Guilty Until Proven Innocent – Government Seizing Bank Accounts


In criminal court, you are innocent until proven guilty.

It’s a different matter altogether in civil forfeiture, where prosecutors can and do seize the assets of anyone on phony charges. Given there is no recourse or fine, the best the innocent victims can do is get their property back, most likely with a huge delay, if at all.

guilty-until-proven-innocent-finalConsider the plight of Terry Dehko and his daughter Sandy Thomas. They run a small grocery store in Fraser, Michigan. Because their insurance only covers a cash limit of $10,000, they frequently make smaller deposits. One day last January, the government seized $35,000 of their assets, not in the store, but in the store account.

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Officials said Dehkos had violated federal money-laundering rules, which forbid people to “structure” their bank deposits so as to avoid the $10,000 threshold that triggers banks to report a transaction to the Internal Revenue Service (IRS).

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There was no evidence of guilt. Dehko was not charged with any crimes, and the IRS supported Dehko’s claim. Nonetheless, Dehko is offered 20% of the amount taken from him.

Grabbing Hand of the Law

The Economist explains the plight of Dehko in its report The Grabbing Hand of the Law

In criminal cases, the government can confiscate assets only after a conviction. Under “civil forfeiture”, however, it can grab first and ask questions later. Property can be seized merely on the suspicion that it has been involved in a crime. Citizens have no right to a swift hearing. For a small business, that can be fatal.

In many civil-forfeiture cases the agencies that seize the assets keep most of the proceeds, and can use them to pad their budgets or buy faster patrol cars. It is hard to know how common this is, but the Institute for Justice (a libertarian law firm that is representing the Dehkos) notes that the federal government shared $450m of seized assets with state and local authorities in 2012.

The grabbers do not always prevail. A motel owner in Massachusetts recently won back his motel after prosecutors tried to seize it because one guest in 13,000 had been arrested for drug offences. In October in California, prosecutors who were trying to seize a building because two of the tenants were marijuana dispensaries (which are legal under Californian law), gave up and let the landlord keep it.

But this is scant comfort for the Dehkos, who are struggling to hold on to the store they have run since 1978. “It’s kind of scary that they can do this to you,” says Ms Thomas. “In America, you’re supposed to be innocent until proven guilty.”

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