Submitted: February 9, 2016
from United States District Court for the Northern District
of Iowa - Sioux City
SMITH and COLLOTON, Circuit Judges, and ERICKSON,  District
COLLOTON, Circuit Judge.
2013, the Internal Revenue Service ("IRS") seized
$32, 820.56 from Carole Hinders's business bank account
based on allegations that Hinders had unlawfully
"structured" deposits to avoid federal currency
reporting requirements. The government then filed a civil
forfeiture complaint against the seized currency. Hinders
responded by filing claims to the seized property.
year later, the government moved to dismiss the case, and the
district court dismissed the action without prejudice.
Hinders moved for attorney fees, costs, and interest under
the Civil Asset Forfeiture Reform Act ("CAFRA"), 28
U.S.C. § 2465(b)(1), and asked the court to dismiss the
case with prejudice on a motion to reconsider. The district
court denied Hinders's motion for fees under CAFRA and
declined to reconsider its prior dismissal without prejudice.
Hinders appeals, and we affirm.
Hinders owned and operated Mrs. Lady's, a Mexican
restaurant in Arnolds Park, Iowa. The restaurant accepted
only cash and checks for payment, and Hinders regularly
deposited the restaurant's earnings in the bank. Hinders
almost always deposited less than $10, 000 at a time but
occasionally deposited more than that amount. According to
Hinders, she did this on the advice of her mother, who
previously managed the bookkeeping for Mrs. Lady's and
told Hinders that she could "avoid paperwork at the
bank" if she kept deposits under $10, 000. This activity
caught the attention of the IRS, which investigates persons
believed to be "structuring" transactions to evade
a bank's legal obligation to report cash transactions
exceeding $10, 000. See 31 U.S.C. §§
5313(a), 5324(a)(3); 31 C.F.R. § 1010.311.
2013, the IRS seized $32, 820.56 from the restaurant's
business checking account. Before the seizure, Agent
Christopher Adkins, an IRS task force officer, reviewed the
restaurant's bank statements from mid-April 2012 through
mid-February 2013. While more than $315, 000 had been
deposited during this period, no individual deposit had
exceeded $10, 000. A majority of deposits were for amounts
between $5, 000 and $9, 500, and deposits on consecutive
business days accumulated to more than $10, 000 on multiple
day of the seizure, Agent Adkins interviewed Hinders.
According to Adkins, Hinders confirmed that she was aware of
the reporting requirement and claimed that she did not break
up cash for deposit. Adkins contends that Hinders then
changed her story after being shown a record of her deposits
and admitted that she broke up deposits so that the bank
would not have to fill out paperwork. When asked why she did
this, Hinders asserted that she thought avoiding paperwork
was a good thing and that her mother had advised her to keep
deposits below $10, 000.
disputes Adkins's account of the interview. She admits
that she broke up deposits to keep them under $10, 000 and
does not recall denying this fact. She claims that Agent
Adkins asked her if she knew of "the $10, 000 rule,
" and she admitted that she did, but says that she was
thinking of the internal bank paperwork that her mother had
described. Hinders maintains that she did not know that the
bank was required to report deposits greater than $10, 000 to
October 2013, the government filed a civil forfeiture
complaint against the seized property, alleging that it
represented proceeds from structuring offenses committed by
Hinders in violation of 31 U.S.C. § 5324. Hinders filed
two claims to the property, one in her capacity as president
of Mrs. Lady's, Inc., and one in her personal capacity.
The parties submitted a scheduling order and discovery plan
to the court and began discovery.
October 2014, the IRS issued a policy memorandum that altered
its approach to civil forfeiture. The new policy provided as
a general rule that the agency no longer would pursue the
seizure and forfeiture of funds in structuring cases where
the funds were believed to have come from legal sources. A
forfeiture in these circumstances would be pursued only in
exceptional circumstances and with approval by the Director
of Field Operations.
December 2014, the government moved to dismiss the forfeiture
complaint without prejudice. The motion stated that the
government wished to exercise its prosecutorial discretion to
decline to pursue the case and to allocate its resources
elsewhere. The government asserted that the parties had
undertaken limited discovery, that trial was not scheduled to
begin for several months, and that Hinders would not be
prejudiced by dismissal. Hinders opposed the government's
motion. She urged the court to dismiss the case with
prejudice, or to deny the motion altogether and allow the
case to proceed to trial. She argued that the government