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So Change the Law (Editorial)

2 min read

A recent New York Times article pointed out something that had also been nagging at us here at Arkansas Business: otherwise law-abiding citizens being charged and convicted of a federal felony known as structuring.

It is a crime to deliberately structure financial transactions (typically bank deposits) so that they do not trigger the reporting requirement that kicks in at $10,000. The reporting requirement is designed to help track the cash economy that may be associated with drug dealing, money laundering, terrorism and other very bad activities. And we understand that deliberately defeating that requirement makes it harder to find, stop and punish these bad actors, so making structuring illegal makes sense.

But then there are cases like that of Patrice and Gary Duncan, who have operated Duncan Outdoors in Conway for three decades. To make banking easier, they followed the advice given by a banker long ago: make smaller cash deposits.

Yes, they deliberately structured their deposits to avoid the reporting requirement. And, in a plea bargain with federal prosecutors, Patrice Duncan pleaded guilty to aiding and abetting structuring and was sentenced to two years of probation.

Thanks to The New York Times article, the IRS has changed its policy on seeking prosecution in structuring cases that don’t involve other crimes. It comes too late for Patrice Duncan, of course, although it has spared Dinanath Mulloli from prosecution in an El Dorado case.

First Assistant U.S. Attorney Pat Harris, who prosecuted the Duncan case, suggests that the real solution is to press Congress to change the law. And Sen. Rand Paul, R-Ky., has introduced a bill to do just that. Congress should consider the resources, public and private, expended in making Patrice Duncan a convicted felon and change the law so that structuring is only a felony if it is used to disguise illegal activities.

Meanwhile, folks, don’t structure your transactions, no matter what your banker says.

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