Sixty-eight-year-old Janet Malone’s husband died of cancer in October of 2011. Before he died, he told his wife that he had about $180,000 in cash in a briefcase. It was money he had made as a publishing executive, but also included money he had made from gambling and investments.
Even though it was totally, legally obtained money, the law says that you can’t just deposit it all at once. If you were to, that would mean that you’re a drug dealer or terrorist. Or worse, a tax evader.
So, to get around that law, you can legally deposit that cash in increments of deposits less than $10,000. The problem is, if you do that, the IRS will view it as a “red flag.” You’re obviously trying to hide something.
It’s like a cop pulling you over for going exactly the speed limit. The cop tells you, “No one drives exactly the speed limit. It’s obvious that you’re trying desperately not to get pulled over. You must be hiding something. You’re running drugs, aren’t you?”
At issue is a law requiring banks to report deposits of more than $10,000 cash to the federal government. Anyone who breaks deposits into increments below that level to avoid the requirement is committing a crime known as “structuring” — whether their money is legal or not.
The IRS has increasingly used civil forfeiture proceedings to seize money from individuals and small businesses suspected of structuring violations, according to a review by the Institute for Justice, a libertarian group.
Federal prosecutors added a misdemeanor criminal charge last week alleging Malone willfully violated the law, after her husband had been warned about the practice four years ago. Malone is expected to plead guilty next week and let the government keep the money, under a plea agreement filed Monday. The charge carries up to one year in jail and a $250,000 fine.
IRS agent Jeff McGuire first went to Malone’s home in 2011 to investigate alleged structuring by Ronald Malone, who was dying of cancer, records show. Ronald Malone admitted that bank deposits totaling $35,500 he’d made could appear to be structured and signed a form acknowledging he’d been warned about the law; no charges were filed. Janet Malone was present for part of the meeting.
Shortly before his death in October 2011, Ronald Malone told his wife about a briefcase containing $180,000 cash from his job as a publishing executive, gambling winnings and investment income.
She deposited some of it in increments between $5,800 and $9,000. The IRS obtained a warrant to seize it based on suspicion that the transactions were meant to avoid reporting requirements.
Janet Malone was irate when she learned of the 2013 seizure, noting that she didn’t sign the form warning her husband and didn’t remember details of the earlier visit because “she was in a state of despair over her husband’s health,” according to an IRS affidavit.
Spokesmen for the IRS and U.S. Attorney’s Office declined to talk about how the case fits with the new policy. Malone’s attorney declined to comment.
Maybe she knew about the law, maybe she didn’t. It’s just so utterly ridiculous that there’s no way to deposit large amounts of cash anymore without being harassed by the IRS and having large amounts of your money extorted. I’m sure this widow doesn’t actually believe that she’s guilty of a crime. But she was probably told that if she didn’t plead guilty and let the IRS keep “their portion” of her money, things were going to go very badly for her. She had no choice.
If you have a (legal) business that deals largely in cash, you’re going to have a lot of cash on hand. If you have over $10,000 to deposit at once, the bank has to report that to the feds so that they can harass you. If you try to deposit it in increments, the feds will think you’re trying to hide something. If you decide to just hold on to the cash to avoid all the hassle, you have to be careful not to let anyone see that you have that much cash. If any authority finds out like a cop, he’ll think you’re a drug dealer, a terrorist, or a tax evader.
The point is, using cash is a crime. The feds don’t like it, because it’s not traceable. That’s the bottom line. They want to be able to track every dollar, every transaction. Cash makes that very difficult. Their concern has nothing to do with cracking down on drug dealers and terrorists. They’re much more concerned with making seizures and grabbing “their portion” of the booty.