Federal Prosecutors Seize Creamery’s Accounts Under Terror Financing Law

half gallon-ICDeptofJusticeRandy and Karen Sowers are not your typical terrorists or mob financiers. They run the popular South Mountain Creamery and sell their produces at farmer’s markets and local events. The Somers however were confronted recently by FBI agents who informed them that the Justice Department was moving to seize their accounts under a law designed to thwart mob and terrorist financiers. They had made repeated deposits under $10,000. The Justice Department has seized their account of $62,936 under the law as illegal “structuring.” The criminal provision is written in a way to avoid the need for actual intent or knowledge of the illegality.

The FBI documented nearly three-dozen deposits into their company’s bank account just under $10,000. The Justice Department takes the position that the transactions alone are sufficient to seize private assets.

Yet few people are aware that such a pattern can be deemed illegal structuring. Perhaps our tax lawyers can fill in the details, but I assume that this money is still reported as income by the business regardless of the deposit amount. Thus, there is no evidence of a benefit to the company in structuring.

What is remarkable is that this is a trap intentionally set by Congress at the demand of the Justice Department. In 1994 in Ratslaf v. U.S, Justice Ruth Ginsburg “interpreted the “willfully” element under 31 U.S.C. Sec. 5324 to require proof that the defendant knew the structuring was illegal. That would seem to create a fair and workable solution to structuring — confining it to the truly criminal element. However, Congress responded to the opinion by removing wilfulness from the statute.

The provision states in part:

(a) Domestic Coin and Currency Transactions Involving Financial
Institutions. – No person shall, for the purpose of evading the reporting requirements of section 5313(a) or 5325 or any regulation prescribed under any such section, the reporting or recordkeeping requirements imposed by any order issued under section 5326, or the recordkeeping requirements imposed by any regulation prescribed
under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508 –
(1) cause or attempt to cause a domestic financial institution to fail to file a report required under section 5313(a) or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record required by an order issued under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508;
(2) cause or attempt to cause a domestic financial institution to file a report required under section 5313(a) or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record required by any order issued under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-
508, that contains a material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.

According to reports, Randy Sowers told agents that “during the farmers’ market ‘season,’ his weekly cash receipts were on the order of $12,000 to $14,000.” He admitted that “he kept his cash deposits under $10,000 intentionally so as not to ‘throw up red flags.’” He says that he was advised to keep the checks below $10,000 by a teller to avoid forms being filed. Yet, there is no charge of tax evasion. Thus, while the Justice Department insists that there is “a reasonable belief” that there was “an intentional scheme or plan to hold back cash receipts,” it is not clear what benefit the family derived from the practice beyond simply not being reported for such checks. I could understand if this was done for the purpose of some criminal benefit, but there is no indication of a collateral crime.

What do you think?

Source: Frederick News

69 thoughts on “Federal Prosecutors Seize Creamery’s Accounts Under Terror Financing Law

  1. @Ed : “You say seized. I say stole.”

    I say that is the distinction made in the law.
    Which seems to be the underlying problem in this case, and cases like it.

    What I have been trying to get to is which is it? Was this action “lawful”? If so, on what basis?
    (– We all are becoming acquainted with actions and policies that are on the face of it immoral and a violation of the underlying predicates of the constitution ( power granted by the people, open government v. private lives, and etc.) yet are decreed legal.
    Or, to take a historical glance, when BushCo decreed that Torture was legal. Or when Nixon was functioning on the equally distorted notion that “When the president does it it is legal…”.)

    So the simple fact of something being “legal” is only the first step in the analysis. It also has to be just, and congruent with our underlying Precepts. Clearly some actions (especially by the Gov. and other centers of power that have the ability to influence and pass laws for their own benefit.) can be legal and not be just.

    I say that the necessity of making these distinctions, and then applying them to the cases before us is the essence of Justice in the large sense. It is the reason we have courts, supposedly, and the reason for the premise of our society being that these courts will not be politically driven. (Which includes the larger notions of power and etc….)
    [ And to extend the point briefly : when the courts and our judges are corrupted, meaning not unbiased, and not applying wisdom to the case, there is no recourse. And what happens then in a society is worthy of its own essay. One, I assert, that is being written for us daily in our own jurisprudence..and is being routinely cataloged on this board.]

    So what has not yet emerged in this discussion is while the “taking” seems to have been “legal” according to statute : “They did the crime, so they did the time” … but was it ‘legal’ according to the facts of the case….
    Did they actually do the crime or did it just look like it?

    It appears it was the latter. At that point the taking seems to be very unjust and therefore, essentially illegal. And so… to your point : stolen.

  2. @OKY1 : “you’ll have to search for the case.”

    I’ll do it, and if I find it I’ll “report back”.

    thx

  3. I didn’t see this reply to the above by Otteray Scribe http://www.fee.org/the_freeman/detail/seizure-fever-the-war-on-property-rights#axzz2XelQDgWT

    It does seem that this original post does indeed reflect a syndrome of profound unjustice throughout our system.
    Any complex system can withstand the occasional breach and be resilient enough to still function in the main, as long as the breach does not open a hole in the system where forces of greed, and power lodge, thus contorting the system.

    When this happens … the system reorganizes. In our case, with the law and the justice system, and in these cases in particular, it seems the system has become amenable to fundamental injustices it was meant to prohibit. ie, Justice for all and equal protection for the powerless from the powerful (including, and especially the government) under the law.

    Funny, writing that last sentence, I realize, opens me up to some cynical charge of Pollyanna… To the degree that is true; is just how true it is that our Justice system is not.

  4. I’d just like to echo all the very good comments by Porkchop on this subject. He’s right–structuring is like it or not, a crime, but the businessman got horrible advice from the teller which isn’t really his fault.

    Is the requirement to file a currency transaction report every time somebody engages in a $10K+ transaction bureaucratic overreach? Yes. Does it end up costing the banking industry, and therefore the rest of us through fees, billions of dollars a year? Yes.

    But in some ways I’m grateful for stories like this because the case helps illustrate the absurdities of our anti-money laundering and BSA compliance regulations. It’s very similar to airport screening. We’re told that moms can’t carry a baby bottle onto an airplane while Abdulmutallab, the underwear bomber, got a one-way ticket with cash and no checked bags. We end up adopting massive, invasive, silly regulations and missing the biggest threats in the process.

  5. Obviously I think these people got hit a little on the unfair side as well, but is everyone here agreeing that they were making daily cash deposits and at the end of the year declaring that extra $100,000 (so they can pay 20% on it) hahahahaha I don’t want to be the guy to disagree but I’m gonna guess that while I don’t think its fair to target these people in particular, they were 100% not declaring that “extra side money”

    I doubt the guys who arrested them would do different,
    Technically I think if you find a hundred dollar bill on the ground you have to declare it, would anyone? No, but in reality that is the law, so these people got caught, I cant imagine if they were doing nothing else wrong that the FBI even takes another look into it, nor would they get in any trouble, but maybe I’m wrong, I just find it very difficult to believe they would really do some hard time for not declaring their 60K they made on a farm.

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