pay her bills for the first time in her life, and Jeff and his brothers owe hundreds of thousands of dollars to vendors.

Their stories have already attracted major media attention, including, as previously mentioned on page 4, a front-page story in the Sunday edition of The New York Times. Carole and the Hirsch family deserve better from their government. That is why they have teamed up with IJ to fight back. We are forcing the government into court, in both Iowa and New York, not only to get Carole’s and the Hirsch brothers’ money back, but to create new legal precedent that will protect all Americans against civil forfeiture.

Larry Salzman is an IJ attorney.

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