If you want to deposit, transfer, or withdraw your own money that you earned legally from your own bank account, should it really be a federal crime — punishable by five to ten years in a federal prison, no less — if you don’t report to our federal overlord a complete description of when, how, why, and who was involved in that transaction?
That is what former House speaker Dennis Hastert is accused of doing: not reporting withdrawals of his own funds, and lying to FBI agents when they asked him the reason for it.
Most Americans would no doubt agree that unless you are involved in illegal activities, it is none of the government’s business what you do with your money. They would think that if FBI agents show up to ask you about it, that it is none of their damn business, either. Most importantly, they would agree that if the government wants to get detailed information about your financial transactions, the Justice Department should be required to comply with the Fourth Amendment to the U.S. Constitution and get a search warrant from a federal judge.
According to the U.S. Supreme Court, that requires the government to present evidence that probable cause exists to believe a criminal offense has been committed or is about to take place.
Of course, the FBI apparently had no evidence of a real crime before it started investigating Hastert. Instead, he is accused in the indictment issued against him of violating a federal law (31 U.S.C. §5313) that requires the reporting of financial transactions over $10,000, and a corollary provision (31 U.S.C. §5324) that makes it a criminal offense to structure your transactions in such a way as to avoid the $10,000 reporting requirement.
In a seven-page indictment, the government accuses Hastert of violating these provisions by withdrawing almost a million dollars from his bank account as part of an agreement to pay an unnamed individual $3.5 million “to compensate for and conceal his prior misconduct against Individual A.”
Individual A is never identified other than as a “resident of Yorkville, Illinois” who has known Hastert “most of Individual A’s life.” Of course, “misconduct” is a loaded word. Note that no information is given as to what that supposed misconduct was, although various news reports are now claiming that it was sexual misconduct (which is a state issue, not a federal one).
The little bit we know from the indictment is that Individual A was apparently blackmailing Hastert into paying him a very large amount of money. One would assume that if Hastert had done something illegal, the Justice Department would have said so. Instead, it uses the word “misconduct,” which could describe a whole host of sins, many of which could be considered immoral, distasteful, or embarrassing without being a violation of federal law.
The point, however, is that there is absolutely nothing in the indictment that indicates that a single penny of the money withdrawn by Hastert was the result of, or derived from, any past or current illegal activity by Hastert. And yet Hastert is being charged with a federal crime not for any alleged “misconduct” with the unknown and unidentified “Individual A,” but for not reporting to the government his personal transactions in his personal bank account. And for then not telling the FBI truthfully what he was doing with the money.
If the Justice Department has evidence that this money was being paid to hush up a prior crime committed by Hastert, it has an obligation to say so, and to explain why it is not charging Hastert for that violation as opposed to this financial reporting “crime.” Also, since the indictment is clearly written to give the impression that Hastert was paying off a blackmailer, Justice has a further obligation to explain why it is not charging Individual A with violating the federal blackmail statute (18 U.S.C. §873).
What is so outrageous about this indictment of the former speaker of the U.S. House of Representatives is that this is just another example of the abuse of this federal statute, a statute that violates basic notions of privacy and the right of every American to be free from having to report what they do to a government overseer.
This “financial structuring” statute was originally passed with good intentions as a way of alerting the government to money laundering by real criminals, like big-time drug dealers. But it is written so broadly as to require absolutely no connection or nexus between the reporting requirement and any other actual illegal activity. As a result, the Justice Department, the IRS, and the Treasury Department have — as government bureaucrats tend to do — turned it into an all-purpose revenue raising vehicle for the government.
There are so many other recent examples of the misuse of this statute that the House Ways and Means Oversight Subcommittee held a hearing on it on February 11. That hearing involved IRS Commissioner John Koskinen making a rare apology for his agency’s abuse of federal structuring laws.
Thus, even the notoriously political IRS has realized its error. Also, over at DOJ the former attorney general this March limited the seizure of funds in structuring cases to only where there is probable cause for additional federal criminal activity. At least someone in the administration realized that structuring laws are subject to abuse where the only underlying “crime” is not reporting the cash transactions themselves.
Of course, the media world is ignoring the issues raised by this reporting statute, and instead is focusing on trying to find out who Individual A is and what the supposed “misconduct” was.
It may turn out that Hastert did commit a crime or engage in behavior we all think was wrong — but absent additional facts, we can’t jump to conclusions as to his guilt. Even if it turns out that he did commit a prior crime for which he is not being charged, that should not distract us from the dangers posed by the statute under which he is actually being charged.
This law is a prime example of the federal government being handed power it should never have been given, power that invades the liberty, freedom, and privacy of Americans, and imposes a legal obligation on the public that the government has no right to impose. It demonstrates how careful Congress should be, and how careless it has often been, in passing laws that give federal authorities power that is fundamentally unconstitutional and a basic violation of due process.
The Hastert indictment — at least with what little we know now — is a prime example of the misplaced enforcement priorities of the Obama Justice Department.