IRS Returns Money Illegally Seized from Store Owner in 'Structuring' Case

The IRS seized this guy's life savings. Now he's getting it back

In June 2014, the IRS seized $153,907.99 from Ken Quran's bank account -- his life savings -- even though he did nothing wrong. February 19, 2016

CNN Money - Now, after months of struggle, it looks like the North Carolina convenience store owner is finally going to get it back.

"We asked the IRS to do the right thing, and it did," said Robert Everett Johnson, an attorney for the Institute for Justice, which took Quran's case pro bono.

The IRS wouldn't confirm or deny whether the case was resolved, citing federal privacy laws.

Johnson submitted a petition to the IRS asking that Quran's life savings be returned. After hearing nothing for six months, Johnson sent a letter this week to IRS Commissioner John Koskinen, inquiring about the status of the petition.

"Ken is unsure how he will ever be able to afford to retire, as the IRS seized the entire bank account for his business," Johnson wrote.

And the agency did so without ever accusing Quran of any crime.

Here's how: Under federal bank "structuring" laws, the IRS may seize a person's bank assets if it discovers a pattern of frequent transactions under $10,000. Banks are required to report cash transactions over $10,000 and it's a crime if one tries to avoid that reporting by purposefully keeping all transactions below that amount.

The laws are intended to suss out drug trafficking, money laundering and organized crime or terrorist activity. But the IRS doesn't need any evidence of wrongdoing before seizing the money.

The end result: Anyone who runs a cash business, such as a convenience store, a restaurant or a bar, can get snared even though they've done nothing wrong.

And people like Quran, 61, don't know what hit them. His bank agreed to give him a $50,000 line of credit to keep his business running.

"I'm working every day, seven days a week. They don't have a right to treat me like that," he told CNNMoney.

The good news is that the IRS changed its policy in October 2014. It decided it would no longer pursue cases with a pattern of transactions under $10,000, if there is no basis to think illegal activity is involved.

The change of policy, however, is not legally binding, Johnson said. And it didn't help resolve Quran's case or other prior cases involving more than 600 people who had at least $43 million seized since 2007.


The Institute for Justice hopes that the resolution of Quran's case will help others, like Maryland dairy farmer Randy Sowers. Sowers, whom IJ also represents, had $60,000 seized and the IRS has only returned half of it. He's petitioned to get back the other half.

"If the IRS is willing to do the right thing for Ken, they should do the right thing for Randy -- and all the other property owners in the same situation," Johnson said in a statement. "Today's decision opens a way for other victims of the structuring laws to get back what's rightfully theirs."

IRS returns money seized from store owner in 'structuring' case

February 19, 2016

BizJournal - A North Carolina convenience store owner has won back his life savings from the Internal Revenue Service --- money that was seized because the IRS suspected him of trying to get around financial reporting laws.

The decision could lead to other business owners recovering money that was seized by the IRS.

Federal law requires banks to report deposits or withdrawals of $10,000 or more, a requirement designed to deter money laundering by criminal enterprises. It’s against the law to “structure” financial transactions in order to avoid this reporting requirement — e.g. making several deposits of less than $10,000 each.

In Ken Quran’s case, the IRS was suspicious about withdrawals of under $10,000 he made from a bank account for 427 Convenience Mart, the store he owns in Greenville, N.C. Although the IRS never accused him of any other crime, suspicion that he was engaged in structuring was enough for the IRS to seize $153,907 from his bank account.

Quran is not alone; hundreds of other owners of legitimate businesses have had their accounts seized by the IRS because of structuring suspicions. Three of them testified at a House hearing a year ago.

The IRS changed its enforcement policy in structuring cases in October 2014 to focus only "on cases where evidence indicates that the structured funds are derived from illegal sources," IRS Commissioner John Koskinen told the committee.

But that new policy didn’t help business owners who already had their money seized. They’ve been trying to get their money back.

On Friday, the IRS informed the Institute of Justice, which petitioned the IRS on Quran’s behalf, that it had decided to return Quran’s money.

“I’m so happy,” Quran said. “The IRS never should have taken my money in the first place, but I’m so grateful that it has now done the right thing. I worked hard for that money. This is justice.”

The Institute for Justice, a public-interest law firm, also filed a petition on behalf of Randy Sowers, a Maryland dairy farmer who was targeted by the IRS because he made cash deposits of under $10,000 — money that came from farmers’ market sales.

“If the IRS is willing to do the right thing for Ken, they should do the right thing for Randy — and all the other property owners in the same situation,” said Robert Everett Johnson, an Institute for Justice attorney. “Today’s decision opens a way for other victims of the structuring laws to get back what’s rightfully theirs.”

IRS to return seized cash to small-business owner

After having his entire bank account seized under a since-updated IRS policy, a convenience store owner will get back more than $150,000.

February 19, 2016

CNBC - A convenience store owner who had his entire bank account seized under an Internal Revenue Service policy meant to target drug dealers and money launderers will be repaid in full, his lawyer told CNBC on Friday.

Khalid "Ken" Quran has been fighting for months to have more than $150,000 returned from the IRS with the help of Washington-based nonprofit public interest firm The Institute for Justice.

Quran, a Middle Eastern immigrant, says he unknowingly forfeited his entire bank account in June 2014 to agents who visited his Greenville, North Carolina, store, accusing him of skirting reporting laws.

The business owner had been making withdrawals of less than $10,000 regularly, and drew a red flag for potential "structuring," a tactic used by criminals who break up their banking transactions to evade authorities. Transactions over the $10,000 threshold must be reported, and these rules intended to target criminals have been applied in some cases in recent years to small-business owners who operate mostly in cash.

"He said, 'You need to sign a paper,' and I told him my English is not right," Quran told CNBC. "Then he read it to me like you would read the newspaper and said you need to sign it."

Quran said he did nothing wrong.

"No bank told me that. No bookkeeper told me that," he said.

The IRS changed its policies in October 2014, restricting asset forfeitures to cases in which the property owner is suspected of criminal activity. The Department of Justice followed suit with a new policy directive for structuring in March 2015, which says the asset forfeiture program will focus on the "most serious illegal banking transactions."

The two agencies work closely together on structuring cases, but unfortunately for Quran and other business owners, these changes were not retroactive.

The Institute for Justice took up Quran's case and filed a petition for mitigation or remission, essentially a pardon, in July 2015, and sent a follow-up letter this Tuesday to the IRS, seeking answers.

The nonprofit received a fax Friday morning, dated Feb. 18, that says "mitigation of forfeiture is granted in full," signed by the chief of criminal investigation at the IRS.

"The IRS took Ken's money without ever accusing him of doing anything wrong," said Robert Johnson, the attorney representing Quran and other small businesses impacted by the IRS policy. "The IRS realized it was wrong when it changed its policies and it has done the right thing in giving it back. That money should have never been taken in the first place, and I hope this is just the beginning."

The IRS did not respond immediately to a request for comment.

"I am very, very happy, and I believe there is justice in this country," Quran told CNBC.

Ken Quran Letter