Jeffrey Epstein skirted the same law the IRS uses to ruin small businesses

JPMorgan helped Jeffrey Epstein commit thousands of federal banking-law violations, per a bombshell New York Times report.

Federal regulators perpetually ignored endless red flags of Epstein’s multimillion-dollar child-sex-trafficking operations.

Federal money-laundering law requires banks to file a report for each cash transaction exceeding $10,000.

Epstein was pulling out $800,000 in cash each year, “much of which was used to procure girls and young women,” the Times details.

Shortly after Epstein’s death in a New York prison cell, in late 2019, JPMorgan “filed a report with federal regulators that retroactively flagged as suspicious some 4,700 Epstein transactions — totaling more than $1.1 billion.”

JPMorgan kept Epstein as a favored client long after the disgraced financier pleaded guilty and went to prison for soliciting and procuring a minor for prostitution.

In 2013, federal regulators “issued a cease-and-desist order against JPMorgan for anti-money-laundering lapses,” including “failing to report suspicious activities to the government,” the Times reports.

Ironically, during Epstein’s financial crime spree, the Internal Revenue Service was wreaking havoc on hapless small businesses for violating the same law.

Between 2005 and 2012, the IRS seized a quarter-billion dollars from banks because it disapproved of how businesses and individuals structured their deposits and withdrawals.

The IRS pilfered more cash from private bank accounts because of alleged paperwork errors than the total bank robbers looted nationwide.

IRS agents in 2012 confiscated the bank account of Carole Hinders, who had run a small restaurant, Mrs. Lady’s Mexican Food, in Arnolds Park, Iowa, for 40 years.

She lost $33,000 because she deposited proceeds from her cash-only business into the local bank in amounts of less than $10,000.

Banks are prohibited from warning customers such deposits can trigger a federal seizure.

Hinders was shocked: “Who takes your money before they prove that you’ve done anything wrong with it?”

When the feds offered to drop the case by refunding her a portion of the seizure, she scoffed: “I would rather throw the money in the garbage than settle with the IRS.”

The agency returned all her money after the nonprofit Institute for Justice helped put her case in the headlines.

Randy Sowers, owner of South Mountain Creamery in the distant Maryland suburbs of Washington, DC, was hammered with a $63,000 “structuring seizure” in 2012.

The Washington Post noted: “Sowers is a high-school-educated entrepreneur who describes himself as inspired by God to deliver local dairy products to busy locavores.”

A bank teller told his wife that deposits in excess of $10,000 from their farmers’ markets sales and elsewhere required a special form, so they kept deposits below $10,000.

But after Sowers complained to local media, the feds played hardball with him.

The feds refunded his money a few years later after national papers picked up the story.

A flock of federal agents arrived at L&M Convenience Mart in the one-horse town of Fairmont, NC, in 2014 to notify owner Lyndon McLellan the IRS had confiscated $107,702.66 from his bank account.

McLellan deposited his market’s proceeds in amounts under $10,000; the feds had no other evidence or allegations of wrongdoing.

After a congressional hearing addressed McLellan’s case, a federal prosecutor warned his lawyer: “Publicity about it doesn’t help. It just ratchets up feelings in the agency.”

When the Institute for Justice came to McLellan’s assistance, the IRS offered a partial refund of its unjustifiable seizure.

Lawyer Robert Everett Johnson summarized the IRS’s settlement offer: “We’re not going to prosecute but we think you should give us half your money anyway.”

After further toxic publicity, the IRS gave a full refund.

The number of IRS seizures rose more than fivefold between 2005 and 2012, but the vast majority of victims were never criminally prosecuted for structuring offenses. “One-third of those cases involved nothing more than making a series of sub-$10,000 cash transactions,” the Institute for Justice reports. Such seizures can cost $20,000 or more in legal fees to fight — a prohibitive cost, especially since half the grabs were less than $35,000.

The IRS chose to seize first, ask questions later. A 2017 inspector-general report found no evidence in 91% of the seizure cases that the money came from illegal activities. IRS criminal investigators simply looked at banking records and then confiscated private accounts. Most of the victims were “legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others.” The IRS targeted businesses with legal sources of income because, as the IG reported, the Justice Department “had encouraged task forces to engage in ‘quick hits,’ where property was more quickly seized . . . rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming.” Congress passed a law in 2019 seeking to block IRS seizures of assets from innocent owners.

Even after his conviction on child-sex charges, Jeffrey Epstein could hire the most powerful lawyers in the land, including Ken Starr, the independent counsel who targeted President Bill Clinton. That helped ensure JPMorgan and the feds overlooked his abuses until far too many females were victimized. Do federal agencies still view average Americans and small businesses as “quick hits” to bolster their press releases and enforcement statistics? Or will due process and basic decency score a rare triumph in Washington?

James Bovard is the author of 11 books, including “Lost Rights: The Destruction of American Liberty.”