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Plundering Immigrants and Other Travelers


Obscure federal regulations give government agents the power to plunder private citizens. Largely in order to suppress tax evasion, in 1970 Congress enacted the fraudulently named Bank Secrecy Act. This act requires that anyone who travels abroad and carries more than $10,000 in cash must fill out Customs Form 4790. Congress declared that the federal government was entitled to preemptively confiscate large amounts of cash found on individuals traveling abroad who had not rushed to the nearest federal agency to report his attempt to take his own money with him. And just for good measure, anyone who violates the law is entitled to five years free room and board at a federal prison.

The Supreme Court is considering a case involving $357,144 seized from Hosep Bajakajian, a Syrian immigrant who was searched at the Los Angeles Airport prior to heading back to Syria. The money consisted of profits from his two gas stations and money from relatives. Both a federal district and a federal appeals court concluded that the money was honestly acquired. Yet the Customs Service insists that the fact that the money is untainted is “not relevant” and that the federal government has a right to confiscate the money solely because the immigrant failed to fill out Customs Service Form 4790 disclosing that he was taking more than $10,000 in cash out of the country.

Typically, the government seeks to demonize all such paperwork violations. At the oral hearings before the Supreme Court, Irving Gornstein of the solicitor general’s office, arguing the case for the Clinton administration, declared that money that is not reported “and is more than $10,000, this is dangerous money. We have a dangerous situation on our hands….” (One wonders, if currency is so inherently dangerous, why does government print up so much of it?)

The Customs Service confiscated $56 million from outbound travelers in 1996. Recent immigrants are among the people most exposed to such penalties, since, coming from nations with very corrupt customs services, they are often leery of making any declaration of cash on hand. Indeed, one federal judge noted that Bajakajian’s behavior “grew out of … distrust for the government.” According to the Clinton administration view, because someone does not trust the government, the government somehow thereby acquires the right to rob the person.

The Clinton administration’s brief in this case is a triumph in statist myopia. The brief quoted a House report on the original Bank Secrecy Act of 1970, which declaimed, “Many Americans had used couriers to send money to foreign jurisdictions with secrecy laws for the purpose of evading taxes and otherwise hiding assets … [thereby producing] debilitating effects … on Americans and on the American economy…. Hundreds of millions in tax revenues were lost.” It is difficult to understand how, at a time when federal tax revenues were exceeding a hundred billion dollars a year, a loss of a few hundred million could “debilitate” the national government. On the other hand, it is understandable that politicians would get paranoid at the prospect of anything that decreased the amount of other people’s money they could spend. Congress’s edict shows how willing politicians are to impose unlimited intrusions into people’s private lives in order to safeguard their control over them.

Some of the Clinton administration’s arguments in this case bordered on the politico-paranoid. The administration brief declaimed: “The forfeiture of undeclared currency … both encourages persons to inform the government that they are transporting more than $10,000 in cash outside the country and prevents such money from being used in circumvention of requirements in the future.”

In other words, if the government steals the money from travelers now, it will not face the burden of stealing the same money from the same travelers in the future. The same rationale would justify shooting all suspected pickpockets as a way to guarantee that the suspects would not pick any more pockets in the future. By the same reasoning, perhaps the government should simply confiscate everyone’s bank account today in order to prevent them from making any illicit purchases in the future.

The administration brief warned:

“The dangers created by money that is secretly exported increases as the amount of money secretly exported increases. The greater the amount of money that is laundered or hidden overseas, the greater the potential harm to the people and the economy of this country.”

But for some reason, the administration has no concern about the far greater laundering of cash that occurs as a result of U.S. foreign aid programs. The U.S. government will deluge foreign governments with over $14 billion in money confiscated from American taxpayers this year. Much of this money will be laundered by its recipients into Swiss bank accounts or used for purposes prohibited by U.S. foreign aid guidelines. The federal government has long known that much of U.S. foreign aid money is “diverted” into prohibited activities. But the Clinton administration is far more concerned with cracking down on how U.S. citizens use their own money than on monitoring how foreign governments use U.S. tax dollars.

