Civil asset forfeiture is coming under the spotlight again, this time by bloggers, journalists, and analysts, who met at a daylong conference to discuss the issue. Logan Albright, a Research Analyst at FreedomWorks who attended the conference, writes in an article for Watchdog.org:

Here’s how it works: If police or federal agents suspect that property has been involved in the commission of a crime, they can simply take it. No charges need be filed against the property owner, no trial must occur. In effect, the property itself is accused of a crime, and it’s up to the owner to prove its innocence if they ever wants to see it again.

US Attorneys seized $679 million in criminal assets and $3.9 billion in civil assets last year. The legal fees and lengthy bureaucratic process often means that assets taken are never recovered — even in the absence of a criminal charge or conviction. The obvious conflict of interest results in a perverse incentive for law enforcement to not only focus on crimes which have a higher chance of resulting in personal gain, but to contrive scenarios in which they seize assets where there may not have been any crime at all.

In one case last October, businessman Lyndon McLellan, who owns the L&M Convenience Mart in Fairmont, N.C., had his entire life savings confiscated by the IRS after they alleged he might be engaged in an obscure financial crime known as “structuring.”

Lyndon McLellon, owner of the L&M Convenience Mart in Fairmont, N.C.

McLellan had routinely been making deposits to his bank account just short of $10,000, which apparently aroused the suspicion of the IRS. Banks are required by law to report transactions over $10,000, and intentionally making deposits under that amount in order to avoid those reports is a crime known as “structuring.”

IRS enforcement agents used this suspicion to seize $107,000 from McLellan. After assistance from the Institute for Justice and pressure from a petition with over 12,000 signatures, McLellan fortunately received the money back on May 12.

Many others are not so lucky.

The Atlantic tells another recent story about Joseph Rivers, a 22-year-old from Romulus, Michigan, who boarded a train for Los Angeles with aspirations to produce music videos. Rivers said he’d been saving money for years in order to make the trip. In total, he carried $16,000.

Federal agents from the Drug Enforcement Administration (DEA) also boarded the train and began interrogating passengers. Rivers believed he had nothing to hide, and made the mistake of speaking to the agents and consenting to a search. The DEA agents found the $16,000 Rivers had saved and seized it. He has yet to get it back.

Senator Rand Paul (R-KY) introduced a bill in 2014 that ostensibly aims to increase the federal government’s burden of proof in civil forfeiture proceedings. The bill has since been referred to the Committee on the Judiciary, but the reform is unlikely to be effective in solving the problem. While the federal government and its various agencies engage in asset forfeiture, individual police and state departments are raking in the cash as well.

Earlier this year, TruthVoice reported a case where it was revealed Missouri Police received $349,617 in civil asset forfeitures by taking advantage of a federal loophole called Equitable Sharing. Senator Rand’s bill does not appear to address this loophole.

Lyndon McLellan is getting his money back.

McLellan, a North Carolina convenience store owner, woke up one day to find the IRS had seized his career savings — all $107,000 of it. The agency had flagged McLellan for a practice referred to as structuring or “smurfing” — making multiple bank deposits of less than $10,000 in cash in order to circumvent the legal requirement to fill out a disclosure statement.

McLellan had been making small deposits, incrementally growing his savings. But he wasn’t illegally trying to cram a pile of money, bit by bit, into a savings account, a disclosure-skirting practice the law was ostensibly created to address.

In his case, there never was a pile of money. McLellan had simply been making regular deposits of what he earned at his store — as he was earning it.

The IRS and the U.S. Department of Justice didn’t care about any of that — at least not at first. Despite having changed its civil asset forfeiture policy to end seizures like the one McLellan endured, the agency wouldn’t return the money. It had seized McLellan’s funds only months before the policy change went into effect, and there was no law saying the IRS had to give him any consideration. Notably, McLellan was never charged with any crime throughout his ordeal.

The IRS did offer McLellan a nice insult of a deal: they’d drop their civil forfeiture “case” and return half the money, in exchange for McLellan to drop the campaign to have the full amount — an amount he amassed over 13 years operating a rural convenience store — returned.

The Institute for Justice (IJ), a nonprofit that advocates for people whose civil liberties have been placed in jeopardy at the hands of government, took up McLellan’s case. IJ’s pro bono attorneys understood that public opinion on asset forfeiture had been recently raised by other, similar cases in different parts of the country, so it produced a video telling McLellan’s story. It was widely seen and shared on social media.

