Hastert Indictment another Example for Justice Department Reform

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After spending millions of taxpayer dollars on an investigation, the FBI indicted Former House Speaker Dennis Hastert.  It takes a bit of reading to figure out why.  Unfortunately the time and money wasted and another public servant’s assassinated reputation cannot be recovered.

Perhaps Hastert deserved to be indicted for being stupid enough to talk to the FBI without an attorney.  He certainly should have known better.

Like many Americans, Hastert probably assumed that the US Attorney’s Office prosecutes real crimes and has the impartiality and common sense judgement to know how to use their discretion.  Dennis Hastert obviously didn’t realize that for some time now the US Attorney’s Office has been targeting people, not crimes to investigate.  As a high profile elected official, Hastert is one of those people even at age 72 and retired.

After reading past the ridiculous, self-righteous quotes from the U.S. Attorney’s press office condemning a human being for making a mistake, the few people who try to understand the alleged “crime” that Hastert committed are left wanting.

According to the indictment, Hastert agreed to pay $3.5 million “cover up past misconduct.” However, the charges have nothing to do with whether Hastert allegedly molested children, but how he structured a legal settlement with “Individual A.” Parties are entitled to enter into monetary agreements with individuals that accuse them of wrongdoing. In this case, Hastert is facing criminal charges for how he structured his bank transactions and lying to the FBI when he was later questioned about withdrawals of his own money from the bank.

Under federal law, financial institutions are required to report whenever an individual makes a cash withdrawal of more than $10,000. The Bank Secrecy Act (BSA) specifically requires banks to file a Currency Transaction Report (CTR) for each transaction in currency over $10,000 and imposes penalties for noncompliance. The requirement is intended to flag large withdrawals, which are often linked to money laundering, drug trafficking or other nefarious undertakings. However, withdrawing or depositing $9,999 is only illegal if knowingly done to skirt the BSA’s reporting requirements.

According to court documents, bank officials questioned Hastert after he made several withdrawals of $50,000 over the course of six weeks. Thereafter, he made smaller withdrawals under $10,000. In 2013, the IRS and FBI launched investigations and, when questioned about the withdrawals, Hastert told investigators that he did not trust the banking system to keep his money safe.

Several weeks ago, Hastert was charged with “structuring,” which involves making withdrawals smaller than $10,000 with the explicit purpose of avoiding detection and making false statements to federal investigators. Conviction can result in up to five years in prison and a $250,000 fine.

The case is unusual because Hastert has not been charged with any underlying crime, such as tax evasion or embezzlement. He also has not been formally charged with sexual abuse, although the statute of limitations has likely long since expired.

So why did prosecutors bring the charges, if not to publicly embarrass Hastert and bring media attention to his alleged misconduct many years ago? Ultimately, this is another case that demonstrates that the U.S. Attorney’s office needs reform.  They need to spend their limited resources investigating real crimes and they should not bring an indictment based upon a flimsy theory or “Got-Ya!”

Unfortunately, Hastert is not the only victim of overzealous prosecution for a technical violation of the BSA. As detailed in the Washington Post last year, “structuring” charges are on the rise in the United States, particularly as a stand-alone charge. According to Syracuse University’s Transactional Records Access Clearinghouse, structuring prosecution rose 57.1 percent over the past five years. In many cases, the defendants are small business owners that did nothing other than making frequent deposits of under $10,000.

As Radley Balko of the Washington Post writes, “It doesn’t matter if you’ve dutifully reported all of that money at tax time, and paid the government every penny required of you under the law. If you knew about the reporting requirement, and you deliberately deposited less than $10,000 in order to avoid it, you’re guilty of a federal felony. And thanks to asset forfeiture, the government can then move to seize everything in your account.”

Donald Scarinci is a managing partner at Lyndhurst, N.J. based law firm Scarinci Hollenbeck.  He is also the editor of the Constitutional Law Reporter and Government and Law blogs.

Hastert Indictment another Example for Justice Department Reform