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. Jim M:

    “It doesn’t serve the public pocket book; for surely, the cost to the system of pursuing these “evil doers” exceeds the $30K recovered.”

    I think you considerably overestimate the cost of bringing this case. The FBI and U.S. Attorneys’ offices can churn out the papers to do this with very little effort. There’s a template — all they need to do is fill in the details of the unreported transactions.

    DOJ hires entry-level attorneys as GS-11’s/12’s. Even with locality pay, that’s no more than $60-75,000 per year plus benefits. The papers to do this can be drawn up in a matter of a few hours, and the odds are very good that any mom & pop operation is going to surrender quickly. FBI agents start at GS-10 (Step 1 = $47,000 per year). The analysts at FinCEN who deal with the initial SAR’s and CTR’s are probably GS-10’s as well.

    No, this is a profit center.

  2. Michael, that took place in the early 1990s. I read it in one of my newsletters. I do remember he was going to litigate the sheriff’s department claim, but there was never any follow up. Remember, this was before people had the internet and it was next to impossible to keep up with things like that unless it was in print. I cannot for the life of me see how that was even close to being legal, however, some jurisdictions seem to make their own rules.

    You might want to take a look at this article. Some of the incidents I do not recall; however, I remember the killing of Donald Scott in Malibu, California. That case made network news, and IIRC, 60 Minutes did a segment on it. Mr Scott was killed during a raid that was claimed to be for drugs, but it was really because the county wanted his property.

    http://www.fee.org/the_freeman/detail/seizure-fever-the-war-on-property-rights#axzz2XelQDgWT

  3. Michael Beaton,

    Looking for answers?

    An American Hating Piece of Trash/Full Blood Nazi Scum, going by the name William Hubbs Rehnquist.

    you’ll have to search for the case.

    A women had an old station wagon seized she was trying to get it back.

    Her husband had pickup a hooker using the station wagon in question.

    Rehnquist wrote for the majority in the case.

    He justified the govt’s actions by using an old maritime law in regards to a Spanish ship being used to transport weapons.

    What a reach, (around)

  4. I have previously touched on this whole subject of law enforcement being out of control when I wrote about the Border Patrol conducting illegal searches of airplanes and aircraft owners as far inland as Iowa.

    On a theme related to this story, I was reminded of an incident in Florida. It has been more than fifteen years ago, but I recall reading about it in one of the aviation newsletters I get. Seems this fellow landed his Beechcraft Baron at a major airport in Florida. The Beechcraft Baron is an expensive twin engine airplane popular with businesspeople. When he parked it, his plane was surrounded by law enforcement officers.

    He was detained and given notice that his plane was being seized. After a brief investigation, he was cleared. It was shown his arrest was due to a case of mistaken identity. When he went to get his airplane back, he was told that once property is seized, it is never returned, even if the arrest is bogus.

    His half-million dollar airplane was kept by the sheriff’s department. He did not get it back, and the insurance would not pay for it. So, he is stuck with a gigantic bank loan to pay off, his business aircraft is no longer his, and under the tax code, he cannot even write the loss off his taxes.

    If any one of us stole a half-million dollars worth of property, we would be charged with a major felony. But that sheriff’s department gets a nice new business class airplane for free. Any questions about the motives off some law enforcement agencies?

    • @Otteray
      re “When he went to get his airplane back, he was told that once property is seized, it is never returned, even if the arrest is bogus. ”

      I cant doubt you, and I cant believe this is true.

      Does anyone, you?, have any references or links that show this is the law? I can believe that a particular branch of any authority in Florida is corrupt… Heck from the top down (Gov to Local Poll supervisor) I think it would not be hard to make that case. But to actually not have any recourse in law to get his property back.
      At the least it violates the “takings” clause of the constitution.

      It gets back to what I suppose is going to be my POV on this board : to attempt to make distinction between corruption, practices, power vs powerlessness and the like and the structure of the system in terms of the Law.

      If this is the law, however poorly interpreted and applied, then we have the makings of a conversation worthy of this blog! And if it is simple corruption or something akin, then it is pure food and fodder for those here who have nothing but contempt and fear of the government and express it in the various outbursts that we see….Annie get your gun….

