Dennis Hastert, second from left, at former President Gerald Ford's memorial service in 2006.
Photo by Marion Doss.The lesson we should draw from former House Speaker Dennis Hastert’s indictment is this: When the FBI comes calling, take a message.
Hastert was charged last week with structuring cash transactions to avoid bank reporting requirements, and also with lying to the FBI about how he took the money and what he did with it. We have no idea why he allegedly agreed to pay millions of dollars to an unnamed recipient, other than that it was supposedly to keep the recipient quiet about Hastert’s undisclosed past misconduct. The indictment does not specify the nature of the misconduct, instead limiting itself to the improper cash withdrawals and then mischaracterizing them when asked. Prosecutors maintained a smug public silence while news outlets quickly picked up on insinuations about homosexual contact with a student that supposedly occurred when Hastert was a high school wrestling coach, a job he left in 1981.
The editorial board of the Chicago Tribune characterized the charges against Hastert as being “as baffling as they are astonishing.” Other reactions have largely kept to a similar tone; John Pitney, a professor of American politics at Claremont McKenna College pointed out that Hastert had avoided the spotlight for much of his political career. “Ironically, and sadly, this late-life scandal will probably bring him more attention than anything he ever did as speaker,” Pitney said.
Hastert was not arrested in the wake of his indictment, but did resign from Dickstein Shapiro, the lobbying firm for which he worked, and from the Chicago Mercantile Exchange board, according to Politico.
From all outward appearances, we can draw three conclusions from this incident.
First, it is just about impossible to withdraw even $1 million in cash in increments below $10,000 without arousing suspicion. Hastert is charged with withdrawing $952,000 in small amounts to avoid reporting requirements. Financial institutions are required to file Currency Transaction Reports with the U.S. Treasury in most instances when customers withdraw or deposit cash in amounts of $10,000 or more. Structuring transactions to fall below the threshold expressly in order to avoid scrutiny is a crime, and doing so merely invites trouble. (Trouble that, in Hastert’s case, accepted the invitation.)
Second, it appears that Hastert is a crime victim in a blackmail scheme. The $952,000 comprised part of an allegedly agreed-upon total of $3.5 million to the unidentified recipient, which suggests that this individual threatened to reveal some very damaging information if payments were not forthcoming. That’s a textbook definition of blackmail, and it’s illegal. But in the highly politicized Obama Justice Department, the U.S. Attorney from Obama’s adopted hometown of Chicago is not interested in portraying Hastert, the former GOP House Speaker, as a victim. The Department is more interested in generating headlines about another Republican indicted in the run-up to the 2016 election season. And the Department mostly got what it wanted, as in this front-page gem from Friday’s New York Times: “Hastert Accused Of Scheme To Pay To Hide Misdeeds.” Wrong; he wasn’t charged with any crime for agreeing to pay someone he allegedly wronged. Such agreements are called legal settlements, and they happen every day. But the late-day announcement by Justice of Hastert’s indictment was calculated to produce exactly that sort of confusion among editorial simpletons.
Third, and most important, when approached by the FBI or any other official investigative body asking questions about something you may or may not have done, the only intelligent response is to take a business card and tell investigators your lawyer will get back to them. Hastert’s big problem, apart from whatever blackmail he may have been subject to, is not the cash structuring but the allegation that he lied about it to the FBI. According to the indictment, investigators asked whether he was making the withdrawals due to distrust in the banking system, leading him to agree that he was holding on to the cash he withdrew. This is the root of the second of the charges against him.
Of course, this is a bit ironic, because police investigators are perfectly free to deceive the targets of their investigations. Such deception is the foundation of every law enforcement sting operation in history. But in today’s environment, this is purely a one-way street, no matter what a given party’s motives. As such, your best and only defense when law enforcement asks about anything relating to your activities is to simply decline to answer.
There are many high-profile examples of instances where attempting to deceive prosecutors created many more problems than the lied-about behavior itself. For just one such example, remember that Martha Stewart’s criminal conviction rested on obstruction of justice for lying to investigators. (She settled the connected civil charges.)
I have no idea what Hastert may have done that led him to allegedly pay the anonymous individual in question. I have no opinion of his guilt or innocence of the charges themselves, either, other than that on the face of it, the odds are good he did at least improperly structure his dealings with the bank. When bank officers asked what he planned to do with the money, he should have said it was for personal purposes. Other than file their reports, the worst the bank officers could have done was to tell him to take his business elsewhere.
I do know that Hastert, now a prominent lobbyist, is no longer a public official. As such, I don’t care much about what he does in his personal life. I care deeply, however, about how the people currently in charge at the Justice Department choose their law enforcement priorities, and especially about the factors they consider when deciding who is a target to pursue and who is a victim to protect.
For now, I can only look forward to a post-Obama day when new people at the Justice Department get a chance to take a look at how laws are enforced in the Northern District of Illinois.
