In August 2013, the Internal Revenue Service used civil forfeiture to seize the entire bank account—totaling nearly $33,000—of Carole Hinders, the owner of Mrs. Lady’s Mexican Café, a popular restaurant near Spirit Lake, Iowa. In May 2012, the IRS did the same thing to Jeff Hirsch and his two brothers, who own Bi-County Distributors on Long Island. This time they took more than $446,000. Neither the Hirsch brothers nor Carole were charged with any crime. “Civil forfeiture is one of the most serious assaults on property rights in America today,” said Larry Salzman, an attorney with the Institute for Justice, the public-interest law firm that is representing Carole and the Hirsch brothers in their fight against the IRS. “The government should not take property from innocent people.”
The IRS claims that Carole and the Hirsch brothers were “structuring” their cash bank deposits to evade a federal bank reporting requirement, despite forgoing the filing of criminal charges. The IRS used the structuring pretext to seize the entirety of their bank accounts using a little known, but highly controversial, legal process known as civil forfeiture. Between 2005 and 2012, the IRS alone seized $242,627,129 in “structuring” cases like Carole and the Hirsch brothers’.
Carole’s small-town restaurant only accepts cash, which means Carole makes frequent trips to the bank to avoid having large sums of money on the premises. Similarly, the Hirsch brothers’ customers largely pay in cash, as is the standard practice in their industry. That means the Hirsch brothers frequently make large deposits at their local bank.
Neither Carole nor the Hirsch brothers received a warning from their banks or the government before their money was taken. Neither of them have been charged with a crime. The government has never claimed that the money it seized was the proceeds of illegal activity—only that civil forfeiture laws allow them to seize money merely suspected of being involved in crime. Shockingly, the money taken using civil forfeiture is used to pad the budgets of the very agencies that seize the property, creating a perverse financial incentive to abuse the power.
“Civil forfeiture laws are broken,” explained IJ Senior Attorney Scott Bullock. “That is why this case is important: A victory for Carole and the Hirsch brothers will not only return their money, but also protect the rights of many more Americans caught up in the IRS’s unconstitutional dragnet.”
Civil forfeiture allows the government to seize cash from Americans without convicting, let alone charging them, with a crime. Since this summer, the use of civil forfeiture by law enforcement has increasingly come into the public spotlight. In September, the Washington Post published a three-part investigative series on the practice, IJ filed a class-action lawsuit against Philadelphia’s civil forfeiture program and federal legislation has been introduced to curb the practice. Most recently, John Oliver, host of HBO’s Last Week Tonight, spent 17 minutes berating the program.