  5. Michael Beaton
    1, June 29, 2013 at 12:38 pm
    —————-
    …….
    Like @Woosty above, certainly justifiable outrage expressed in whatever sharp sarcastic language he feels to say it. But then the comment section exchange has the feeling of a tavern conversation; good to blow off steam, but worth nothing in terms of the important points, much providing any rational input into the Public Square.
    ——

    there is much understanding to be had in Taverns over a pint….. 😉

    I like this blog not just because there are many brilliant legal minds here, but there are many other brilliant minds w/souls and understanding that post here as well….
    There is much fear to be found in the idea that our Government has become so entirely separated from it’s people that the laws it makes using the power of those same people can be perverted to be oppressive when it was intended to protect people from corruption. And the incredibly un-interpretable laws and the gazzillions of ‘rules’ that have been created are becoming a noose that chokes the horse…
    I find a certain amount of fear-killing solace in the knowledge that I can pop off in frustration and it will not be entirely discounted by those who may see some of the source of my frustration in my comment….and perhaps be in a better position to ‘tidy up’ the words if necessary but forward the worthy nuggets further than I could send them alone.

    Woosty

  6. ** I have been doing forensic psychology for almost a half century and was one of the founders of that specialty area. **

    OS,

    I know I’ve already have my personal bent & you yours & that’s fine.

    Dovetailing along the lines I was already thinking I believe this is going to be an excellent documentary & you might enjoy it as well.

    Here is an interview about it:

    State Of Mind: The Psychology Of Control

  7. **

    Porkchop 1, June 28, 2013 at 8:09 pm

    Oky1:

    “but I’d like to see people with cases like this one successfully sue, get a positive judgment”

    The problem is that they would lose that lawsuit; on the facts as given, it’s not even close — it would be resolved in favor of the government on summary judgment.
    **

    Porkchop,

    If the case had made it to a court & I was the judge, I would have grant summary judgment to the creamery owners & granted them damages & oversight control over the agencies doing these seizures if they wanted it.

    That’s not what’s happening though.

    Color of Law is still illegal

    IE: Bush v Gore, Obamacare, etc., etc.,,

    Even that being the case with all these type fake rules/regs/laws most all of us obey them anyway because we don’t have the time, money or patients to fight each one we encounter.

    Of the reasons not openly spoke of regarding this reporting reg is about namely Capital Controls & the illegal Banking/Insurance Monopoly granted to Wallst firms by our govt.

    IE: Have you seen a $1000 bill used for commerce since Nixon?

    The Federal Reserve System was meant to be corrupt from it’s conception.

    Among the many reasons this reporting reg is unconstitutional are at least the Commerce Clause, General Welfare Clause & of course the Preamble to the Bill of Rights, 1st,4th,5th,9th,10th.

    Also there are issues here regarding govt’s creation of currency/taxing powers & their abuse of their authority of those powers.

    If it stays within a legal argument based on constitutionality it has to go always to the intent of the law.

    But currently our nation has been hijacked by criminal foreign bankster creeps & there’s only the illusion of law left & their boot on our collective necks.

    …… If someone had the right case/time/courts/money to fund…..

    Yesterday I read of a real judge, he threw out all the speeding tickets from a local traffic camera, ordered the equipment seized, ordered the Police to return all the fines.

    I can’t completely recall, but I think he’s looking at charges for the operators?

    Clintons/Bushs/Obama= They hate us because of our Freedom!

    http://dailycaller.com/2013/06/27/obama-administration-paid-contractors-millions-to-snoop-through-americans-financial-data

  8. “That being said, it’s an unfair result under an unfair law, probably motivated by the ease of the seizure and the bump in the FBI’s (and the individual agents’) seizure statistics. Special Agent Jones will get an attaboy in his annual performance evaluation for another successful asset seizure”
    This is truly a case where following the money may pay a benefit. Who benefits from the outcome? It won’t provide the benefit of reducing the bureaucratic enforcement burden by enlightening the clueless bank tellers or their hapless clients. It doesn’t serve the public pocket book; for surely, the cost to the system of pursuing these “evil doers” exceeds the $30K recovered. As Porkchop points out, the only benefit serves the bureaucracy, (i.e., some sub manager’s compensation), by having the unit’s enforcement statistics padded.

  9. Michael,
    If you are looking for good legal thinking on this blog, you need go no further than mespo, Gene, rafflaw and Nal, to name just four out of many. There are more good lawyers here, and they are hanging around. I only named those four because they are among the most frequent commenters, as well as being front page writers here. Several of the commenters in this thread are attorneys. BTW, my analysis of issues comes from a different perspective on the legal system than that of a lawyer. I have been doing forensic psychology for almost a half century and was one of the founders of that specialty area.

