Government Charges Hastert with “Crime” of Withdrawing His Own Money

Dennis Hastert, former Speaker of the US House of Representatives, has been charged with lying to the FBI about the reason he was withdrawing money from bank accounts.  Should what Hastert did be illegal, or any of the government’s business?  Let’s look at the facts.

From the charges, it appears that Hastert (1) withdrew $3.5 million of his own money from banks to (2) pay an individual “to cover up past misconduct” and (3) lied to the FBI about the reason he was making the withdrawals.  It appears that the past misconduct was (4) molesting a student when Hastert was a high school teacher and wrestling coach.  Let’s look at each of these four things to see whether the charges are warranted.

I’m going to wait to discuss (4), but will state the obvious up front.  It’s not acceptable for teachers to molest their students, and it is also against the law.  I’ll discuss this at the end of the post, because Hastert is not being charged for this.

  1. The $3.5 million was Hastert’s money, which should give him the right to spend it as he sees fit.  Withdrawing a person’s own money from a bank should never be a crime, although it can constitute the crime of structuring, if it appears that the withdrawals might be to finance some illegal activity.  But note that under structuring laws, there need be no evidence of any actual illegal activity; just a suspicious pattern of withdrawals.  If someone is doing something illegal, charge them with that.  While someone’s suspicious behavior might lead law enforcement officials to follow up and detect illegal activity, suspicious behavior by itself should never be illegal.  Doing so puts every law-abiding citizen at risk, and the abuses of civil asset forfeiture show this.  Hastert did nothing wrong when he withdrew his own money from his own bank accounts.
  2. Paying money to a former student also should not be illegal.  Note that Hastert is not being charged with this.  I just bring it up because it is part of what Hastert did.  If Hastert wanted to give money to someone, that’s between the giver and the recipient, and it is none of the government’s business.  It is not, and should not be, illegal to give money to people.  (I will note that it is likely that the recipient in this case should have paid income taxes on the money, but I have no indication that the IRS has shown any interest in pursuing this.)
  3. Apparently, when questioned by the FBI about the withdrawals, Hastert claimed he felt the money would be safer if it was not in the bank, which the FBI says was a lie.  I could twist this around to make it true: Hastert might have thought the money would be safer in the hands of the person he paid rather than languishing in the bank.  But, I would argue that it is none of the government’s business anyway, because it is Hastert’s money to use as he sees fit.

My conclusion is that regardless of the actual law, none of (1), (2), or (3) should be illegal, even though (1) and (3) actually are illegal, and Hastert is being charged with violating (1) and (3).  Those laws are examples of government overreach that threaten every American, innocent or not, that violate our privacy, and allow people to be penalized based on activities that look suspicious to some government employee even when no wrongdoing has occurred.

Now let’s look at (4), which should be a crime, because if the accusation is true, Hastert was violating the rights of his students.  If that is the crime we believe has occurred, he should be accused and tried for that crime, not for withdrawing his money from a bank or lying to the FBI.

Assuming the accusation is true, what would be the appropriate punishment?  Jail time, coupled with being labeled as a sexual predator once released?  Such a punishment would be typical for the crime.

However, libertarian scholars such as my colleague Bruce Benson argue that such punishments do nothing to compensate the victims of crime, and that a libertarian legal system would require those who violate the rights of others to pay restitution to the injured parties.  Then justice would be served.  A prison sentence for the rights violator falls short because it does nothing to compensate the person whose rights were violated.

In this particular case, Hastert did just that.  He paid the victim $3.5 million, which the victim apparently thought was fair compensation because we have heard nothing from the victim.  I’m not arguing that because of those payments, justice has already been served, and it appears there may be other victims who were not compensated.  I’m just saying that libertarians often argue that restitution is the appropriate way to justly settle rights violations, and Hastert paid what, apparently, his victim viewed as fair compensation.

My big issue with this case is that while almost everyone would agree that a teacher molesting a student is a repulsive criminal act, Hastert is not being charged for that crime.  He’s being charged with withdrawing his own money from his own bank accounts.  Our legal system allows people suspected of one crime to be charged with something else that only amounts to suspicious behavior.  Everyone should be against that perversion of the law.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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