Update: Baltimore City Paper on South Mountain Creamery case

Van Smith with the City Paper in Baltimore (where South Mountain Creamery is a farmer’s-market fixture) reported on Wednesday and again on Friday on the “structuring” charges and forfeiture action against dairy farmers Randy and Karen Sowers (see yesterday’s post). A few highlights:

On Wednesday, Smith reported that Sowers said in an interview that “he deposited the cash he’d made in the increments in which it had been earned. If the deposited amounts often ended up being a little under $10,001, he explained, that’s just the way it worked out and he [had] no intention of breaking the law.”
On the other hand, according to Smith’s summary of the federal complaint yesterday, Sowers is said to have told federal investigators during a February 29 interview “that ‘during the farmers’ market “season,” his weekly cash receipts were on the order of $12,000 to $14,000,’ yet ‘he kept his cash deposits under $10,000 intentionally so as not to “throw up red flags.”‘ He also told the agents that ‘he was advised by a teller at the bank that the deposit of more than $10,000 in cash would lead to the filing of a form, and that he decided from that point forward not to make deposits in excess of $10,000,’ according to the complaint.”
“Historically, the anti-structuring statute has been used by prosecutors as an ancillary charge with other accusations of nefarious behavior, such as drug dealing or terrorism. And it still is. But over the last few years, prosecutors have started to use it more regularly as a standalone charge — an observation noted by defense attorneys that Maryland U.S. Attorney Rod Rosenstein confirms. Syracuse University’s Transactional Records Access Clearinghouse, a data center about federal court cases, reports that in fiscal year 2011 Maryland brought 14 of the nation’s 99 structuring cases, making it the top state for such prosecutions. Nationally, the numbers have been rising; the 2011 figures are up 8.8 percent from the year before and up 57.1 percent from five years ago.”
Targets in Bank Secrecy Act forfeiture cases — which, to repeat, need not be premised on any suspicion of tax evasion or other criminality unrelated to the Act — have included Maryland “gas stations, liquor stores, and used-car dealerships.” “South Mountain is not the first seasonal-produce market to find itself targeted for structuring recently. Taylor’s Produce Stand, on the Eastern Shore, was stung last year after the feds seized about $90,000 from its bank accounts. In December, pursuant to a civil-forfeiture settlement agreement after no criminal charges were filed, the stand’s owners got back about half of the seized money.”
And this clue as to why the U.S. Attorney’s office in Maryland might be outperforming its colleagues nationwide in pushing BSA forfeitures: the forfeiture complaint against the Sowerses was “signed by assistant U.S. attorney Stefan Cassella – who literally wrote the book on federal forfeiture law.”

Filed under: banks, forfeiture, Maryland, prosecution

Class action lawyers vs. “Three Cups of Tea”

Defendants in federal court in Montana are now seeking dismissal of a purported class action on behalf of readers disappointed by author Greg Mortenson’s exaggerations and embroiderings. As in the earlier (and successful) James Frey episode, lawyers are arguing that consumers should be awarded refunds for their purchases of the flawed memoir. [AP/Washington Post] Earlier here, etc.

Filed under: class actions, publishers

“Structuring”: who can get away with it, and who can’t

“Structuring,” as readers may recall, is the federal criminal offense of splitting up bank deposits so as to keep them under a threshold such as $10,000 above which banks have to report transactions to the government. Structuring is unlawful whether or not it occurs in conjunction with any other legal offense, as opposed to being motivated by, say, a desire to keep a low profile in general or a sentiment that the government already keeps tabs on too many innocent activities. Nor is there any requirement that the person be aware that there is a law banning structuring; someone who gets wind that transactions over $10,000 are reportable, and decides “What’s up with that? I’ll just make $9,000 deposits”), has broken the Bank Secrecy Act. Indeed, the federal government instructs banks to report suspicious patterns of sub-threshold deposits, and not to warn customers that it is doing so.

So who can engage in structuring and get by with it? Well, it might have a bit to do with who you are:

* On the one hand, as Courtney Mabeus reports in today’s edition of the Frederick News-Post, federal prosecutors yesterday filed a six-page complaint against dairy farmers Randy and Karen Sowers, who own the successful South Mountain Creamery in Middletown, Md. On February 29 Treasury officials showed up at their farm to question them about bank deposits; 45 minutes into that interview, according to the Sowerses, they learned that the federal government had just seized their bank account and the $70,000 in it. The family does a lot of business at farmer’s markets and its cash receipts over a ten-month period exceeded $320,000, the feds say. The News-Post account includes no mention of the family being under suspicion of any offenses other than what U.S. Attorney Rod Rosenstein describes as follows: “The holding back of cash receipts in excess of $10,000 indicates a knowledge of the Currency Transaction Reporting requirement and an attempt to evade it.” The couple is now speaking out about their plight to a wider public; they have hired attorney David Watt, though how they intend to pay him given the seizure of their bank account is not clear from the article. (Update Apr. 21: see also Apr. 18 coverage in Baltimore City Paper; & welcome Radley Balko readers)

* On the other hand, if you are former New York Attorney General Eliot Spitzer, you might not find the federal structuring laws so intimidating. Spitzer had good reason to be intimately familiar with the bank reports system since he had relied on its output in conducting white-collar investigations, and he was “smurfing” deposits in furtherance of conduct that was itself illegal, as he knew well, having crusaded in favor of longer sentences for “johns” as part of his appeal to New York City feminist and legal-services groups. But as Harvey Silverglate points out, “Spitzer, with the help of a high-powered legal team, was able to convince the Justice Department’s lawyers to drop the charges.” Now he goes on TV to denounce the federal government’s failure to prosecute persons in high places.