    There are non-lawyers here who are pretty sharp folks when it comes to analyzing issues. We have a couple of scientists besides myself, at least one Clinical Social Worker, an engineer or two, musicians and writers. We also have a few trolls from time to time, but they get to say their piece too. Hang around and enjoy the fireworks. Your observations so far have been quite substantive and certainly add to the conversation.

    You are really looking for the answer to what is probably an unanswerable question. As I have said many times before, every case is different. Were the actions of the government justified? I doubt it, on both legal and moral grounds. As someone pointed out above, the banker who gave the couple that bad advice should go into another line of work. Technically, they may have been guilty of something. Most of us here have worked on many cases where there we felt there was a miscarriage of justice. Sometimes things eventually work out for the best interests of what is right and good, other times not. What we can do is work hard to fix the things we can fix, and shine a spotlight on the things we can’t fix at the moment. That spotlight is one of the things this blog does very well indeed.

    Welcome aboard.

    • Thank you. Will do.

      In the v.off chance that JT does scan these msgs, I want to make sure to say, I appreciate what he is doing. The recent post on the NSA and the media is amazing…
      I hope it gets the in depth grist that it deserves. The beauty of this blog, unlike most, is that it actually is rooted in one of the essential, as well as one of the least understood, forces of our country : the law.

      I do think if we had a more robust, rather than simply irritated , public square we could move the needle on some of these things.

      Thanks again… No more belly-aching for what isnt here and looking for what might be. These leads are welcome and important.

      Here’s to spotlights.

      Michael

  10. @Olde Reb: “the object is to instill fear. there is NO tax return that cannot be found to have some flaw in it that can be used to prosecute the filer. When people become so fearful that they will not expose assets to seizure, we will find John Galt living in the hills.”

    I can agree, and maybe even do agree, about your philosophical “proposition” that the purpose of all this “is to instill fear”. However, it would be great, on a blog purporting to be a legal inquiry and explanation if you could frame your point in terms of the law.

    For example: are you making the assertion that the law, and the entire government is corrupt? On what basis? Do you know the facts of this case such that the conclusion that this is a travesty of justice is warranted in terms of the law? It certainly seems so. But I have to think in this age of courts that there is something going on besides simple raw abuse of power.

    But maybe not.

    If not, it is due to some form of powerlessness on the part of the victims.
    If that is the case then a useful analysis, and bit of information would be to identify the root of the powerlessness. Was it personal? Did some sheriff and prosecutor collude to destroy these people? Was it falling thru the cracks? Was there actually some essential fact that if we knew it would justify the outcome as reported? Or what???

    The problem with this this original post by JT and subsequent comments (the thrashing ones as well as ones trying to make some sort of response) is that there is no real understanding and resolution added to this.

    So all it does is add to the general low level anger and rage at the “system”.

    I promise you I feel it to. But I had hoped, when I saw J.Turley’s name on this blog, that he might bring more of his great analysis and ability to contextualize an issue to bear. As such providing a service and adding useful information into the public square.

    As to your John Galt:
    I wonder if you are making some sort of assertion that the Ayn Rand philosophies are in any way an meaningful counterpoint and solution to the corruption and whatever else is being surfaced in these blog posts?

    Michael

  11. 1.) The message to the masses is that Mom and Pops are the pillars of the economic foundation of the Country….so stop whining and pull up your bootstraps and get out there and makes us some $$$$$…..

    2.) Corporations and Banks have carte blanche in operational movement and solidarity with Government financing and protections.

    3.) What the phuck is ‘structuring’ and where is my manual of ‘How to do business without pissing off the delicate Man’ ?

    …inquiring minds dontcha know….

    • @ Otteray
      Hard not to be disappointed that JT doesnt help with the “rest of the story”. Maybe It would create some liability on his part? Whatever it is, he concludes his posts with “What do you think?” and then apparently tosses juicy starts into this mosh pit, which then is not all that kind to the conversation.
      Like @Woosty above, certainly justifiable outrage expressed in whatever sharp sarcastic language he feels to say it. But then the comment section exchange has the feeling of a tavern conversation; good to blow off steam, but worth nothing in terms of the important points, much providing any rational input into the Public Square.

      Anyway, as you say, JT isnt going to show up here. That is to bad. I don’t need a catalog of ongoing abuses of the Gov to the Citizen. I do need some way of understanding the dark arts that make such things possible all while the public face of power, be it Obama or some department head (or the SEC, or Congress or the NSA or … etc…) tells us that everything is fine.