Posted by Larry M. Elkin, CPA, CFP®
Dennis Hastert, second from left, at former President Gerald Ford's memorial service in 2006.
Photo by Marion Doss.
The lesson we should draw from former House Speaker Dennis Hastert’s indictment is this: When the FBI comes calling, take a message.
Hastert was charged last week with structuring cash transactions to avoid bank reporting requirements, and also with lying to the FBI about how he took the money and what he did with it. We have no idea why he allegedly agreed to pay millions of dollars to an unnamed recipient, other than that it was supposedly to keep the recipient quiet about Hastert’s undisclosed past misconduct. The indictment does not specify the nature of the misconduct, instead limiting itself to the improper cash withdrawals and then mischaracterizing them when asked. Prosecutors maintained a smug public silence while news outlets quickly picked up on insinuations about homosexual contact with a student that supposedly occurred when Hastert was a high school wrestling coach, a job he left in 1981.
The editorial board of the Chicago Tribune characterized the charges against Hastert as being “as baffling as they are astonishing.” Other reactions have largely kept to a similar tone; John Pitney, a professor of American politics at Claremont McKenna College pointed out that Hastert had avoided the spotlight for much of his political career. “Ironically, and sadly, this late-life scandal will probably bring him more attention than anything he ever did as speaker,” Pitney said.
Hastert was not arrested in the wake of his indictment, but did resign from Dickstein Shapiro, the lobbying firm for which he worked, and from the Chicago Mercantile Exchange board, according to Politico.
From all outward appearances, we can draw three conclusions from this incident.
First, it is just about impossible to withdraw even $1 million in cash in increments below $10,000 without arousing suspicion. Hastert is charged with withdrawing $952,000 in small amounts to avoid reporting requirements. Financial institutions are required to file Currency Transaction Reports with the U.S. Treasury in most instances when customers withdraw or deposit cash in amounts of $10,000 or more. Structuring transactions to fall below the threshold expressly in order to avoid scrutiny is a crime, and doing so merely invites trouble. (Trouble that, in Hastert’s case, accepted the invitation.)
Second, it appears that Hastert is a crime victim in a blackmail scheme. The $952,000 comprised part of an allegedly agreed-upon total of $3.5 million to the unidentified recipient, which suggests that this individual threatened to reveal some very damaging information if payments were not forthcoming. That’s a textbook definition of blackmail, and it’s illegal. But in the highly politicized Obama Justice Department, the U.S. Attorney from Obama’s adopted hometown of Chicago is not interested in portraying Hastert, the former GOP House Speaker, as a victim. The Department is more interested in generating headlines about another Republican indicted in the run-up to the 2016 election season. And the Department mostly got what it wanted, as in this front-page gem from Friday’s New York Times: “Hastert Accused Of Scheme To Pay To Hide Misdeeds.” Wrong; he wasn’t charged with any crime for agreeing to pay someone he allegedly wronged. Such agreements are called legal settlements, and they happen every day. But the late-day announcement by Justice of Hastert’s indictment was calculated to produce exactly that sort of confusion among editorial simpletons.
Third, and most important, when approached by the FBI or any other official investigative body asking questions about something you may or may not have done, the only intelligent response is to take a business card and tell investigators your lawyer will get back to them. Hastert’s big problem, apart from whatever blackmail he may have been subject to, is not the cash structuring but the allegation that he lied about it to the FBI. According to the indictment, investigators asked whether he was making the withdrawals due to distrust in the banking system, leading him to agree that he was holding on to the cash he withdrew. This is the root of the second of the charges against him.
Of course, this is a bit ironic, because police investigators are perfectly free to deceive the targets of their investigations. Such deception is the foundation of every law enforcement sting operation in history. But in today’s environment, this is purely a one-way street, no matter what a given party’s motives. As such, your best and only defense when law enforcement asks about anything relating to your activities is to simply decline to answer.
There are many high-profile examples of instances where attempting to deceive prosecutors created many more problems than the lied-about behavior itself. For just one such example, remember that Martha Stewart’s criminal conviction rested on obstruction of justice for lying to investigators. (She settled the connected civil charges.)
I have no idea what Hastert may have done that led him to allegedly pay the anonymous individual in question. I have no opinion of his guilt or innocence of the charges themselves, either, other than that on the face of it, the odds are good he did at least improperly structure his dealings with the bank. When bank officers asked what he planned to do with the money, he should have said it was for personal purposes. Other than file their reports, the worst the bank officers could have done was to tell him to take his business elsewhere.
I do know that Hastert, now a prominent lobbyist, is no longer a public official. As such, I don’t care much about what he does in his personal life. I care deeply, however, about how the people currently in charge at the Justice Department choose their law enforcement priorities, and especially about the factors they consider when deciding who is a target to pursue and who is a victim to protect.
For now, I can only look forward to a post-Obama day when new people at the Justice Department get a chance to take a look at how laws are enforced in the Northern District of Illinois.
Related posts: