L&L-12-13-Taken; Fighting the Forfeiture Machine in Michigan
By Clark Neily
Terry Dehko and his daughter, Sandy, run Schott’s Supermarket in Fraser, Mich. Terry is the embodiment of the American Dream: He came to America from Iraq in 1970 and bought the grocery store in 1978. Today, the store employs about 30 people and is popular for its quality deli selection and freshly baked bread. Sandy has worked at the market since she was 12 years old.
On January 22, 2013, Terry and Sandy discovered that all the money in their store’s bank account—more than $35,000—was gone. Later that day, they learned the IRS seized their money using civil forfeiture.
As Liberty & Law readers know, civil forfeiture is the governmental power to take property merely suspected of being involved in a crime. Unlike criminal forfeiture, in which the ill-gotten gains of criminal activity may be seized after an individual is convicted of a crime, prosecutors use civil forfeiture to take property without convicting a person of, or even charging them with, any crime. Shockingly, the civil forfeiture proceeds are often used to pad the budgets of the very agencies that seize the money.
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 collects vast amounts of information about the banking activities of Americans each year, looking for, among other things, this so-called “structuring” of cash transactions. This is what the IRS says Terry and Sandy did wrong.
But it is not illegal merely to make deposits of less than $10,000 in cash when one has a legitimate business purpose like Terry and Sandy did. They have a commercial insurance policy that limits losses of cash to $10,000, and, like most grocery stores, Schott’s Supermarket has many customers who pay in cash. To avoid accumulating too much cash in their store, they make frequent deposits at the bank across the street.
Instead of asking Terry and Sandy why they deposit money the way they do, the IRS got a secret warrant and seized their store’s entire operating account without warning.
It gets worse. Federal civil forfeiture law provides no way for someone whose entire bank account is seized to quickly contest the seizure before a judge. Nine months after the seizure, Terry and Sandy still had not had an opportunity to challenge the forfeiture in court. They have struggled to keep their store open after being deprived of their operating funds. IJ took their case in September and immediately demanded a hearing, arguing that even if federal civil forfeiture statutes do not provide for a prompt hearing, the U.S. Constitution requires it.
The Dehko family and IJ are committed to going all the way to the Supreme Court if that’s what it takes to stop the government from using civil forfeiture to seize money from people who have done nothing wrong.
Clark Neily is an IJ senior attorney.
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