Explore The NRA Universe Of Websites

APPEARS IN News

House Report: "Choke Point" Targets Legal Businesses for Asphyxiation

Friday, May 30, 2014

On May 29, House Oversight and Government Reform Committee Chairman Darrell Issa  (R-Calif.)  released a staff report, The Department of Justice's "Operation Choke Point": Illegally Choking Off Legitimate Businesses? The report concludes that the true goal of the operation is to "choke out" certain industries, including legal businesses like sellers of firearms and ammunition, which the current administration considers politically objectionable.

The report follows the Department of Justice's (DOJ's) launch last year of Operation Choke Point, a wide-ranging investigation into banks and payment processors (the middlemen between banks and merchants in financial transactions). DOJ claimed the operation was aimed at combating mass-market consumer fraud by shutting down access to the banking and payment systems that are necessary for fraudulent businesses to operate. The justification was an alleged higher "risk profile" for consumer fraud or potentially illegal activities associated with some merchants or activities identified by the Federal Deposit Insurance Corporation (FDIC).

These "high risk" merchants are typically characterized by high rates of unauthorized transactions, consumer complaints, or evidence of state or federal regulatory or criminal actions against the business customer. However, with no explanation or justification, the FDIC's list of high-risk merchants and activities also lumped in ammunition and firearm sales (among other legal industries) with potentially exploitative or outright illegal enterprises. No one can reasonably suggest that firearms and ammunition sellers pose the same risks of fraud to banks and consumers as Ponzi schemes, cable-box descramblers, "get rich" products, online gambling, pyramid–type sales, debt consolidation scams, and similar schemes.

As NRA recently reported, evidence has been mounting that banks and financial institutions have been responding to the threat or potential for government investigative action and penalties by refusing to do business with legitimate law-abiding companies in the firearm industry. These decisions, moreover, are apparently being made without regard to the specific company's credit, criminal or financial history. Rather, they're predicated on the implicit threat that a bank's business relationship with a listed "high risk" merchant could be enough to trigger a federal subpoena and resulting investigation and lawsuit.     

Earlier this year, Chairman Issa and Subcommittee Chairman Jim Jordan requested that the Justice Department produce documents and communications related to Choke Point. Their resulting review of the 853 pages of internal documents provided in response concludes that "Operation Choke Point is an inappropriate exercise of the Department's legal authorities, and is being executed in a manner that unfairly harms legitimate merchants and individuals."

Other key findings of the report released this week include the following:

  • DOJ acted without the requisite legal basis. In furtherance of Operation Choke Point, the Department of Justice "radically and inappropriately expanded its own authority." Operation Choke Point's investigatory basis purportedly rests on subpoenas issued under Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, or FIRREA. Yet this authority was intended to give the Department the tools to pursue civil penalties against entities that commit fraud affecting banks, not to investigate consumer fraud, much less private companies doing legal business.
  • Despite assertions that the government's intended goal was limited to fraudulent activity, the report finds that DOJ targeted legitimate businesses. The desired effect was clearly to have legal merchants and legitimate businesses "choked off from the financial system." Operation Choke Point, according to the report, effectively transformed the FDIC "high risk" list "into an implicit threat of a federal investigation," a reaction the DOJ anticipated. The Justice Department was aware of the impact on legitimate businesses – that banks were dumping entire sectors of business deemed "high risk" by the government -- and "dismissed them."  The proffered reasoning was that banks and "legitimate" businesses would sort it out, an expectation the report likened to claiming, "if one is not a witch, then they will sink rather than float."
       
  • Rather than have offenders prosecuted on the basis of real and sufficient evidence in a court of law, DOJ misused its authority to "forcibly conscript banks to serve as the 'policemen and judges' of the commercial world."

  • The report specifically cites the consequences of labeling firearms and ammunition sales as "high risk," resulting in law-abiding firearm merchants having existing bank accounts frozen or terminated. "The experience of firearms and ammunition merchants – an industry far removed from consumer finance fraud – calls into question the sincerity of the Department's statements" regarding the scope and goals of  Operation Choke Point.

The report and its appendices are available online.