According to the Clinton administration, the essence of this crime is “smuggling money.” But whose money is it? Is the Clinton administration trying to inform people that no one really owns the dollars in their wallet — that they are simply permitted by bureaucrats to retain possession until the government finds some pretext to seize their money? Why is someone transporting $10,001 from Portland, Oregon, to Vancouver, Washington, a law-abiding citizen, while someone transporting the same amount of money from Portland, Oregon, to Vancouver, Canada, is a dangerous felon?

The 1970 law also provided the pretext to vest the Customs Service with far more power than most travelers realize.

Everyone knows that Customs agents have the right to stick their nose into travelers’ luggage when they are returning from overseas. But few people realize agents also routinely secretly search the baggage of citizens leaving the United States. Federal judge Alex Kozinski, in a dissent to a court decision upholding this practice, declared:

“The notion that, while an individual is temporarily separated from his property, law enforcement officers are rummaging through it at will, is difficult to square with contemporary notions of what is reasonable government conduct…. My guess is that most passengers would be shocked to learn that, as they are waiting to board the plane, faceless bureaucrats are breaking into their luggage and pawing through it at will.”

Such searches are extremely inefficient: one Customs agent who rummaged through 50,000 bags during a seven-month period found illegal amounts of currency in only four of them.

Many law-abiding people are leery of declaring to Customs agents that they are carrying large amounts of cash because federal employees have the bad habit of confiscating cash on the flimsiest of pretexts. The administration brief noted, “When currency is reported, the information may be used to investigate and detect circumvention of our drug, tax and other laws.” In other words, reporting such currency outtakes automatically sets off all the criminal and regulatory alarm bells.

Federal agents can seize people’s cash merely on the basis of “probable cause” — among the lowest of conceivable legal standards. A few years ago, a federal appeals court in California struck down the seizure of $30,060 from a motorist based on a police dog’s tail wag. Police stopped Albert Alexander for allegedly running a stop sign. The officers who stopped him found a large bag of money on the front seat. (Alexander, a car mechanic, was going to meet a friend to invest in the friend’s trucking business.)

The police searched the car but found no drugs. The officers called in their trump card — a police dog who barked when he sniffed the money. This supposedly proved that the money was tainted with drug residue — and thereby proved, to the officers’ satisfaction, that the money constituted illicit profits of narcotics deals.

Alexander sued the government to get the money returned. At trial, one forensic toxicologist testified that up to 75 percent of U.S. currency is coated with traces of cocaine or other illicit drugs. The appeals court concluded, “If greater than 75 percent of all circulated currency in L.A. is contaminated with drug residue, it is extremely likely a narcotics detection dog will positively alert when presented with a large sum of currency.”

It took Alexander almost five years and thousands of dollars in legal costs to get his money back. Though prosecutors know that most American currency is tainted with cocaine residue, they routinely invoke the “tainted currency” claim in order to grab as much as they can.

A major issue for the Supreme Court is whether the confiscation of all of Bajakajian’s money was an “excessive fine.” (The highest possible fine for this offense is $250,000 — significantly less than the amount seized from Bajakajian). The Clinton administration assured the court that confiscating property linked to a crime could never be “excessive,” since the property was involved in a crime. The same arguments have been used to confiscate cars and houses for minor law-enforcement violations. This is simply another one of the tricks used by government to acquire more and more arbitrary power over ordinary citizens.

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    James Bovard is a policy adviser to The Future of Freedom Foundation. He is a USA Today columnist and has written for The New York Times, The Wall Street Journal, The Washington Post, New Republic, Reader’s Digest, Playboy, American Spectator, Investors Business Daily, and many other publications. He is the author of Public Policy Hooligan (2012); Attention Deficit Democracy (2006); The Bush Betrayal (2004); Terrorism and Tyranny (2003); Feeling Your Pain (2000); Freedom in Chains (1999); Shakedown (1995); Lost Rights (1994); The Fair Trade Fraud (1991); and The Farm Fiasco (1989). He was the 1995 co-recipient of the Thomas Szasz Award for Civil Liberties work, awarded by the Center for Independent Thought, and the recipient of the 1996 Freedom Fund Award from the Firearms Civil Rights Defense Fund of the National Rifle Association. His book Lost Rights received the Mencken Award as Book of the Year from the Free Press Association. His Terrorism and Tyranny won Laissez Faire Book’s Lysander Spooner award for the Best Book on Liberty in 2003. Read his blog. Send him email.