A win for property rights curbs abuses in asset forfeiture policy; but a loss of privacy could lead to abuse and misuse from the surveillance state.
July 8, 2019
By: Bobby Casey, Managing Director GWP
Seems I’m reading about taking one step forward on one page and one step backward on the next with the Trump administration.
He cut corporate taxes! Yay!
He imposed tariffs! What?
He cut regulations! Yay!
He increased spending! What?
It sounds diplomatic to say something like, “Politics is compromise… we take the wins where we can.” Honestly, that’s more defeatist than diplomatic. That which is being compromised are people’s rights and wealth, and by the definition of the word “inalienable” those tend to be nonnegotiable.
All this to say, the US has some good news, and some bad news.
The Good News
I’ve covered asset forfeiture quite a bit here. Banking institutions are just informants for the government at various levels.
FATCA has banks around the world informing on their clients. Four years ago, we mentioned the Suspicious Activity Reports (SAR) banks have to file for deposits over $5,000, and the quotas thereof.
Cash activities exceeding $10,000 must be federally reported, so these smaller businesses that largely run on cash transactions started depositing smaller sums to avoid the $10,000 threshold. In so doing, they are engaging in what is called “structuring”.
We shared the stories of Terry Dehko and Carole Hinders. The former owned a small grocery store, and the latter a local restaurant. Both had tens of thousands of dollars confiscated by the IRS due to making deposits below $10,000.
Reason shared other cases amounting to hundreds of thousands of dollars in small business losses:
- $60,000 from Maryland dairy farmer Randy Sowers in 2012
- $446,000 from Long Island candy and snack wholesaler Jeffrey Hirsch in 2012
- $107,000 from North Carolina convenience store owner Lyndon McLellan in 2014
A week ago, Trump signed the “Respect Act” into law. Targeting solely the IRS, it says:
“Property may only be seized by the Internal Revenue Service” in structuring cases “if the property to be seized was derived from an illegal source or the funds were structured for the purpose of concealing the violation of a criminal law or regulation other than” structuring. The law also requires that the IRS notify the owner within 30 days of a seizure and mandates a hearing to consider whether there was probable cause for the seizure within 30 days of the owner’s request.
This doesn’t now apply to the DOJ yet, but there are active bills in Congress now to change that:
- The Due Process Act – This would extend the same principles outlined in the Respect Act to the DOJ.
- The Fair Act – This would prohibit Federal agencies from keeping the proceeds of forfeiture.
In late June, an addendum to end funding for the asset forfeiture “adoption program” passed. This is particularly nefarious because they used it to work around state level safeguards for individuals and businesses. Moreover, it served to launder stolen goods, as it didn’t require any criminal charges to be filed.
It allowed state and local law enforcement to seize property and transfer it to federal prosecutors for forfeiture under federal law. Then, up to 80% of the “take” was up for redistribution back to the local jurisdiction:
Between 2000 and 2016, the Justice Department distributed nearly $1 billion in federal-adoption funds to police and prosecutors nationwide.
Feeling good enough for the bad news?
The Bad News
The US surveillance state might be taking a great leap forward. Technology offers fantastic benefits to the end user, especially when it comes to privacy. The advancements in encryption, however, are a major bugaboo for government.
The National Security Council had a meeting with some top brass to discuss the matter of end-to-end encryption and privacy in IP messaging platforms like Wickr and WhatsApp.
The discussion focused on the lock down of messaging apps, billed as “a privacy and security feature,” which “frustrates authorities investigating terrorism, drug trafficking and child pornography.”
Nothing like the trifecta of fear to get people shaking in their boots and calling for the right to privacy to be offered up as a sacrifice at the altar of safety!
The government, and other governments around the world, are complaining that the encryption is “too good” they themselves cannot hack into it. They are seeking either a backdoor or what is called a “ghost protocol” where the government can access these conversations:
This proposal to add a “ghost” user into encrypted chats would require providers to suppress normal notifications to users, so that they would be unaware that a law enforcement participant had been added and could see the plain text of the encrypted conversation.
Members of Big Tech along with privacy experts and human rights groups came out with an open response to this encroachment. The inevitable vulnerabilities this sort of backdoor creates goes well beyond what these companies are comfortable providing. It would leave their platforms open to abuse and misuse.
Joel Wallenstrom, CEO of Wickr, rightly observes:
“The ghost protocol idea has been proven over and over to be unsustainable. Deciding who gets access to this kind of [intercept] technology means we’re in the business of determining who’s good and who’s bad.”
Of course the DOJ and FBI want to make crime fighting their number one priority. The Machiavellian approach to this has tech companies, civil rights defenders, and end users very concerned, as they should be.
This is kind of how China operates. People’s activities are monitored and censored on social media, and they are given citizenship scores that could affect their ability to travel, get a loan, or get a job!
Citizens are often told that the reason why we must make this concession on your privacy is for your safety from these horrible evil criminals. That’s how the people were sold on asset forfeiture. But what ends up happening is a bunch of innocent people become victims of an overzealous dragnet.
I don’t know why getting a warrant and due process ceased to be viable options, but it looks like while the IRS just got reigned in, other agencies are clamoring to be let loose!
The smart thing to do is invest a little in your privacy and asset protection.
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