deposit money, go to jail for 30 years

Eugen Leitl eugen at
Thu Oct 22 05:18:29 PDT 2009

 Johnny Gaskins and the End of Law

by William L. Anderson

Recently by William L. Anderson: UC-Davis Make-Believe

As the federal government has become more powerful and more invasive, we have
seen an explosion of new laws and regulations. Interestingly, as the number
of laws increase, we have seen a similar decrease in anything that resembles
the rule of law. The successful North Carolina criminal defense attorney
Johnny Gaskins has found out the hard way that in the federal system, law has
disappeared altogether.

Earlier this month, Gaskins was convicted in a Raleigh federal court for
depositing money in a bank and faces prison for the rest of his life as a
result. I am not kidding.

The News & Observer presented a misleading headline about the case: Lawyerbs
Career Ends in Crime. (Yes, the N&O is the same paper that published the
false story which set off the infamous Duke Lacrosse Non-Rape Case almost
four years ago.) True, the lawyerbs career is over but, no, he did not commit
any crimes, despite what the N&O and a federal jury might be saying.

According to the N&O:

    Johnny Gaskins was a keeper of the law who built his career defending
those who disregarded it.

    But a jury decided Oct. 9 that Gaskins had gone from being an officer of
the court to being a criminal.

    Gaskins, a Raleigh criminal defense lawyer, was convicted of dividing
large sums of money into small deposits so that his bank would not fulfill an
Internal Revenue Service requirement to report cash transactions of more than
$10,000. The rule is intended to flag large sums of cash that might be tied
to illegal activity.

The legal term for this activity is "structuring," and readers might remember
that Elliot Spitzer, a.k.a. "Client Number 9," was caught doing something
similar (except he was making small withdrawals rather than deposits).
However, there is a huge difference between the two acts. Gaskins did not
make his deposits in order to cover up any illegal activity, while Spitzer

Thus, it seems to be the perfect commentary on federal criminal law that
Spitzer never was charged while Gaskins faces more than 30 years in prison.
This is a compelling story, and as one who has seen injustice after injustice
in the federal system, this perhaps is the worst injustice I ever have seen.

The N&O continues:

    Associates of Gaskins said in interviews that many of his fees were paid
in cash, often offered by clients who didn't trust banks enough to open
checking accounts.

    Gaskins kept the money in a safe in his home's upstairs closet. By
September 2005, he had amassed more than $200,000 in cash.

    That month, Gaskins hired a crew to work at his house. One evening, he
noticed a set of muddy footprints on the carpet leading to his safe, even
though he had locked his house. Gaskins was sure he would be robbed. He began
moving that cash, one chunk at a time, to a personal account at RBC bank,
careful to not alert any particular teller about his supply of cash.

    "I was concerned about any single bank teller having information that I
had so much cash," Gaskins testified during his trial.

    Each deposit was just below $10,000, the threshold to report to the IRS
so that federal authorities can track cash that might be tied to criminal
activity. Purposely structuring cash deposits to cause a bank to evade
reporting requirements is against the law.

This law was passed as an "ancillary crime" to give prosecutors leverage in
cases where people had amassed huge amounts of cash via drug sales or other
illegal activities and were trying to avoid detection as well as avoid paying
taxes on their money. However, that clearly was not the case here, as the N&O

    Gaskins filed forms to the IRS accounting for more than $450,000 in cash
payments, according to evidence at trial. Prosecutors agreed that he had
filed and paid his taxes.

    He didn't dispute that he intentionally divided his money, but he
testified that it was for innocent reasons. His habits, he said, were born of
an exposure to a criminal world that most people only see on television

    Prosecutors did not offer evidence of any other motive for Gaskins'
behavior. They said at trial that Gaskins should have known better.

    "The point of the law is to make sure we don't have people who try to
fool the bank," federal prosecutor Randall Galyon told jurors last week. "The
fact that he was trying is against the law."

So, we had an attorney who was paid legally in cash, decided he might be
robbed, so he deposited the money in a bank. Furthermore, he already had paid
taxes on his cash earnings, so it is clear that he had no criminal motives.

Furthermore, I can guarantee the readers that there was a motive that was not
mentioned, but well should be: prosecutors would have tried to frame Gaskins
had he deposited all of his money at once. That kind of a deposit b which
prosecutors insist that he had to make in order to be legal b would have sent
alerts to the police and prosecutors, who would have tried to make a drug
case against him, claiming he actually had received that money illegally.

The question is this: Why were prosecutors hell-bent on going after him? The
answer lies in the success that Gaskins had in his career:

    He had received death threats and had been harassed for more than a
decade after he persuaded a jury to spare the life of a client convicted of
killing a popular Raleigh police detective. Some of Gaskins' clients were
robbed and tortured, targeted because they carried large amounts of cash,
court filings show.

The N&O continues:

    Gaskins was a former agent with the State Bureau of Investigation who
built a legal career on a reputation for asking the right questions and
paying attention to detail. He won his first jury trial as a third-year law
student while attending Campbell University Law School.

    Over the years, Gaskins would represent more than 20 clients facing the
death penalty, nearly all too poor to afford their own lawyers. In recent
years, though, Gaskins carved a niche representing clients in massive federal
drug conspiracy cases. His clients stretched across this state and into

This was payback, pure and simple. Gaskins had success representing people
accused of crimes, and the police and prosecutors paid him back with what
only can be a trumped-up charge.

Remember, Gaskins was convicted of depositing money in a bank. He did not
evade taxes, he did not gain his cash through illegal means, he just put the
money in the bank.

This is the first time I have seen someone convicted in federal court of only
an ancillary crime with no underlying accusation to buttress it. Spitzer
withdrew small amounts of money in order to evade his lawbreaking. (Even if
one believes prostitution should be legal, we should not forget that Spitzer
would not have hesitated to charge someone else with the same crime if he had
the chance.)

Lest anyone think that the "system works fairly," think again. The federal
criminal system works, but it only works for the prosecutors and no one else.

While I am lambasting the prosecution, one also should save at least some
venom for the judge and the jurors. If the jurors in this case really believe
that depositing one's money into a bank at less than $10K a pop is a crime,
then they need to turn in themselves and plead guilty to the same thing.

If Americans really can go to prison for what effectively will be for the
rest of their lives simply for depositing money in a bank, then the law is
lost. Lost. One cannot rescue this "legal" system, for it is beyond rescue.

October 21, 2009

William L. Anderson, Ph.D. [send him mail], teaches economics at Frostburg
State University in Maryland, and is an adjunct scholar of the Ludwig von
Mises Institute. He also is a consultant with American Economic Services.
Visit his blog. 

More information about the cypherpunks-legacy mailing list