Lyndon McLellan, target of structuring/forfeiture case, beats IRS

We covered this case last year:

…despite the U.S. Department of Justice’s promise to stop seizing bank accounts in future in cases where violations of laws against bank deposit “structuring” (keeping them under the $10,000 reporting threshold) are not connected with any underlying crime, it continues to hold on to money already in the seizure pipeline. That includes the $107,000 grabbed from Lyndon McLellan, who runs L&M Convenience Mart in rural North Carolina, according to the New York Times. “You work for something for 13, 14 years, and they take it in 13, 14 minutes.”

To make matters worse, a “prosecutor wrote menacingly to McLellan’s lawyer about the publicity the case had been getting,” warning that press attention “ratchets up feelings within the agency.”

In June of last year the IRS agreed to drop the charges and return McLellan’s money, and now a federal judge has told the agency to pay the store owner $20,000 for his legal costs, according to my Cato colleague Adam Bates, who has other links and thoughts on the case: “If the government cannot prove beyond a reasonable doubt that a person engaged in criminal activity, it should not be able to punish them as if they’re guilty.”


  • probably worth it, even though it means he will be audited annually until he dies, or until we get an honest president, whichever comes first.

  • The problem to me is that while the IRS will pay the man and his counsel, that is money coming from the pockets of the American people – the very people who think things like this are absurd and should never happen.

    It is not too difficult to see the IRS saying it needs more money when it could have spent the time and money in areas other than prosecuting and persecuting legitimate business owners for doing nothing wrong.

    I know some of the mental stress when a government comes after you for your legal and legitimate activities, but nothing to the extent of losing my livelihood. Yet because of the practically unlimited resources and no accountability for Federal employees, they have nothing to fear or worry about.

    (See the cases of Diana Rubens and Kimberly Graves at the VA for example.)

    In this case, McLellan nearly lost his business, was harassed by government officials over exercising his rights, had to fight for wrongful taking of his assets and yet the people who brought these actions down upon his head will face no disciplinary actions and continue to be employed by the government.

    Heads need to roll.

  • Hard to believe $20,000 begins to cover the true legal costs. I’d expect legal fees for a case of this nature to be well over ten times that.