The Criminalization of Making a Bank Deposit

A couple days ago, I wrote about Congressional hearings on the "over criminalization" that seems to be endemic in U.S. "law" these days. One of the "crimes" that has been created in the past few decades and expanded by federal agents has been "structuring," which is another way of describing a simple action: depositing money in a bank. (The slang term is called "smurfing.")

In 1970, tales began to circulate of drug dealers buying cars and houses with suitcases full of cash in an attempt to "launder" the money they had made through illicit deals. (That is, selling a product of which the government disapproves.) Congress, which always advertises itself as being "tough on crime," responded by passing the Bank Secrecy Act that required banks to report currency transactions of $10,000 or more to the government, which then "investigates" whomever made the deposit.

Since people don't like to be investigated (Imagine that!) and treated like criminals by federal officials (Imagine that!), there are times when people will either deposit or withdraw funds under the $10,000 threshold. However, Congress has a law against that, too, the "structuring" law. The idea behind the "structuring" law is that people might have something to hide, such as illegal activity, so the commission of an underlying crime (such as drug dealing) might try to deposit or withdraw money in amounts less than $10,000 in order to avoid detection of their illegal acts.

Unfortunately, federal officials have dispensed with the "underlying crime" reasoning and have decided just to arrest people because they are not depositing all of their money at once. Last year, I wrote about the case against Johnny Gaskins, a North Carolina attorney who had the effrontery to convince a jury not to order the execution of a man convicted of killing a cop. For that "crime" (doing his job as a defense attorney), the "Thin Blue Line" vowed revenge and the feds did their job.

Mr. Gaskins often had been paid in cash and kept the money in a safe in his house, but when he realized that he was a target for robbery, he decided to deposit his money in a bank. Keep in mind that he had reported all of his cash earnings to the IRS and had paid taxes. The money was legal, but because he did not want to have to deal with yet another federal investigation (read that, harassment because he did not willingly give up his client to the executioner), he made a series of deposits of around $9,000 each.

For that, the feds indicted him, and a North Carolina federal jury convicted him. While some people, like columnist Ruth Sheehan of the Raleigh News & Observer were highly critical of the feds, most journalists engaged in their usual worship of federal prosecutors.

The latest news of this madness comes from Baltimore, where the Korean owner of a liquor store was indicted for "structuring" cash deposits under $10,000:

According to the indictment, Park repeatedly made bank deposits from September 2008 to February 2010 in amounts less than $10,000. The deposits were generally made at bank branches in Glen Burnie and Severn for amounts between $8,500 and $9,500.

Prosecutors allege Park illegally deposited a total of $2,150,375 under this structuring scheme.

The newspaper also breathlessly reports that Mr. Park faces up to 40 years in prison, simply for depositing money in a bank. Unfortunately, people really don't understand what is happening, as is expressed in this comment from a reader named Doug Jones from Severna Park, Maryland:

First, the feds do not indict people for a one-time mistake. This guy must have been laundering money.

Second, when someone goes into a bank and plops down more than $10,000 in cash, the bank is required to notify the feds. Therefore, people who launder money, i.e., crooks, will "structure" their deposits to avoid the bank reporting them to the federal government. The crime is attempting to avoid the reporting of the transaction by putting the 10k in the bank piece-meal, instead of at one time.

Third, my understanding is that 98% of people charged federally are convicted. The feds typically do not charge innocent people. I suspect the story just lacks the details of everything this person was involved with.

This falls into the "not exactly" category, as it depends upon one's view of how federal law works. As the great Harvey Silverglate points out in Three Felonies a Day, federal criminal law is written in a way that most of us probably commit federal felonies or do something of which the feds could find a creative way to indict us. That includes the above Mr. Jones (who probably works for the government).

What about people who actually commit the underlying crimes that lead to structuring, people who "structure" precisely because they are wanting to hide criminal actions? Surely the feds will indict them, right?

Uh, ever hear of Elliot Spitzer, the erstwhile "Client # 9" who was involved in prostitution while he was first attorney general and then later governor of New York? It seems that Spitzer made bank withdrawals of less than $10,000 precisely to hide the fact that he was paying money to a prostitution ring, and prostitution is illegal, and to engage in activities with a prostitution ring that is operating over state lines clearly violates federal law.

So, surely the feds threw the book at Spitzer, given he was committing crimes in his own state and also elsewhere, violating state and federal laws. Surely the feds came down hard on the man not only for "structuring," but also for breaking the law, which is ironic, since the media feted Spitzer as a "law and order" guy, a 21st Century Elliott Ness, and he let them down.

Not exactly. No, the feds did nothing. The U.S. Department of Justice, which wants to throw Mr. Park into prison for 40 years because he deposited money in a bank in a way that the feds did not like, completely overlooked Spitzer's transgressions as though they never happened.

Why? I think we know. Some call it "professional courtesy," and some call it hypocrisy. I call it the present state of American "law," in which some are charged and convicted, while others who have the requisite government contacts or wear the appropriate government costumes are given a free pass.