Michigan Civil Forfeiture - Release: 6-11-14
Federal Court Refuses to Hold IRS Accountable
Court Dismisses Civil Forfeiture Case After IRS Returns Ill-Gotten Money From Grocery Store,
But Store Owners Will Appeal
WEB RELEASE: June 11, 2014
CONTACT: John Kramer, (703) 682-9320 ext. 205
IJ client Terry Dehko and his family have owned and operated the Schott's Market in Fraser, Michigan, for 35 years. The Dehkos had $35,000 taken from them by federal law enforcement officials through a process known as “civil forfeiture." Download a high-resolution photo.
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|Background on this case: Taken: Federal Lawsuit in Michigan Challenges Forfeiture Abuse|
Arlington, Va.—Today, in what the Institute for Justice considers a minor setback in the long-term battle to end the IRS’s abuse of its power, a federal Court dismissed a lawsuit brought against the IRS seeking to ensure that property owners receive a prompt court hearing when federal agents seize their property through civil forfeiture. The case was filed by Terry Dehko and Sandy Thomas, owners of a family-run grocery store in Fraser, Mich., and Mark Zaniewski, owner of a gas station in Sterling Heights, Mich., after the IRS accused them of violating an obscure banking law and employed civil forfeiture to seize their small businesses’ entire bank accounts without warning.
“Today’s decision represents a missed opportunity to impose a crucial measure of judicial oversight on civil forfeiture law,” said Clark Neily, a senior attorney with the Institute for Justice, which represents business owners. “The government’s conduct in this case raises serious questions regarding its motivations and the fairness of the procedures used to take money from people without showing they have done anything wrong. Unfortunately, unless this decision is reversed on appeal, those questions will continue to go unanswered. We will appeal this ruling.”
Civil forfeiture allows the government to take private property from Americans without charging them with, let alone convicting them of, any crime. The proceeds of civil forfeiture are used to pad the budgets of the IRS and other agencies that seize property under federal law, giving agencies like the IRS perverse financial incentives and skewing their enforcement priorities.
Federal law requires banks to report cash transactions above $10,000, and it is illegal to “structure” cash deposits for the purpose of avoiding that requirement. The IRS noticed that the Dehkos’ grocery store and Zaniewski’s gas station often made deposits of less than $10,000 and seized the bank accounts of each business on the premise that they were violating this obscure federal banking law.
The government never charged anyone in either case with any crime, but refused to return the money for nearly a year in the Dehkos’ case and for more than seven months in Zaniewski’s case. The Dehkos and Zaniewski sued the IRS to prevent similarly baseless seizures in the future and to ensure that they, and all Americans, received the prompt judicial hearing to which they are constitutionally entitled whenever civil forfeiture is used by the IRS.
“Innocent businesses owners should not have to live in fear that the IRS can take their bank accounts and cripple their businesses without meaningful judicial oversight,” said IJ attorney Larry Salzman. “We are confident that this decision will be overturned on appeal so that Terry, Sandy, and Mark can have their day in court.”
“We didn’t do anything wrong,” said IJ client Sandy Thomas. “We filed this case to ensure that we will not be victimized by the abuse of civil forfeiture laws in the future and to protect other Americans from going through what we did.”
The Institute for Justice has come to the defense of Americans nationwide to fight civil forfeiture, including the owners of the Motel Caswell in Massachusetts, the owner of a small commercial building in California, and the owner of a truck seized in Texas. In 2010, IJ published the landmark report on civil forfeiture, Policing for Profit.