Strapped with pistols and carrying government IDs, two Treasury agents walked onto a Maryland farm on a cold winter morning in 2012, and asked for the owner - Randy Sowers. It was a blur of badges and questions, but Sowers’ four-year legal nightmare was only just beginning. “My story could belong to any farmer or business owner,” Sowers says. “People have almost no idea what the feds will do when they want to hurt you. What kind of power-hungry bureaucrats do we have when guilt or innocence plays no role in the system?”
Sowers was caught in the hooks of a law intended to capture crime lords and money launderers, and tagged with a bank deposit breach—a paperwork infraction with a sledgehammer penalty. Although the Frederick County producer wasn’t suspected of drug dealing, tax evasion, or criminal enterprise, Internal Revenue Service investigators wedged Sowers into a legal vise with almost no chance of escape. Sowers’ wife had made a series of bank deposits—all less than $10,000 cash and gleaned from farmers’ markets—and in response, IRS was baying for proverbial blood. “They seized almost $70,000 of our money, had us scared and thinking we were going to prison, and maybe losing all we’d worked for,” Sowers explains. “Roll over and shut up—that’s the game I was supposed to play.”
Instead, Sowers spoke to the press, raised Cain and refused to dance to the federal tune, and his actions eventually helped rip the lid off IRS’ “seize first, question later” tactics involving millions of dollars in private property grabs across the U.S. Within three years of the Treasury agents’ visit, Sowers would walk up Capitol steps and testify before House and Ways Committee members disgusted by IRS behavior, regain his money, and become a key catalyst for the passage of 2019 legislation limiting federal power. In short, Sowers became the dairy farmer who dared: “What was I going do when I felt like somebody was threatening my wife with jail and my livelihood? I was never, never going to give up.”
Upside Down
Sowers and his wife, Karen, are the owners of South Mountain Creamery in Middletown, Md., roughly 60 miles northwest of Washington, D.C. In 2012, Sowers had 320 dairy cows and grew 2,000 acres of corn and soybeans on the flat ground of a valley floor, consistently logging 16-hour workdays: “When things got tight, I’d work up to 20 hours a day, but I’m not complaining—I did it because I loved it. We were like a lot of Americans, working hard and grateful for what we had.”
In 2011, the Sowers set up shop at farmers’ markets or festival venues, dealt on a cash-only basis, and backed each sale with notation on a yellow legal pad. Every Monday, like clockwork, Karen entered a branch of Columbia Bank and deposited the cash proceeds, typically around $10,000. After a particularly large special event, Karen arrived at Columbia the following Monday with approximately $12,000, a bit more green than usual, and received a request from the bank teller, according to Sowers: “The teller asked Karen for a favor and said, ‘Make your deposit less than $10,000 and no paperwork is required.’ That was it. We did it because we were asked to do it. For 34 weeks, Karen deposited about $9,500 each time. I’m not saying it didn’t look a little odd, but there was a reason—we’d been asked,” Sowers says. “There was no tax evasion, no laundered money, and no drug money.”
Technically, by depositing the cash in increments less than $10,000, the Sowers were committing a crime. The Bank Secrecy Act of 1970 required all U.S. banks to notify the feds of any transactions above $10,000. Essentially, the act allowed the government to place tighter crosshairs on drug operations, crime organizations and money launderers by tracking the movement of large piles of cash. By the letter of the law, the Sowers were guilty of “structuring” cash deposits to keep totals below reporting requirements and off the government’s radar. (The pursuit of Sowers was backed by then Maryland U.S. Attorney Rod Rosenstein, who would go on to serve as U.S. Deputy Attorney General and resign in 2019, following a controversial tenure.)
“We’d never even heard of the Bank Secrecy Act and didn’t mean to break any laws. I had no idea our lives were about to go upside down,” Sowers describes. “They were about to take our money and run, threaten us with jail, and then expect us not to make a sound. Combine all that with 16 hours a day of work on a farm and watch what happens to your life. Karen’s parents, my parents, and so many people we know assumed we must have done at least some bad stuff because otherwise the government would never, never bother us. That’s a heavy thing around your neck when everyone believes you’ve done wrong.”
