Facing Intense Pressure, IRS Drops Civil Forfeiture Case in North Carolina

Government Moves To Return $107,000 Seized From Innocent Small Business Owner; Refuses To Pay Interest Or Attorney Fees

Arlington, Va.—Two months ago, U.S. Attorney Steve West told Lyndon McLellan that any attempt to garner publicity about his civil forfeiture case “doesn’t help. It just ratchets up feelings in the agency. My offer is to return 50% of the money.”

Yesterday, just two weeks after the Institute for Justice took on the case and brought it to the attention of the nation, the IRS and Department of Justice moved to voluntarily dismiss the case and give Lyndon back 100% of his hard-earned money.

“I’m relieved to be getting my money back,” said Lyndon McLellan. “What’s wrong is wrong, and what the government did here is wrong. I just hope that by standing up for what’s right, it means this won’t happen to other people.”

Even after he recovers his bank account, Lyndon is still out tens of thousands of dollars, thanks to the government’s actions. Lyndon paid a $3,000 retainer to a private attorney before IJ took the case on pro bono, and he also paid approximately $19,000 for an accountant to audit his business and to provide other services to help convince the government he did nothing wrong. The government is refusing to pay those expenses. And the government also is refusing to pay interest on the money.

“The government cannot turn Lyndon’s life upside down and then walk away as if nothing happened,” said Robert Everett Johnson, an attorney at the Institute for Justice who represents Lyndon. “Lyndon should not have to pay for the government’s lapse in judgment. And the government certainly should not profit from its misbehavior by keeping the interest that it earned while holding Lyndon’s money. We’ll continue to litigate this case until the government makes Lyndon whole.”

Lyndon’s situation is hardly unique. Lyndon’s money was seized using civil forfeiture, a controversial legal strategy that allows law enforcement officials to take property based on mere suspicion of wrongdoing. No conviction is necessary. To get the property back, owners must engage in costly legal battles.

“Civil forfeiture turns the American principle of innocent until proven guilty on its head, forcing property owners to prove their own innocence,” said IJ Attorney Wesley Hottot. “That isn’t just unfair—it’s unconstitutional.”

The government pursued Lyndon’s case despite a change in policy, announced by the IRS in November 2014 and adopted by the DOJ  in March 2015, that was intended to shield property owners just like Lyndon. The case was discussed at a congressional hearing, and the IRS Commissioner told members of Congress, “If that cases exists, then it’s not following the policy.”

Now, in moving to drop the case almost half a year after the IRS announced its policy change, the government cited the change in policy as its reason for backing down.

“The government in this case had to have its arm twisted to follow its commitment to property owners like Lyndon,” said IJ Attorney Scott Bullock. “That shows reform of the civil forfeiture laws cannot be entrusted to voluntary policy changes from the government. What is truly needed is binding reform from Congress.”