      Happenings like this one, but also some of the others I have read from this blog, give the lie to those assurances. The questions being here, in this blog, with someone of the stature of Jonathan Turley I had hoped there would be something more than just more impotent rage or cynical jabs in the air.

      Thanks for your points. Hopefully some of “the best legal minds” will show up. If you happen to see an article where they do I’d love it if you’d post the heads up.

      thx
      Michael

  12. John Gault was a fictional sociopath. The hills are probably the best place for him; away from civilization where the toxic and corrosive ideas of Objectivism can no longer delude people into thinking selfishness is a virtue.

  13. the object is to instill fear. there is NO tax return that cannot be found to have some flaw in it that can be used to prosecute the filer. When people become so fearful that they will not expose assets to seizure, we will find John Galt living in the hills.

  14. Michael,
    Don’t be too disappointed if professor Turley does not stop in. Some of the best legal minds in the country participate on this blog. Maybe some of them will weigh in.

    I agree with you on the over the top comments. They do not add to the conversation, but our host believes in freedom of expression, even when the expression is, shall we say, “less than additive” to the conversation.

    Speaking of seizures, someone just sent me the link below. This is from Canada, and gives one pause. The person who sent this link commented that this is one of the reasons many people are paranoid about gun registration.

    Here is the link to the story:
    http://news.nationalpost.com/2013/06/28/high-river-residents-furious-after-rcmp-seize-substantial-number-of-firearms-from-evacuated-homes/

    One of my former clients gave me a sign to hang in my office. The picture was different, but the sentiment was the same:
    https://i.chzbgr.com/maxW500/3985469696/h73F2EACE/

  15. I tire of such bombastic comments as 63 Marine, some of the others prior to this in the thread and even Jim. They don’t do anything to advance the conversation in any substantial way. Even if I understand the rage and the sometimes condescending cynicism being expressed.

    That said, in wan hope of actually having a conversation: @Otteray Scribe:
    1. thanks. for the response.
    2. Too bad if that is JT’s MO. I have been enjoying having robust conversation on a different site, over different issues with David Simon of HBO Wire fame. I suppose I was getting used to actually having viable discussion beyond the too common outbursts that pass for Comments and rational thought in most places.
    3. But to your point… I get the point about taxing and even seizure… But that is a function of law right? (This is where JT should enter) . But the controlling ideal, from my POV, isnt that they have the “right” but that the “right” is governed by law. And given the facts of the case as presented, the law is fairly clear : It doesn’t apply here. Ie, in this case they “don’t have the right” to have taken this couples assets.

    So… What law is being asserted that makes it ok for the Government to take any of the money given that there was, after all, no crime, no violation?
    This should be a matter for the courts, and it should be made right.
    Why isnt it?

    Is it simple monolithic power? They couldn’t fight back, as the article suggests, so they simply capitulate? Then this is no longer a conversation about law and justice, but raw power. How does that reflect on a Nation supposedly governed by the rule of law?

    This is where an legal expert should explain why what doesn’t appear to make sense actually does. Or, why it is a travesty of justice. But just to leave it at the point of “This thing happened….Oh well… That’s what governments do (to paraphrase some of the comments above) is inadequacy to the conversation.

    If we must be reduced in our understanding to this level of reaction, then, of course, there is no functioning “Public Square”, and a very thin veneer of a social contract (sometimes known as the constitution) and we go on simply hoping we don’t get caught in the cross hairs of an unknowable, “all powerful” government….

    I know this exceeds the bounds of this post and apparently even this board. But I had hoped, when I saw J.Turleys name on the board, and the quality of issues he seemed be addressing… I had hoped that after all he might continue to offer his considerable expertise to the discussion.

    —— To loop another line from current events into this conversation then:
    W/ the NSA affairs. It has been asserted as a primary defense “if your not doing anything wrong you have nothing to worry about”. A debatable proposition on its own terms. However in the light of cases like this one it is also proven to be a lie. And I think, and I assert, that much of the fear of the citizenry toward the government, and much of the blowback and why many are hailing Snowden and others as “heroes” has something to do with this as much as anything.

    —- To close : I fully get I could be completely on the wrong track. Thus my soliciting Johnathan to join in. As you say, apparently that is not what he does.

    To bad.

    Thanks again.
    Michael

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