Connecticut bakery beats bullying IRS.

Civil asset forfeiture is a ‘tool’ used by law enforcement officials to seize certain property and assets believed to have been involved in a criminal enterprise[1]. The problem is that often these assets are seized with no proof of wrong doing.  What would motivate federal, state, or local governments to practice an act that might be better defined as strong armed thuggery? The answer to this question, like many others, is money. The ACLU summarizes the situation succinctly:

“Forfeiture was originally presented as a way to cripple large-scale criminal enterprises by diverting their resources. But today, aided by deeply flawed federal and state laws, many police departments use forfeiture to benefit their bottom lines, making seizures motivated by profit rather than crime-fighting.”[2]

And, this isn’t a practice done by cash strapped local police. The federal government is using civil forfeiture as a way to end around Congressional budget constraints. In 2013 Vocatura’s Bakery, a family owned business in Connecticut, was raided by the IRS and U.S. Marshalls. The IRS seized the bakery’s entire bank account totaling almost $68,000, while accusing the owners of running drugs, prostitution, and/or guns. These allegations are the result of the bakery, largely a cash business, depositing weekly amounts in the bank that triggered a review by the feds under “structuring” laws. Structuring is a “felony offense to avoid federal bank reporting requirements. Banks are required by federal law to report cash transactions over $10,000. And federal law also makes it a crime—structuring—to engage in transactions under $10,000 in order to avoid filing of a report.”[3] To be fair, the bakery was limiting their deposits to under $10,000 but not with any criminal intent. The owners of the bakery were operating “[o]n the understanding that bank employees did not like having to deal with [the reporting paperwork for transactions of $10,000 or more]” and as a result “the bakery limited the size of its weekly deposits to help the bank reduce red tape.”[4]

In the three years since the raid, the IRS had not returned the money.  Lacking evidence of criminal activity the IRS pressed the Vocaturas to voluntarily agree to forfeit the already seized funds. When the Vocatura’s refused, the IRS retaliated and launched a full-scale criminal tax investigation including a ‘’vastly overbroad grand jury subpoena demanding eight years worth of practically all business records for the baker.”[5]  This is school yard bullying on a grand scale. The bully takes lunch money from the victim. Then, using threats of even more violence pushes the victim to agree that they gave the money voluntarily so the bully can avoid any scorn or corrective action from the teachers.

Fed up, the Vocatura’s filed suit in May, 2016.  Within hours the IRS announced it was finally giving the money back. But, the IRS wasn’t giving up on the fishing expedition to prove that the raid, and thus the seizure, was justified.  It took another month before the IRS decided to withdraw its grand jury subpoena.   The Vocatura’s attorney Robert Everett Johnson expressed relief “[t]he IRS seized the Vocatura’s money for no real reason and spent three years trying to find a way to keep it. Now, after putting the Vocaturas through the wringer, the IRS is walking away from a case it never should have started in the first place.”[6]

This is the inevitable end when agencies tasked with police and investigative powers are also given the power to seize assets for their own use and profit.   This is when absolute power corrupts absolutely. The Vocaturas are the exception.  They had the resources and wherewithal to push back.  Until pushing back becomes the norm, the bullying won’t stop.

—  Derek A. Jordan, Esq., Barnes Law

Derek A. Jordan is an associate attorney with Barnes Law, licensed to practice law and land surveying in Tennessee.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] See: http://www.heritage.org/research/reports/2014/03/civil-asset-forfeiture-7-things-you-should-know

[2] See: https://www.aclu.org/issues/criminal-law-reform/reforming-police-practices/asset-forfeiture-abuse

[3] See: http://ij.org/case/connecticut-forfeiture/

[4] Ibid.

[5] See: http://ij.org/press-release/irs-agrees-withdraw-retaliatory-grand-jury-subpoena-connecticut-bakery/

[6] Ibid.