The report: http://oversight.house.gov/wp-content/uploads/2014/05/Staff-Report-Operation-Choke-Point1.pdf

 First appendix of documents: http://oversight.house.gov/wp-content/uploads/2014/05/Appendix-1-of-2.pdf

Second appendix of documents: http://oversight.house.gov/wp-content/uploads/2014/05/Appendix-2-of-2.pdf 

Congressional action is already underway to reign in what is merely the latest is a growing list of DOJ's abusive practices. We will continue to report as developments unfold.

TRENDING NOW
Biden Administration Bans Importation of Russian Ammunition

News  

Sunday, August 22, 2021

Biden Administration Bans Importation of Russian Ammunition

The Biden Administration’s Department of State announced that it will soon prohibit the importation of Russian ammunition into the United States. According to a release on the Department of State’s website, “[n]ew and pending permit applications ...

The Second Amendment Now Comes with Government-Issued “Harmful Language Alert”

News  

Monday, September 13, 2021

The Second Amendment Now Comes with Government-Issued “Harmful Language Alert”

The absurdity and dysfunction of the Biden Administration have become so pervasive that it’s easy to become numb to it all. But some things it does are still so outrageous and inconceivable – touching on ...

University President, Activist Scolds, Try to Take “Come and Take It” Battle Cry

News  

Monday, September 20, 2021

University President, Activist Scolds, Try to Take “Come and Take It” Battle Cry

Long a slogan of defiance and independence, it is little wonder that the phrase “Come and take it” now finds itself falling into disfavor with a new generation of busybodies and penny-ante authoritarians. The latest ...

Guide To The Interstate Transportation Of Firearms

Gun Laws  

Thursday, January 1, 2015

Guide To The Interstate Transportation Of Firearms

CAUTION: Federal and state firearms laws are subject to frequent change. This summary is not to be considered as legal advice or a restatement of law.

Biden Reiterates Call to Ban 9mm Handguns

News  

Monday, July 26, 2021

Biden Reiterates Call to Ban 9mm Handguns

During a July 21 CNN “presidential town hall,” Joe Biden expressed his support for a ban on commonly-owned handguns. Responding to a question about the recent increase in violent crime, the career politician stated,

Harvard Researcher: About Half of New Gun Owners are Women

News  

Monday, September 20, 2021

Harvard Researcher: About Half of New Gun Owners are Women

In a blow to the tired stereotypes perpetuated by gun control supporters, a recent academic survey found broad diversity among recent first time gun buyers.

The State of Surveillance: California Cops and Social Media Monitoring

News  

Monday, September 20, 2021

The State of Surveillance: California Cops and Social Media Monitoring

Last year, the Brennan Center for Justice requested under California’s freedom of information law, that the Los Angeles Police Department (LAPD) provide records relating to the Department’s “social media monitoring” activities.

Virginia Attorney General Finds More Roving Gun-Free Zones

News  

Monday, September 20, 2021

Virginia Attorney General Finds More Roving Gun-Free Zones

The Virginia state government’s attacks on law-abiding gun owners continue apace. On September 1, Attorney General Mark R. Herring (D) used his position to offer an expansive interpretation of statute that will create a confusing patchwork of ...

Atlantic Writer Promotes Culture War on Gun Ownership

News  

Monday, September 13, 2021

Atlantic Writer Promotes Culture War on Gun Ownership

Canadian-born political commentator and George W. Bush-era speechwriter David Frum has taken a break from promoting actual wars in the Middle East to advocate for a culture war on gun ownership here at home.

Virginia Shocker: Crime to Get Public Health Response, Not Police

News  

Monday, September 20, 2021

Virginia Shocker: Crime to Get Public Health Response, Not Police

The Mayor of Richmond rejected a plan to reduce violence by focusing on gangs, instead prioritizing a costly “public health” approach that conflicts with the reality on the ground.

MORE TRENDING +
LESS TRENDING -

More Like This From Around The NRA

NRA ILA

Established in 1975, the Institute for Legislative Action (ILA) is the "lobbying" arm of the National Rifle Association of America. ILA is responsible for preserving the right of all law-abiding individuals in the legislative, political, and legal arenas, to purchase, possess and use firearms for legitimate purposes as guaranteed by the Second Amendment to the U.S. Constitution.