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The IRS Intentionally Targeted Innocent Small Business Owners in Order to Steal Millions Via Forfeiture Laws

IRS Asset Forfeiture Theft Small Business Revenue Generation

The Internal Revenue Service used deposit restrictions intended to detect profits from illegal activities to steal from innocent legal business owners.

Earlier this month, a report from the Treasury Department’s Inspector General detailed how the Internal Revenue Service used a restriction on deposits to bilk otherwise law abiding individuals and businesses of millions of dollars using asset forfeiture laws. Those restrictions require that any deposits made to a bank above $10,000 be reported to the IRS. The stated intention of that restriction is to draw attention to profits generated by illegal acts, such as terrorism and the violation of drug prohibitions.

In order to escape that scrutiny, many of those involved in such activities employ what is called “structuring,” which consists of splitting large deposits into multiple smaller deposits that are below that $10,000 threshold. However, many others involved in completely legal activities also do the same thing for various innocent reasons. Those reasons include a lack of awareness of those restrictions, insurance policies that limit coverage of deposits to less than that amount, and simply an effort to avoid extra paperwork (often on the advice of bank employees).

While structuring is illegal under the federal Bank Secrecy Act, according to the Inspector General it is really just a technicality that is intended to allow the initiation of an investigation into whether the deposits in question were derived from illegal activities. Instead, the IRS often used the practice of structuring alone as a justification to seize those deposits, via civil asset forfeiture. They also intentionally targeted small businesses and individuals engaged in legal activities due to the fact that they were less likely to be able to fight the forfeitures and in order to avoid “time consuming” investigations of actual criminals.

Via the Washington Post:

They “were not put in place just so that the Government could enforce the reporting requirements,” as the IG’s report puts it.

But according to the report, that’s exactly what happened at the IRS in recent years. The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents’ suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity.

The IG took a random sample of 278 IRS forfeiture actions in cases where structuring was the primary basis for seizure. The report found that in 91 percent of those cases, the individuals and business had obtained their money legally.

“Most people impacted by the program did not appear to be criminal enterprises engaged in other alleged illegal activity,” according to a news release from the IG. “Rather, they were legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others.”

More troubling, the report found that the pattern of seizures — targeting businesses that had obtained their money legally — was deliberate.

“One of the reasons why legal source cases were pursued was that the Department of Justice had encouraged task forces to engage in ‘quick hits,’ where property was more quickly seized and more quickly resolved through negotiation, rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming,” according to the news release.

In most cases, the report found, agents followed a protocol of “seize first, ask questions later.” Agents only questioned individuals and business owners after they had already seized their money.

In many cases, the property owners provided plausible explanations for their pattern of deposits. But these explanations appeared to have been disregarded or ignored.

“In most instances, we found no evidence that attempted to verify the property owners’ explanations,” according to the report.

It probably shouldn’t be that surprising that the Feds’ official revenue generators at the IRS jumped on an opportunity to go the extra mile and generate even more cash to fund our disfunctional, violent uncle’s war machine. Nor should it be particulary shocking that they avoided the tedious work of investigating actual criminals in favor of preying on innocent people that lack the ability to fight back.

Incidentally, it’s unknown exactly how much money the IRS stole from innocent businessmen, because they don’t voluntarily disclose those figures and refused to honor Freedom Of Information Act (FOIA) requests for that information even after those requesting it said pretty please.

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Fired NV Police Chief Ordered to Pay Punitive Damages in Abuse of Authority Lawsuit

Harassment of the Mongols Motorcycle Club and Attempt to Circumvent the Open Records Law

Stephen Stubbs MongolsOn July 28th, Thomas Finn, the former chief of police for Boulder City NV, was ordered to pay $10,000 plus attorney’s fees to Las Vegas area attorney Stephen Stubbs. The judgment stems from a lawsuit Stubbs had filed over abuses of authority Finn had engaged in during his time as the chief of police, as well as the malicious filing of a lawsuit by Finn against Stubbs after he initiated an investigation into those abuses of authority.

