Courts: U.S. refuses to return legally earned $357,144 that he tried to take out of the country. U.S. Supreme Court will hear the case.
May 27, 1997 | DAVID G. SAVAGE | TIMES STAFF WRITER

WASHINGTON — Cash may have gone out of style as the currency of choice, but can the government confiscate your money simply because you are carrying too much of it?

For the 41-year-old owner of two Hollywood service stations, the answer so far has been “yes.”

On June 9, 1994, Hosep Bajakajian and his wife went to Los Angeles International Airport to board a flight to his native Syria. In their suitcases and carry-on bags, they had packed $357,144 in cash, which he said was intended to pay off family debts.

When a dog sniffed out the money, federal authorities arrested Bajakajian and charged him with failing to report the movement of $10,000 or more in cash across a U.S. border. He pleaded guilty to the violation, was fined $5,000 and was given three years probation.

But to his surprise, the government kept the $357,144 seized at the airport, even though it was agreed that Bajakajian had accumulated his money lawfully.

“Undeclared cash that is brought into or taken out of this country is subject to forfeiture,” Justice Department lawyers said in the case. “Much criminal activity depends on money laundering that secretly moves cash into and out of this country,” and seizing such cash “is an effective tool for detecting and deterring illegal activity,” they said.

Although it may be an effective tool against criminals, Bajakajian and his lawyers question its use against an innocent person.

“We agree if the money is tainted, they can take it,” said Michael G. Raab, an Encino attorney who has represented Bajakajian in his three-year legal fight. “But this guy has a lawful business. There is no evidence of anything wrong with the money, but [federal prosecutors] still maintain they can seize it.”

“What they did was not fair,” Bajakajian said Monday. “That is legal money, clean money. Most of it is money I earned from my two service stations. Some of it I borrowed.”

Bajakajian said he carried the cash–rather than a check or some other form of credit transfer–“because, over there, you have to keep everything you have in cash.”

He said the money was being taken to Syria to pay back a relative who had helped him finance a U.S. business venture.

Although Bajakajian has won favorable rulings in two lower courts, federal prosecutors appealed the case to the U.S. Supreme Court. The justices may act on the appeal as soon as today.

The outcome is expected to have a broad impact on the government’s forfeiture power in currency cases. The U.S. 9th Circuit Court of Appeals, ruling in Bajakajian’s case last year, prohibited forfeitures of legal currency.

“Forfeiture of currency is unconstitutional,” wrote Judge Warren J. Ferguson of Santa Ana, simply for “a mere failure to report” the transaction. “People leaving the United States are free, as they have always been, to take with them such amounts of cash as they so choose.” He was joined in the decision by Judge Thomas G. Nelson of Boise, Idaho.

The Justice Department cited Wallace’s dissent and a ruling by the U.S. 2nd Circuit Court in New York that upheld the seizure of “smuggled cash” as reasons to hear Bajakajian’s case and reverse the result. The government argues that Bajakajian’s money represented “smuggled cash.”

The 9th Circuit’s jurisdiction covers much of the West from California and Arizona in the south to Alaska in the north, and this “region could readily become a haven for drug dealers, money launderers and tax evaders intended on conducting non-traceable currency transactions,” the Justice Department says in its appeal.

Bajakajian’s attorney says the claims are exaggerated. The 9th Circuit’s ruling only “tempers the government’s ability to forfeit lawful currency,” Raab said. “In essence, the government seeks for its own coffers currency which was legitimately obtained, lawfully possessed and intended for a lawful purpose,” he said.

At the initial hearing in Bajakajian’s case in a Los Angeles courtroom, U.S. District Judge John G. Davies pressed the defense lawyer to explain why his client had hidden the money in his suitcase and lied about it when questioned by federal agents. It was “a distrust of government,” the lawyer said, adding that his client grew up in a region where citizen rights are not always protected.

The judge finally agreed that Bajakajian’s “somewhat suspicious” behavior could be attributed to “cultural differences,” and therefore should not warrant the forfeiture.

Indeed, Davies rejected most of the government’s claim. Even though the federal forfeiture law is broadly worded, he said it would “be extraordinarily harsh” to take all of Bajakajian’s cash. In a 1995 ruling, he limited the forfeiture to $15,000, on top of the $5,000 fine.

Bajakajian said Monday that he was glad to learn that the Supreme Court is about to hear his case, but he is only cautiously optimistic about the outcome.

“God knows what will happen,” he said.

Times staff writer Eric Malnic contributed to this report.

© 2012 Michael G. Raab and Patrick T. Mahoney. All Rights Reserved.