Maybe they’re too busy going after the dairy farmers.

P.S. The Supreme Court, in a majority opinion by Justice Ruth Ginsburg [Ratslaf v. U.S., 1994], admirably “interpreted the ‘willfully’ element for a currency structuring violation under 31 U.S.C. Sec. 5324 to require proof that the defendant knew the structuring was illegal. Congress responded rather promptly to the Court’s holding by dropping willfulness from the statute.” [White Collar Crime Prof, h/t Sam Bagenstos] (& welcome Prof. Bainbridge, Amy Alkon, Hans Bader readers; & see update.)

Filed under: banks, Eliot Spitzer, for me but not for thee, forfeiture, Maryland

April 20 roundup

Lawsuit claim: MERS mortgage system is just a racket to deprive court clerks of recording fees [Baton Rouge Advocate]
More reporting on hospital and community drug shortages [Washington Post; my post last summer]
Roger Pilon: How the “judicial activism” debate changed [Cato at Liberty]
Louisiana Gov. Bobby Jindal, spoken of as a future national political figure, has rather a lot of ties to trial lawyers [Political Desk]
Problems with DOJ e-book antitrust suit targeting Apple [Declan McCullagh]
One bogus campaign feeds into another: “ALEC Unfairly Demonized Over ‘Stand Your Ground’ Laws” [Bader, CEI “Open Market”]
New Point of Law discussion on class actions with Ted Frank and Brian Fitzpatrick;
Today’s best spam comment? “With all the thistledown floating almost on the net, it is rare to look over a locate like yours instead.”

Filed under: antitrust, Apple, class actions, Louisiana, mortgages, politics, stand your ground, Ted Frank

North Carolina Amendment One

The proposed constitutional amendment, which would ban legal recognition of nonmarital relationships, is opposed by figures that include John Locke Foundation president John Hood; Rep. Renee Ellmers (R-N.C.); noted foes of same-sex marriage David Blankenhorn and Elizabeth Marquardt (ban “goes too far“); and not least by Patrick at Popehat, who says, regarding the likelihood that the “parade of horribles” conceivable from the ban would ever come to pass in North Carolina, remembers the days “when I was represented in the United States Senate by Jesse Helms and John Edwards, simultaneously.”

Related: Moorfield Storey blog on Hayek and gay marriage.

Filed under: North Carolina, same-sex marriage

EEOC: Employers have no right to ask what prescription drugs employees are on

Even if they’re operating heavy machinery, and even if the drugs are of the type that make users drowsy, twitchy or agitated. It’s all part of the ban on employee medical inquiries under the Americans with Disabilities Act, and the Eighth Circuit has backed up the agency’s position that questions do not become permissible until the employer has in hand objective evidence of impairment, the sort you can take to a judge. Evidence like, you know, there having been a serious accident. I explain at Cato at Liberty.

Filed under: disabled rights, EEOC, safety

Drew Curtis of FARK: How I beat a patent troll

“You need to know that the average patent troll defense costs 2 million dollars and takes 18 months when you win. That is your best case outcome when you get sued by a patent troll.”

Filed under: patent trolls

“Iowa judge rejects theory of ‘implicit bias'”

In a much-watched (earlier) lawsuit filed on behalf of a class of up to 6,000 blacks not hired or promoted by the state government of Iowa, a judge rejected a theory that hiring and promotion were tainted by unconscious “implicit” bias. Judge Robert Blink did not find persuasive the expert testimony proffered for the plaintiff’s theories, and said plaintiffs had not identified a particular discriminatory practice responsible for their situation as required by law. He also noted that blacks appeared to fare better in the state employment process than they did in private sector hiring. Iowa Attorney General Tom Miller “noted that much of the case involved blacks who were passed over for jobs after sending in applications in which they did not list their race.” [AP/NPR, Des Moines Register]

P.S. Thanks to commenter wfjag for directing our attention to this December AP dispatch with its truly wince-making example of Lead Plaintiff Fail:

The lead plaintiff in a class-action discrimination lawsuit filed by black workers against the state of Iowa is expected to plead guilty Wednesday to using her position at Iowa Workforce Development to carry out a fraud scheme in which she embezzled $43,000 in benefits meant for jobless Iowans. … Her claims have been front and center during the lengthy litigation….

Filed under: discrimination law, expert witnesses, Iowa

“Ex-Worker Sues City Over Service Dog For Paprika Allergy”

“A former city worker is suing Indianapolis after she claims the city failed to accommodate the service dog she needs due to her severe allergy to paprika.” The city had already removed certain foods from its vending machines but declined to accept a service dog as reasonable accommodation under the Americans with Disabilities Act (ADA) because a co-worker was allergic to dogs. [WRTV]

Filed under: allergies, disabled rights, Indiana, service animals

Debunking the “food desert” myth

No, this isn’t the first time the fashionable, First-Lady-approved theory has been debunked — see posts here, here, and here — but it’s gratifying to see the NYT’s formidable Gina Kolata get front-page space for a thorough treatment. One study found poor neighborhoods “had nearly twice as many supermarkets and large-scale grocers per square mile” as wealthier ones; another “found no relationship between what type of food students said they ate, what they weighed, and the type of food within a mile and a half of their homes.” [Tyler Cowen, Jacob Sullum] And Katherine Mangu-Ward notes the juxtaposition of Kolata’s piece with an opinion piece in the paper the very same day: “Food Deserts Are Not Real. Also, We Can Fix Them.”

Filed under: eat drink and be merry, New York Times, obesity