A Federal Threat to Innocent Business Owners

By | June 8, 2015

Imagine you were told a story of government officials approaching small businesses, claiming all of the money in the bank accounts, and then being told that if the establishments can prove themselves innocent, some of the money might be returned. Could you believe that this is a scenario that plays out in the United States?

In fact, it does happen. In 2014, acting under the auspices of the Bank Secrecy Act (BSA), the Internal Revenue Service (IRS) proceeded to claim hundreds of bank accounts from small business owners. The BSA allows the IRS to seize money after being alerted by banks of “suspicious” activities – or regular cash deposits less than $10,000.

Civil Asset Forfeiture

The process is known as civil asset forfeiture and is a modern problem that has put many small industry owners out of business or very nearly so. The magnitude of this situation is such that both the Senate and the House Judiciary Committees, the Department of Justice of the Inspector General, and the Attorney General have made comments touching on the issue. The trouble with civil asset forfeiture really began in 1984 when the Comprehensive Crime Control Act was passed. Although it affects US citizens in many areas, the decked is really stacked against innocent business and property owners.

Purpose of the Bank Secrecy Act

The Bank Secrecy Act was first enacted as a means of combating money laundering. Today, unfortunately, it is used to target those who believe in good faith that their operations are legal. The BSA prevents banks from educating proprietors about the dangers of handling cash transactions just under the $10,000 mark. Innocent dairy farmers, restaurant owners, gun shop proprietors, car rental dealers, elder homeowners, motel landlords, and other small business vendors have been targeted over the past several years – often losing everything.

A Cause for Concern

There are some identifying characteristics of asset forfeiture that should be a cause of concern for anyone living in the country:

  • The majority of cases are tried under a “guilty until proven innocent” ideology
  • Any amount of money can be claimed by the administration
  • The agency that gains from the forfeiture is also the investigator, prosecutor, and judge in the case
  • The defendant often has limited resources for their defense because all money has been claimed by the government
  • There is no requirement of evidence that the defendant acted willfully to break the law

Fighting Back

As part of their effort to fight back against the BSA and civil asset forfeiture, small business owners have pointed out personal expenditures made by district attorneys, sheriffs, and other officials. These purchases included sports tickets, home renovations, trips to casinos, and tanning salons. Some changes are coming at both state and federal levels, but for those affected proprietors, changes in the law might be too little, too late.