Walter White
Close to 10 a.m., on a February morning in 2012, the government came knocking at South Mountain Creamery’s on-farm store, when two Treasury agents asked Sowers if was willing to answer questions. Sowers attempted to telephone his lawyer, got no answer, and agreed to speak with the agents in a back office. “They had badges and were armed, so I assumed they were the real deal and I didn’t have a problem talking. I answered all kinds of questions about my business, and I didn’t know if they were recording and I didn’t care.”
“They worked their way to a final question I remember very well: ‘Where did the cash come from?’ I told them the truth about farmers’ markets and special events, and that sometimes the amounts were $10,000-plus and we deposited the money on Mondays. That was it; the questions pretty much stopped, and they had what they wanted.”
Sowers’ realized his words were tantamount to a confession in the eyes of IRS, but he wasn’t aware the ax had already fallen: A grand jury date had been set. “They were going to get me to settle before the court date or indict me,” he notes. In addition, IRS already had seized Sowers’ bank account and grabbed roughly $63,000 through civil asset forfeiture. The chance of Sowers regaining all of his money was miniscule: Civil asset forfeiture enables IRS to take cash or assets without criminal charges or conviction, and take property owners into the deep water of expensive, long-term litigation.
“Forget innocent until proven guilty or reasonable explanations, the wheels were already in motion,” he says. “They’re making me think I was on the road to a grand jury and a felony charge. Yes, I was scared in that moment, but I kept asking myself, ‘How many other people has this happened to?’”
Turns out, Sowers’ scenario had played out with an alarmingly high number of U.S. citizens. Sowers was not an exception, because IRS structuring charges were levied in a scattergun approach across multiple states, often without merit. Drug dealers, crime bosses, tax skirters, or Walter White types? Not exactly.
According to data collated by the Institute for Justice (IJ), a national libertarian law firm and legal advocacy group representing clients pro bono, IRS grabbed over $242 million in 2,500 suspected structuring cases from 2005-2012. Significantly, at least a third of the 2,500 cases were triggered by cash deposits below $10,000, and contained no other criminal allegations.
The examples are not isolated:
—Terry Dehko, and daughter, Sandy, owned Schott’s Supermarket, outside Detroit, Mich., and made frequent sub-$10,000 deposits from the store registers to a bank account, partly because their insurance policy only covered losses up to $10,000. In January 2013, IRS and DOJ drained the Dehko account—$35,000-plus.
—Calvin Taylor, and wife, Debora, grew sweet corn and raised poultry at C.W. Taylor Farms in Preston, Md., on the Eastern Shore, and operated multiple farm stands. In 2013, IRS plucked $90,175 from the Taylors’ business account, due to structuring.
—Andrew Clyde ran a highly successful gun store in Athens, Ga., Clyde Armory, and made 100 deposits (all below $10,000) into a bank account to navigate around limited insurance coverage. In April 2013, Clyde, a military veteran with three tours in Iraq, got a visit from Treasury agents: IRS seized $950,000 from the account.
—Jeff Hirsch owned Bi-County Distributors in Long Island, N.Y., and provided goods to convenience stores—a cash intensive business. Hirsch took an accountant’s advice and kept bank deposits below $10,000, in order to avoid paperwork. In March 2012, IRS grabbed $446,651 of Hirsch’s money.
—Carole Hinders had roughly $33,000 seized by IRS in 2014. She owned a small, cash-only restaurant in Spirit Lake, Iowa, and caught IRS attention after making sub-$10,000 deposits.
Ironically, structuring offenses were sometimes ignored in high-profile cases, such as the infamous prostitution scandal of Eliot Spitzer, former governor and attorney general of New York. In 2008, IRS investigators were alerted to odd cash transactions—structuring—in Spitzer’s bank records, ultimately directly connected to prostitution payments. After Spitzer resigned, and an investigation was completed by IRS and FBI, the DOJ walked away and declined to prosecute. Nothing to see, move along.
