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Criminal Defense Attorney Edward Griffin's Fight With the IRS Detailed in the Washington Post

As covered in the Washington Post, https://www.washingtonpost.com/amphtml/local/the-irs-seized-59000-from-a-gas-station-owner-they-still-refuse-to-give-it-back/2017/10/16/57828500-b296-11e7-be94-fabb0f1e9ffb_story.html , and Fox News, http://www.foxnews.com/us/2017/10/17/report-irs-refuses-to-give-back-59g-to-vet-after-seizing-his-business-cash.html , in 2011, I began representing Mr. Kwon.  He was being investigated by the FBI for structuring, which is making cash deposits of less than ten thousand dollars at a time to avoid the bank's obligation to report cash deposits of more than ten thousand dollars to the IRS. 

Mr. Kwon and his wife owned and operated a gas station.  They were both in their late 60s.  She worked the register and did the books.  He wore blue overalls, changed oil and got greasy and dirty from the twelve hours a day he spent working there six or seven days a week.  This was their retirement plan.  Hard, honest work and at the end of the day a business they could sell and a nest egg they could leave for their children and their grandchildren.     

Instead, the IRS froze and seized the entire business operating account.  With no money to pay the rent or buy gas for the station, Mr. Kwon and his wife would lose their business. 

Mr. Kwon was alleged to have violated the structuring laws with over one million dollars in deposits.  This was the entire gross proceeds of the business over several years of operation.  This was despite the fact that every penny he made was properly accounted for, reported and taxed.  At this time, the sentencing guidelines called for years of incarceration, because the guidelines were calculated based upon a million dollar fraud or theft case.       

Pursuant to a pre-indictment plea agreement, Mr. Kwon pled guilty to one count of felony structuring.  The government would get to keep all the money.  In exchange, Mr. Kwon received no period of incarceration.  Indeed, the government admitted at sentencing that this crime had no victim.

After active petitioning and political pressure brought by other business people who had been swept up in these types of investigations and prosecutions, the DOJ and the IRS changed their policy.  Current DOJ policy states that the government will not seek forfeiture absent “probable cause that the structured funds were generated by unlawful activity or that the structured funds were intended for use in, or to conceal or promote, ongoing or anticipated unlawful activity.”  

The government today would not even initiate forfeiture proceedings in this case. In the face of political pressure, both the IRS and the DOJ announced policy changes under which they will no longer seek to forfeit money under the structuring laws where—as here—the money involved in the allegedly structured transactions is derived from lawful activity.  As the IRS Commissioner explained at a February 2015 hearing before the House Ways and Means Oversight Subcommittee, this policy change will “ensure fairness for taxpayers” and “protect the rights of individuals” by “making sure that taxpayers get appropriately protected.”   The policy change implicitly recognizes that what happened in this case was not fair, was not appropriate, and did not adequately respect constitutional guarantees of property and due process.

In 2016, we petitioned the IRS to return Mr. Kwon’s lawfully earned money back to him.  Having recognized that what happened in this case was wrong, the government should do the right thing and give the money back. The government has ample authority to correct this injustice: Congress has authorized the return of forfeited money, under the remission and mitigation procedure, so long as it will promote the interests of justice. See 19 U.S.C. § 1618; 31 U.S.C. § 5321(c). And IRS and DOJ regulations recognize that return of forfeited money is appropriate where it “will promote the interest of justice and will not diminish the deterrent effect of the law.” Internal Revenue Manual § 9.7.7.4.6.1.A; 28 C.F.R. § 9.5(b)(1)(i). In light of current policy, the DOJ and IRS evidently have determined that seizure of money in cases like this one is neither just nor necessary to deter criminal behavior. So there can be no question that return of property is merited under the standards for remission and mitigation.

A year after filing Mr. Kwon’s Petition, the IRS issued a brief rejection of Mr. Kwon’s request for the return of his monies stating that he had pled guilty so the monies would not be returned.  We have appealed that initial decision and we sincerely hope that raised awareness of this injustice will help push the IRS to do the right thing and return Mr. Kwon’s money to him. 

Edward Griffin is a criminal defense attorney with over a decade of experience representing clients in State and Federal courts, and you can find out more about his practice at www.adelphilaw.net.   

 

 

 

Edward Griffin