On Tuesday, former House Speaker Dennis Hastert will be arraigned on one count of evading currency reporting requirements and one count of making a false statement to the FBI. He will not be arraigned for because he has not been charged with sexual misconduct toward a minor several decades ago.
However horrific that latter allegation might be, it is no justification for punishing him via an antiquated banking law that violates the basic constitutional precepts of privacy.
Hastert's seven-page indictment didn't explain the alleged underlying conduct, but it didn't take much to read between the lines. The very first sentence said: "From approximately 1965 to 1981, defendant John Dennis Hastert was a high school teacher and coach in Yorkville, Ill." That's a curious way to begin the biography of a man who served as speaker of the House. Further context came in a later sentence with regard to a victim of Hastert's alleged misconduct:
"Individual A has been a resident of Yorkville, Ill., and has known defendant John Dennis Hastert most of Individual A's life."
Put both sentences together, and it seems obvious that prosecutors believe something went wrong when Hastert was a teacher and Individual A was a minor. But before you can say "Sandusky," first consider something we never wondered about the Penn State pedophile: Was Hastert, too, a victim?
The indictment says that in 2010, Individual A met with Hastert and the two "discussed past misconduct by defendant against Individual A that had occurred years earlier." Hastert then agreed to pay $3.5 million "in order to compensate for and conceal his prior misconduct against Individual A." Hastert allegedly withdrew approximately $1.7 million in cash from his own bank accounts and gave the money to Individual A.
His cash withdrawals of more than $10,000 triggered a Currency Transaction Report, from the bank to the U.S. Treasury Department's Financial Crimes Enforcement Network, commonly called FinCEN. The indictment alleges that Hastert withdrew $50,000 on 15 occasions, and then reduced the amounts after being questioned by his bank. The feds call that "structuring."
Hastert's explanation? When confronted by the FBI, he feigned distrust in the U.S. banking system. Of course he should not have lied. Then again, he should not have needed to.
There are two potential problems with this prosecution.
First, Hastert himself could be a victim. It's doubtful that in 2010, Individual A still had a cognizable legal claim for whatever happened between 1965 and 1981. We don't know the underlying circumstances, and it's possible, but highly doubtful, that when confronted by Individual A, Hastert had an epiphany, whereupon he unilaterally decided to be generous to the tune of $3.5 million. If so, facing no threat, he would have been within his legal right to give that amount to Individual A. And had he done so with a check, he would currently face no prosecution.
Of course, another, more likely possibility, is that when Individual A met with Hastert in 2010, he threatened to expose the former House speaker unless he was paid millions. If Individual A made such a claim without legal justification because, say, the statue of limitations had expired, that would be extortion, and Individual A should be prosecuted.
The second problem with the prosecution is the invasive nature of the CTR.
What business is it of the government whether Americans wish to withdraw their own money in any amount from their bank? And why should we all be presumed to be criminals for seeking access to our own currency? The prosecution of Hastert might be technically correct, but it lacks perspective. While prosecutors are quick to extol the success of using CTR to track down criminality, especially involving drugs, there are plenty of Americans whose rights are trampled in the process.
Consider Scott, a Montana resident who called my radio program last week to explain what happened when his 76-year-old father suffered a stroke in the summer of 2011. Scott determined he needed a van that could carry his father's wheelchair. He wanted to purchase the van quickly without having to wait for a check to clear. Scott was then a 41-year-old officer in the Army National Guard and a federal employee. When, the following year, his security clearance came up for renewal, he had to account for his withdrawal of $16,000. While his explanation was accepted, he should never have had to explain his lawful behavior.
Or take the friend of mine who recently required psychological services for a member of his family. He wasn't seeking insurance reimbursement and didn't want a paper trail evidencing the care for fear that a social stigma might later prove problematic. So he decided to pay for the care and treatment in cash. On several occasions he withdrew money from his personal account at his local bank in denominations ranging from $7,000 to $9,000. One day a local bank officer called and asked for a meeting. When my friend presented himself at the bank, he was told that his withdrawals had triggered an internal alert and he was asked why they had been made. After patiently answering the banker's questions, he replied, rightly: "Great. Now close my account."
The law that requires the reporting was first passed as the Bank Secrecy Act in 1970 and later amended by the USA Patriot Act. The $10,000 threshold for reporting has remained constant despite the lessened value of a dollar. Assuming that the withdrawal of $10,000 in 1970 was so aberrant that it warranted some type of government notification, the same cannot be said today. (At an annual inflation rate of 4.15 percent, that amount today is worth $62,284.35.)
Congress should end the requirement for reporting cash transactions from one's own account to the government. Barring such a move, at a minimum, it must raise the threshold.