Wednesday, June 6, 2018

Structuring - First Kent Hovind - Now Dennis Hastert

This post was originally published on Forbes May 30, 2015

The indictment of former House Speaker Dennis Hastert has brought new attention to the crime of structuring.  The attention is energizing the supporters of Kent Hovind, who is nearing the end of a long sentence, primarily, when considering the number of counts in the indictment, for structuring.

The Trials Of Kent Hovind

Hovind has just won a big victory in Pensacola.  Filings he made, while in prison, to affect title to property seized as a result of his structuring conviction, were viewed as contempt of court, conspiracy and fraud.  A trial in March resulted in conviction on the contempt charge and a hung jury on the more serious fraud and conspiracy charges.  On the eve of his retrial in May, the government dropped the fraud and conspiracy charges and shortly thereafter Judge Margaret Casey Rodgers reversed the contempt conviction.  Kent Hovind will be coming home on August 9, possibly sooner.

Hovind and his supporters are not satisfied with his upcoming release.  They are arguing for complete Hovindication, which would include the reversal of his 2006 structuring conviction and return of property seized due to the forfeiture of structured funds and reform of the structuring laws.  Hovindicators gloss over the $3,000,000 civil liability confirmed by the Tax Court, noting, correctly, that Kent Hovind, who stated that he had not filed a personal income tax return in decades and did not believe any law required that he do so, was never indicted for tax evasion.

What Is Structuring?

Structuring is an illustration of Reilly's Third Law Of Tax Planning - "Any clever idea that pops into your head probably has a corresponding rule that makes it not work ".  If you deposit or withdraw more than $10,000 in cash at a bank, the bank is required to file a report to the government.  There has been something of a criminalization of cash, a kind of assumption that if you are dealing in a lot of cash you must be up to something nefarious, low-level tax avoidance at the least.  Hovind for example who was convicted on 45 counts of structuring, was also convicted on 12 counts of not filing payroll returns and one count of interfering with the administration of the Internal Revenue Code.  The latter counts were of course facilitated by dealing in cash.

At any rate, the clever idea is to not take out or deposit say $50,000 all at once, which would cause the bank to rat you out to the government by filing a report, but rather to make six or more trips to the bank withdrawing or depositing eight or nine thousand more of less each time.  Section 5324 of Title 31 makes that a crime.  It is not the deposits or withdrawals themselves that are criminal, but rather the structuring of them to avoid the bank reporting.  No really nefarious purpose is required just the desire to avoid the bank reporting requirement.  It is the intent to avoid the reporting that makes it criminal, even if the cash was obtained in or will be used in a lawful manner.

How Is Hastert's Case Different From Hovind's?

One difference is that even though Hastert is accused of withdrawing $952,000 in at least 106 transactions, he was only charged with one count of structuring. Hovind and his wife withdrew just over $400,000 and were charged with 45 counts.  This reticence on the part of the Justice Department to stack up the structuring counts may be the result of the Eleventh Circuit decision in the case of Jerry Dwayne Lang.  Mr. Lang was indicted on 85 counts of structuring, each count representing a separate deposit of less than $10,000. The Court ruled that a deposit of less than $10,000 all by itself could not possibly represent structuring. You need at least two deposits that total over $10,000.  Under the federal sentencing guidelines being convicted of multiple counts of the same thing doesn't tend to get you much extra time over a single count, so the government does not gain much by multiplying the counts other than possibly impressing the jury with the notion that with all that smoke there must be a fire somewhere.

The other difference is that the only other thing that Hastert is indicted for is lying to the FBI.  He told them that he was stacking up all that cash because he didn't trust banks. Apparently though he was paying blackmail, which may have been related to sexual abuse from his wrestling coach days. There is some irony here. The House Speakership opened up to Hastert when Robert Livingston resigned in the light of a sex scandal while the House was in the midst of impeaching President Clinton for saying that he had not had sexual relations with "that woman", when maybe he had, depending on how you define sexual relations.

At least in the court of public opinion it would seem that Hastert could invoke the "everybody lies about sex" defense.


I have to say that this prosecution strikes me more as a possible weaponizing of law enforcement for political payback than the interminable Lois Lerner Teapartygate IRS scandal.  Kent Hovind's supporters are wondering why the structuring charge is not bringing Kent Hovind and his travails front and center.  #FreeKent, the Hovindicator's flagship website states:
What Does This Mean for Kent Hovind?
It only builds Pastor Kent Hovnd’s case to overturn his prior conviction of “structuring”. Due to the massive pressure the IRS and DOJ are facing, and the new reform laws the DOJ passed – there is every reason Kent Hovind has the ability to clear his name (Thank you God).
Rudy Davis, whose youtube channel LoneStar1776 has totally focused on Kent Hovind, for some time now thinks that the purpose of the Hastert prosecution might be to make people feel better about structuring prosecutions.

Rudy finds it amazing that nobody is mentioning Kent Hovind.  Rudy believes that "they" are trying to set it up so that the public is convinced that we need structuring laws just as a soon to be free Kent Hovind is preparing to expose the evils of the structuring laws.

Do Structuring Prosecutions Make Sense?

Personally, I'm becoming convinced that structuring prosecutions are a bad idea.  My inference is that they are attractive to prosecutors because it is a lot easier to prove than the nefarious activity that the structuring is thought to support.  On top of that the forfeiture provisions can make the effort self-financing.   It is too easy for supporters of those prosecuted that way to cast them as victims and increase the amount of alienation in the world.  Hovind's travails while receiving almost no mainstream attention have been a staple of right-wing conspiracy outlets such as Alex Jones for a while now, although the Hovindicators chide those venues for lack of zeal.  The criminal prosecution of Kent Hovind has proven to be counterproductive to the cause of tax compliance and the use of structuring charges has greatly contributed to his supporters religious persecution narrative.  I suspect that the prosecution of Dennis Hassert will also not be something that ends well for the country.

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