FAIRMONT, N.C. – More than a month after dismissing a case involving a Fairmont, N.C., convenience store owner, the federal government has returned the $107,000 it seized from him last year. However, the Internal Revenue Service still refuses to pay L&M Convenience Mart owner Lyndon McLellan’s lawyers’ fees and expenses to which he is entitled.

According to news reports citing documents filed in federal court this week, the government returned the $107,702.66 it seized from McLellan, depositing the money into the store’s bank account on June 29. Last July, the IRS seized the $107,702 from L&M Convenience Mart’s bank account under a subset of civil asset forfeiture laws that oversees cash deposits.

In McLellan’s case, the government alleged that he committed structuring violations over a period of three years, which involves making consistent cash deposits or withdrawals of less than $10,000 to avoid bank reporting requirements. Neither McLellan nor his niece, who was in charge of making deposits, were aware they were committing any violations and claimed that they were simply following the suggestion of their local bank teller by depositing smaller amounts of cash in each transaction. However, it is worth noting that frequent cash deposits just under the $10,000 reporting limit -- however legitimate they are -- may trigger suspicion from banking authorities.  

Several months after the IRS took McLellan’s money, the government offered to return half of it, a settlement which he declined. Instead, McLellan decided to fight the government to get the full amount back, and was eventually successful. This May, the assistant U.S. attorney on the case moeved to dismiss McLellan's case, citing a policy chage at the Department of Justice regarding seizures conducted because of structuring violations. Now that the government has returned funds to L&M's bank accout, McLellan and his legal counsel are still fighting to have lawyer fees, expenses and interest on the monoey covered.

Under the Civil Asset Forfeiture Reform Act of 2000, a property owner who “substantially prevails” in a federal forfeiture case is entitled to have such fees and expenses covered by the government.

“Actions speak louder than words,” Robert Johnson, a lawyer at the Institute for Justice who represented McLellan, wrote in the filings. “At the same time that the government has continued to slander Lyndon as a criminal in its filings in this court, the government has returned the money that it seized from Lyndon’s business. … There should be no clearer indication that this forfeiture proceeding has drawn to a close — with Lyndon the prevailing party and thus entitled to attorney fees, costs, and interest under governing federal law,” he continued.