Fast forward two weeks: the IRS has backed down, pledging to return all $107,000 of the dollars McLellan earned and saved.

“Yesterday, just two weeks after the Institute for Justice took on the case and brought it to the attention of the nation, the IRS and Department of Justice moved to voluntarily dismiss the case and give Lyndon back 100% of his hard-earned money,” IJ reported May 14.

“… Now, in moving to drop the case almost half a year after the IRS announced its policy change, the government cited the change in policy as its reason for backing down.”

IJ notes that McLellan hasn’t been made completely whole.

He’s “still out tens of thousands of dollars, thanks to the government’s actions,” the report states. “Lyndon paid a $3,000 retainer to a private attorney before IJ took the case on pro bono, and he also paid approximately $19,000 for an accountant to audit his business and to provide other services to help convince the government he did nothing wrong.”

The government isn’t offering to reimburse McLellan those expenses, nor is it offering to pay him interest on the money it stole/borrowed.

McLellan told IJ he was just happy his ordeal was ending, and he expressed a hope that his case would serve as a preventive lesson.

“What’s wrong is wrong, and what the government did here is wrong,” he said. “I just hope that by standing up for what’s right, it means this won’t happen to other people.”

Published by Ben Bullard on personalliberty.com

Lyndon McLellan, a rural North Carolina convenience store owner, woke up one day to discover the IRS had seized every penny of the $107,000 in his bank account. It was all the money he had put away over the course of 13 years of assiduous, hard work.

“This is all I’ve ever done. I was raised in the store business; I’m here 12-13 hours a day, seven days a week,” he explains. “To make this kind of money selling soft drinks, cigarettes and hot dogs, somebody’s gotta work, okay? It wasn’t just handed to us. It was taken from us – but it wasn’t handed to us.”

McLellan hasn’t been accused of a crime. The IRS just seized his money. And even though the IRS announced it was changing its civil forfeiture policy in October of last year – a result of growing public outcry in opposition to the practice – it didn’t relent in McLellan’s case, which predated the announcement by a few months.

For years, McLellan had been making periodic cash deposits into his account. The federal government requires that bank customers fill out a currency transaction report to document any single deposit in excess of $10,000. But McLellan had been depositing his earnings in increments beneath that threshold – for more than a decade.

The IRS had, until its policy change last year, exercised its own discretion in invoking its power of civil asset forfeiture against these smaller depositors. The spirit of the forfeiture law, as it applies to McLellan’s case, assumes that he was sitting on a stack of currency but elected to deposit it in small increments to avoid the government’s reporting requirements.

But that’s clearly not what he was doing – he was depositing what he was earning, as he was earning it.

It took McLellan years to accumulate the small nest egg the IRS took away, and each deposit represented a small milestone. There was never a giant stash of cash. And both before and after its policy change, the IRS didn’t care. In the aftermath of a February congressional hearing on forfeiture practices, the IRS’ position revealed itself in pretty cruel fashion.

From The New York Times:

During a congressional hearing in February, Representative George Holding, a Republican from North Carolina, referred to Mr. McLellan’s case, saying no crime other than structuring had been alleged. “If that case exists, then it’s not following the policy,” John Koskinen, the commissioner of the I.R.S., said.

But the prosecutor on the case, Steve West, was unmoved. Notified of the hearing by Mr. McLellan’s lawyer at the time, he responded with concern that the seizure warrant in the case, filed under seal but later given to Mr. McLellan, had been handed over to a congressional committee, according to an email exchange provided to The New York Times by the Institute for Justice, a libertarian public interest law firm that has taken over the case.

“Your client needs to resolve this or litigate it,” Mr. West wrote. “But publicity about it doesn’t help. It just ratchets up feelings in the agency.” He concluded with a settlement offer in which the government would keep half the money.

So, as it stands, the government is offering McLellan the sweet deal of getting back half of his $107,000 in order to make the forfeiture case – a case in which McLellan hasn’t been charged with a crime, but which forces him to bear the burden of proof if he wants all his money returned – go away.

The Institute for Justice, which produced the video above, is advocating on McLellan’s behalf in the ongoing effort to right this injustice and return all of his hard-earned money. You can read more about that effort here.