Justice Department shuts down porn money: Column

Glenn Harlan Reynolds 6:07 p.m. EDT May 26, 2014

'Operation Choke Point' unfairly targets businesses it doesn't like.

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They told me if I voted for Mitt Romney, our moralistic Department of Justice would be trying to shut down porn stars. And they were right: I voted for Romney, and sure enough, the Department of Justice is trying to shut down porn stars. Along with a lot of other, perfectly legal businesses. But I'll bet if Romney were in the White House, there'd be more coverage in the press.

A while back, some adult performers noticed that banks were terminating their accounts. The reason, it turned out, was a Justice Department program called "Operation Choke Point." This program, apparently, seeks to target businesses regarded as undesirable — like porn — by hitting them at a financial "choke point": their bank accounts.

Though the Justice Department can't prosecute people for making porn, because the First Amendment prohibits that, and too many people would think of them as blue-nosed morality police, which is politically undesirable, it can use its power to put them out of business extra-legally, by pressuring banks to cut off their accounts. Prosecutors and regulators have a lot of discretion, and the threat to use (or abuse) that discretion in ways that make banks uncomfortable provides a lot of leverage. Sure, banks make money off of the accounts of porn performers (and other targeted businesses), but not enough to make up for the hassle of being targeted for harassment by the feds.

As Timothy Geigner of TechDirt puts it:

Let's not mince words: A program that was built upon the goals of stopping financial fraud has devolved into a massive government overreach into private businesses that are operating within the law. The way it works is that the DOJ informs financial institutions that certain industries are more likely than others to be involved in unauthorized charges of consumer credit and bank cards. They likewise inform the banks that the DOJ is going to keep a special super-awesome close-eye on these industries, with the implication being that there will be a great deal of prosecutorial action, subpoenas, and scrutiny on those industries, not to mention penalties on the institutions that work with them. The intention of the government, it would seem, is to make the banks unwilling to deal with the government harassment and simply cut anyone in those industries off from the financial institutions.

It's not only adult stars that are being targeted. Justice Departmenttargetsinclude industries as diverse as ammunition sales, coin dealers, payday loans, "racist materials," etc. And, again, these are all legal businesses that haven't been charged with breaking any laws — the Justice Department just doesn't like them.

So what we have under "Operation Choke Point" is the government deciding it wants to put the squeeze on certain lines of (legal) business, for no other reason than that the Department of Justice doesn't favor them. It seems almost like some sort of conspiracy to deprive people of their civil rights.

As Prof. Todd Zywicki observes in the Washington Post's lawblog:

The ability to destroy legal industries through secret actions to deprive them of banking services has obvious political consequences. . . . In principle, of course, the logic of Operation Choke Point could be extended to groups not currently targeted. Notably absent from the FDIC's hit list, for example, are abortion clinics, radical environmental groups, or, well, marijuana shops, for that matter. Something similar was done to cut off credit-card payments to support the operation of WikiLeaks .

Personally, I don't think that regulators should be able to abuse their discretion — and this certainly looks abusive to me — in order to pressure banks to shut down the accounts of legal businesses. (As Sen. David Vitter, R-La., noted in March, the Justice Department has no statutory authority to do this). And while abortion clinics and environmental groups are probably safe under the Obama administration, if this sort of thing stands, they will be vulnerable to the same tactics if a different administration adopts this same thuggish approach toward the businesses that it dislikes. And why wouldn't it, if the Justice Department gets away with this?

Congress, and the courts, and the press, need to bring the Justice Department to heel. And, in fact, I think that the officials involved should be named, shamed, and disciplined. Because what's going on here doesn't look much like justice at all.