Federal Court Dismisses North Carolina Forfeiture Case “With” Prejudice, Rejecting Government’s Attempt to Evade Attorneys’ Fees

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This week a federal court handed down a long-awaited decision vindicating Lyndon McLellan in his fight against the IRS.

Lyndon’s case came to the nation’s attention after the IRS seized his entire bank account in July 2014 using civil forfeiture for the innocent act of depositing his hard-earned money in the bank in amounts under $10,000. The Institute for Justice took Lyndon’s case to clear his name and get back his property, and in June 2015, the government finally returned Lyndon’s money.

In returning Lyndon’s money, however, the government sought to avoid its obligation under federal law to pay Lyndon’s attorneys’ fees, costs, and interest. Lyndon racked up nearly $20,000 in fees owed to his accountant and lawyer before the Institute for Justice took his case on a pro bono basis.

The district court’s decision rejected the government’s maneuver, stating:

Certainly, the damage inflicted upon an innocent person or business is immense when, although it has done nothing wrong, its money and property are seized. Congress, acknowledging the harsh realities of civil forfeiture practice, sought to lessen the blow to innocent citizens who have had their property stripped from them by the Government. . . . This court will not discard lightly the right of a citizen to seek the relief Congress has afforded.

“Today’s decision recognizes that Lyndon should not have to pay for the government’s outrageous use of civil forfeiture laws against a totally innocent property owner,” said IJAttorney Robert Everett Johnson. “The government took Lyndon’s property even though he did nothing wrong, forcing him into a prolonged and expensive legal nightmare. Now the government will have to comply with its obligation to make Lyndon at least partly whole.”

The decision comes just as the United States Court of Appeals for the Eighth Circuit prepares to consider the government’s similar attempt to avoid paying fees, costs, and interest to Carole Hinders—an Iowa restaurant owner who also had her entire bank account seized and then returned. The Eighth Circuit will hold oral argument in that case onFebruary 9 in St. Paul, MN.

“The government cannot turn a citizen’s life upside down and then walk away as if nothing happened,” said IJ Attorney Wesley Hottot, who will argue the case for Carole Hinders. “Now that Lyndon has been vindicated, we look forward to holding the government to account in Carole’s case as well.”

Government indicts Dennis Hastert instead of protects him, he should have used Bitcoin

Former Speaker of the House, Dennis Hastert, was indicted yesterday, May 28, 2015 for not reporting to the government money he withdrew from his own bank accounts and lying to the FBI. The federal government has a rule that if one makes cash deposits or cash withdrawals to systematically avoid reporting transactions of $10,000 or more, then that person is breaking federal law. Allegedly, the money was to pay off an extortionist who had dirt on him.

Dennis Hastert indicted on federal structured financing laws and lying to the FBI.

Photo by Ben Sklar/Getty Images

This is what we know as of this morning: Dennis Hastert was a member of the U.S. House and then became a well-paid lobbyist. In 2010, someone approached Hastert with information that could be damaging to him. The two agreed for Hastert to pay that person $3.5 million over a period of time for that information not to be revealed. We do not know if the information is of any criminal activity Hastert may have committed in the past, or if is simply something of an embarrassing nature. Either way, the information was strong enough that Hastert was willing to pay millions of dollars for that information to be kept private. The FBI and the IRS began investigating Hastert when it was alerted he was withdrawing large amounts of cash from his different bank accounts and then he began to withdrawal amounts just under the $10,000 federal reporting limit.

The reporting limit was initially designed to thwart drug dealers’ money laundering operations, which has not been successful in the War on Drugs. Instead, the law has been used nefariously by the federal government to arrest or seize the money of otherwise normal Americans and business people. This column has offered many stories of the IRS seizing the bank accounts or arresting business people who are in legitimate cash businesses and are not involved in any illegal activity.

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IRS caught violating its own civil forfeiture policy

Lyndon McLellan has spent more than a decade running L&M Convenience Mart, a gas station, restaurant and convenience store in rural Fairmont, North Carolina. Then, almost one year ago, agents from the IRS came to the store and announced that they had seized his entire bank account, totaling more than $107,000. Yesterday, April 30, 2015, the Institute for Justice (IJ), a national public interest law firm leading the fight to end civil forfeiture, filed court documents contesting the IRS’s forfeiture of Lyndon’s money.

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Federal judge wants to get to the bottom of Lerner’s mysterious computer crash

Yesterday, July 11, 2014, U.S. District Court Judge Reggie Walton demanded a written affidavit specifically explaining the circumstances surrounding the IRS’s Lois Lerner’s computer hard drive crash. Lerner was found to be in Contempt of Congress in May for not answering questions during a Congressional inquiry. The inquiry focuses on Lerner’s division of the IRS unfairly targeting conservative groups seeking non-profit status during the 2010 election season.

Read the rest of the story here.

Federal judge wants to get to the bottom of Lerner's mysterious computer crash

Yesterday, July 11, 2014, U.S. District Court Judge Reggie Walton demanded a written affidavit specifically explaining the circumstances surrounding the IRS’s Lois Lerner’s computer hard drive crash. Lerner was found to be in Contempt of Congress in May for not answering questions during a Congressional inquiry. The inquiry focuses on Lerner’s division of the IRS unfairly targeting conservative groups seeking non-profit status during the 2010 election season.

Read the rest of the story here.

IRS declines to seek U.S. Supreme Court review of ruling

Today, May 13, 2014, three independent tax-return preparers’ victory over the IRS became final, after the agency declined to file a petition seeking review from the U.S. Supreme Court. The lapse of the deadline marks the conclusion of a two-year battle over whether the IRS had the authority under the “Horse Act” of 1884—a statute passed to govern compensation claims for dead horses brought on behalf of Civil War veterans—to impose a nationwide licensing scheme on tax preparers.

Read the full story here.

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IRS' Lois Lerner held in contempt by U.S. House

Yesterday, May 7, 2014, the U.S. House voted in favor of holding Lois Lerner, a former official with the Internal Revenue Service (IRS). A handful of Democrats and all Republicans voted for the contempt citation in an effort to force Lerner into court to explain her actions while at the IRS. The IRS sees Lerner as the lynchpin in the investigation concerning denial and lengthy delays for conservative groups’ approval of tax-exempt status. Lerner is accused of either herself being biased against conservative-leaning groups, or being directed to harass the groups.

Read the rest of the story here.