All of this originates from a campaign to harass and manufacture traffic charges against the Mongols motorcycle club during a national event they were holding in Boulder City in June of 2012. Former Chief Finn instructed Boulder City police officers to figure out any reason they could to stop and cite or arrest members of the Mongols. He also sent a letter to Judge Victor Miller, the sitting judge in Boulder City, informing him of their plans to harass the Mongols and asking that he not allow plea deals for any charges resulting from that harassment campaign.

In addition, on June 11th of 2012 Finn sent an e-mail to Boulder City police officers asking them to delete all emails related to the intentional harassment of the Mongols. That e-mail explicitly stated that they should do so in order to avoid releasing them in the event that a public records request was filed. This, of course, was a violation of the Nevada Destruction of Public Records Statute (NRS 239.230).

After Stephen Stubbs, who represents the Mongols, received a copy of that email anonymously, he initiated an investigation against Finn with the Boulder City Council and Nevada Attorney General’s Office. As a result of that investigation, Finn was fired as the Boulder City Police Chief, although he was not charged with a crime because, unbeknownst to him, all city emails are backed up on a separate hard drive and the emails he ordered to be deleted (and that were in fact deleted) were able to be recovered.

In other words, a loophole saved him from being punished for the crime he actually committed. Not that people should expect anything more than a whitewash of crimes by the police from Clark County District Attorney Steve Wolfson.

Stephen Stubbs Vs. Former Boulder City Chief Thomas Finn

Thomas Finn Boulder City Police ChiefSubsequent to Stubbs’ initiation of the investigation that eventually led to his firing, Finn began engaging in a series of retaliatory acts that included wrongful use of confidential information, as well as filing a false and malicious lawsuit against him relating to the anonymous source of the email instructing officers to delete evidence of his campaign to harass the Mongols.

After acquiring a laptop belonging to Stubbs and containing personal, confidential information belonging to Stubbs, as well as his clients, from Lisa Lemley, a former employee with Stubbs’ law firm, Finn began writing to the FBI, Nevada State Bar, and IRS in failed attempts to compel those agencies to investigate him for fraud and money laundering. All of those allegations were subsequently found to be without any merit.

Next Finn filed a lawsuit against Stubbs, the city attorney, and two members of the Boulder City Council. Ironically enough (in light of his own participation in the theft of the laptop belonging to Stubbs), the lawsuit was based on the contention that the email in which he instructed police officers to illegally destroy evidence of their intent to harass the Mongols was confidential information that had been acquired illegally. This lawsuit was quickly dismissed on anti-SLAPP grounds.

Stephen Stubbs also had filed a series of lawsuits himself on behalf of the Mongols and Stray Cats motorcycle clubs, as well as the Nevada Confederation of Clubs, over the harassment by Finn and Boulder City Police.

On July 30th, Clark County District Judge Pro Tempore Barbara Johnston ruled that Finn’s lawsuit was filed as retaliation for his firing as police chief and that he had abused his authority in order to acquire Stubbs’ personal laptop and by using it to try to initiate investigations against him by the FBI, Nevada State Bar, and IRS. As part of that ruling Stephen Stubbs  was awarded $10,000 in punitive damages plus legal fees, which could amount to as much as $50,000.

In that ruling, Judge Johnston stated that Finn’s lawsuit against Stubbs and his co-defendants was clearly filed in retribution for the investigation of Finn’s own misconduct. In addition, she states that Finn’s obtaining of Stubbs personal laptop and the “subversive and probably illegal use of the data on it” represents “outrageous conduct, with a conscious disregard” for the impact his false accusations would have and “malice aforethought.”

Judge Johnston further concludes that Finn’s attempts to initiate an investigation against Stubbs by the IRS, FBI, and Nevada State Bar were “oppressive and despicable conduct that subjected Stubbs to cruel and unjust hardship with a conscious disregard of the rights of Mr. Stubbs.”line-banner

Obviously, it shouldn’t be hard to see who is (very much) in the wrong in this whole affair. Former Chief Thomas Finn is the prototypical Las Vegas area corrupt politician and the head of a prototypical Las Vegas area police department that are well known for having no regard for rights or the actual law. By all rights, Finn should actually be facing charges for his criminal acts of misconduct before and after his firing, but expecting Clark County District Attorney Steve Wolfson to go after the many corrupt politicians or police in Las Vegas is just setting yourself up for a disappointment.

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