FOX News: DOJ Accused of Blocking Legal Gun Shops From Banking
PLEASE SEE THE NEW DEVELOPMENTS IN THIS STORY IN BOLD PRINT AT THE BOTTOM OF THE ORIGINAL ARTICLE.
Mike Schuetz operates a small gun shop in northern Wisconsin called Hawkins Guns. In November, just before one of his peak selling times, his local credit union notified him his account needed to be closed.
“The bank manager said they made a mistake, and they were not supposed to open accounts for those people involved in high-risk industries, which the gun industry and ammunition industry is one of those,” Schuetz said.
It turned out there was a list created by a Justice Department program called Operation Choke Point. The list equates legal gun sellers like Schuetz with escort services, Ponzi schemes, people who sell cable TV de-scramblers — and at least 30 other industries.
The program, which is facing tough questions in Congress, intimidates banks with the threat of heightened scrutiny and increased audits if accounts are maintained in those industries.
Rep. Sean Duffy, R-Wis., said Operation Choke Point began as a means of combating fraudulent businesses — but evolved into an arbitrary list of businesses targeted by bureaucrats in the DOJ and banking regulators purely on moral grounds, backed by no legislation
“What they’ve done is they put short-term lenders out of business, gun dealers out of business, ammunition manufacturers out of business. Because in America, if you can’t bank, you can’t do business,” Duffy said.
In northern Wisconsin, Schuetz became suspicious that something strange was happening after his issue with the local credit union. So he concealed an audio recorder and visited his credit union.
A manager and then a regional manager told Schuetz the credit union wanted his business, but he had indeed been placed on a list of “high risk” industries.
“We’re really not anti-gun as a company but our hands are tied, and I feel horrible about this. I didn’t sleep last night,” regional manager Troy Ewer said.
Fox News found several more businesses — from payment processors to ammunition dealers to pawn shop owners to short-term lenders — who all had their bank accounts closed. In response to an inquiry from Fox News, a spokesman for the DOJ wrote, “We do not target businesses operating within the bounds of the law, and we have no interest in pursuing or discouraging lawful conduct.”
Duffy said, “That’s a bald-faced lie.”
Fox News was provided a DOJ memo in reference to short-term or payday lenders that seems to suggest an indifference to harming legal businesses. “Although we recognize the possibility that banks may have therefore decided to stop doing business with legitimate lenders, we do not believe that such decisions should alter our investigative plans,” Michael Blume, director of the department’s Consumer Protection Branch, wrote.
A spokesman for the DOJ said that the “high-risk merchants” list was produced by the FDIC.
However, Brian Wise, of the U.S. Consumer Coalition, pointed out that the FDIC sits on the Financial Fraud Enforcement Task Force, which is the driving force of Operation Choke Point and is chaired by U.S. Attorney General Eric Holder. Also, starting in August of 2013, the DOJ issued subpoenas to banks and payment processors.
Wise, with the Consumer Coalition, says there are hundreds and even thousands of businesses across the nation who have had bank accounts closed, and they may not even know their bank was intimidated by Operation Choke Point. “This is one of the greatest abuses of power that the country has never heard of,” Wise said.
NEW DEVELOPMENTS IN THIS STORY:
In a major development concerning discrimination in how financial services and products were withheld from firearms-related businesses due to “Operation Choke Point,” the top officials of the Federal Deposit Insurance Corporation (FDIC) have admitted wrongdoing and said they would cease such practices
Participating in Operation Choke Point, which was spearheaded by the Department of Justice, the FDIC had classified some industries as high risk: Cable Box De-scramblers, Credit Repair Services, Dating Services, Drug Paraphernalia, Escort Services, Ponzi Schemes, Pornography, and Racist Materials, to name a few. Included in this group were “Ammunition Sales” and “Firearms Sales.”
U.S. Rep. Blaine Luetkemeyer (R-Mo.) released a statement after a meeting with Federal Deposit Insurance Corporation Chairman Martin Gruenberg and Vice Chairman Tom Hoenig discussing the agency’s involvement in Operation Choke Point.
“Today is a turning point in the fight against Operation Choke Point. This morning, I met with Chairman Gruenberg and Vice Chairman Hoenig to discuss the FDIC’s activity with Operation Choke Point. Not only did the Chairman and the Vice Chairman acknowledge wrongdoing within the organization, but they have accepted many of the policies put forth in my legislation, the Financial Institution Customer Protection Act.
“I’m pleased that FDIC is implementing these important changes without delay. I’m also pleased that the Chairman and Vice Chairman have joined me in calling on the FDIC Inspector General to conduct a formal investigation of the program and any staff who have played or may have played a role in the program. The bottom line is the FDIC knows the culture at the agency must be changed and I will continue to monitor to make sure the agency sticks to its word.
“I fully intend on reintroducing my legislation because we must ensure these changes will be codified into law, that the Department of Justice ends its misuse of authority, and that other agencies don’t ever fall into this illegal and abusive practice.”
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