Operation Choke Point

[American Patriot]

This has become ridiculous on level well beyond either the recognition or understanding of most Americans.


First it was shutting down LEGAL gun purchases by forcing credit cards and banks to disallow such purchases.

Now they are going after coin and gold dealers....

Out to break Obama's chokehold on their businesses

March 19, 2015
Updated 8:31 a.m.

By ORANGE COUNTY REGISTER EDITORIAL

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We were shocked last year to learn of a federal program – Operation Choke Point – which has been used to go after perfectly legal businesses that the Obama administration does not like, such as the gun and tobacco industries. Now, we are heartened to hear that the targeted businesses are starting to fight back.
Operation Choke Point is an effort coordinated by the Federal Deposit Insurance Corp., the Justice Department and, perhaps, the Consumer Financial Protection Bureau, to designate certain industries as “high risk,” and then pressure banks and payment processing companies to sever their ties to the targeted businesses, thereby choking off their means of operation.
The ostensible purpose was to go after fraudsters and illegal businesses, like debt consolidation scams and Ponzi schemes, but numerous legitimate businesses in politically disfavored industries, such as guns and ammunition dealers, tobacco dealers, coin dealers and payday lenders, have also found themselves in Operation Choke Point’s crosshairs.
One such victim is Brennan Appel, owner of Global Hookah Distributors (SouthSmoke.com), a tobacco parts distributor based in Charlotte, N.C. After a 12-year relationship with his bank, Mr. Appel suddenly received a notice last year that all of his Bank of America accounts – business and personal – would be shut down, without explanation, and he had a mere two weeks to scramble to notify all his customers, shift his payroll and make other arrangements. Then in February, Mr. Appel’s payment processor, EFT Network, likewise told him it could no longer do business with him due to the “risk” involved in the business.
After much research, Mr. Appel discovered Operation Choke Point and related his story to the U.S. Consumer Coalition, an organization dedicated to protecting consumer choice and fighting government intrusions into those voluntary decisions.
A recorded conversation between Mr. Appel and the president of EFT Network, Alex Bacon, was quite revealing. “Have you heard of a little thing called Choke Point and the CFPB?” Mr. Bacon asked. “They’re taking aim at industries like you and others to eliminate you from business by choking off your payment processing.” (The USCC website has audio clips of the conversation.)
“Just because you don’t like something doesn’t mean it’s right to just close it,” Mr. Appel told us.
There is a hard lesson here. “Government’s just abusive. You learn that in business over the years,” Mr. Appel said. “I hope that standing up to this will put a stop to it. Somebody’s got to stand up.”

[American Patriot]

The DOJ’s “Operation Choke Point” Has Driven 30 Industries To Bitcoin

Caleb Chen
Accepts Bitcoin, Bitcoin Business, Bitcoin Merchants, Bitcoin Op-ed, News
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You may have heard of Operation Choke Point over the last year in reference to payday lending, and more recently in reference to firearm sales and porn star personal accounts. The gist of it is this: The Department of Justice (DOJ) is strongly encouraging banks and third party payment processors to close the accounts of individuals and businesses associated with certain high-risk merchant categories such as payday/online lending, firearms/ammunition sales, and pornography, and even dating services. Essentially, the DOJ has tasked banks and third party payment processors, such as PayPal, with “choking” out specific industries by slowly but continually constricting their access to financial services.
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According to The Hill, the DOJ encourages banks and third party payment processors to drop these high-risk clients by “flooding payments companies that provide processing service to those industries with subpoenas, civil investigative demands, and other burdensome and costly legal demands.” The American Banker reveals, in their timeline of Operation Choke Point, that the subpoena flood started shortly after Operation Choke Point’s inception in March 2013. The subpoenas went to banks and payment processors large and small: Everything from the $343 million-endowed National Bank of California to the $220 billion-endowed PNC Financial Services Group. By fall of 2013, the Justice Department had pressured some banks into settling with the government. The DOJ used these settlements as a template to further strongarm other banks into compliance. The DOJ is targeting 30 high-risk industries, as labeled by the Federal Deposit Insurance Corporation (FDIC) in 2011, in a report titled “Managing Risks in Third-Party Payment Processor Relationships.”
The FDIC’s list of 30 high-risk merchant categories that are currently being pursued by the DOJ.

• Ammunition Sales
• Cable Box De-scramblers
• Coin Dealers
• Credit Card Schemes
• Credit Repair Services
• Dating Services
• Debt Consolidation Scams
• Drug Paraphernalia
• Escort Services
• Firearms Sales
• Fireworks Sales
• Get Rich Products
• Government Grants
• Home-Based Charities
• Life-Time Guarantees
• Life-Time Memberships
• Lottery Sales
• Mailing Lists/Personal Info
• Money Transfer Networks
• On-line Gambling
• PayDay Loans
• Pharmaceutical Sales
• Ponzi Schemes
• Pornography
• Pyramid-Type Sales
• Racist Materials
• Surveillance Equipment
• Telemarketing
• Tobacco Sales
• Travel Clubs

Payday and Online Lenders

In America, most of the mainstream media has been focused on Operation Choke Point’s attempt to gag and bind the payday loan industry, which is legal in 36 states and certainly no Saint to the Bitcoin community. New York Financial Services Superintendent Benjamin Lawsky also made choking actions in his own state, where four of the nation’s largest banks reside, when he instructed New York banks to be wary of unlicensed online lenders and cracked down on licensed lenders that were violating New York’s own interest-rate cap. On the topic of edging payday lenders out of his state, Lawsky had this to say: “We want to make payday lending into New York, over the Internet, as unappetizing as possible.” When announcing New York’s acceptance of Bit-License applications, Lawsky had this to say: “…the fact is that virtual currencies are unlikely to disappear entirely. They will likely continue to exist in one form or another. As such, turning a blind eye and failing to put in place guardrails for virtual currency firms while consumers use that product is simply not a tenable strategy for regulators. Our overarching goal is to balance creating appropriate regulatory protections without stifling beneficial innovation in the development of new payments platforms.” Bitcoin is certainly capable of being used in newly developed payment platforms that won’t have any trouble staying under New York’s interest-rate cap. On the topic of Bitcoin and loans, BTCJam has recently moved to the United States.



Guns and Drugs

Bitpay previously shut down the account of Central Texas Gun Works because bitpay’s ToS specifically bans gun sales and gun services. It is unclear whether or not bitpay enforces this ban because their bank requires it, or for other reasons. Infamous marketplace Silk Road also bans firearms and ammunition sales, though for ideological reasons. CoinVoice now provides the Bitcoin payment processing for Central Texas Gun Works; on the other side of the country, Coinbase also allows gun stores to accept Bitcoin with their merchant services. Info Wars reports that banks such as Bank of America have also denied firearm related businesses without any substantiated or legal reasoning in connection with Operation Choke Point. One budding industry that is not mentioned by the FDIC or targeted by Operation Choke Point is none other than the marijuana industry, which has been choked out of financial systems since its inception and is now starting to embrace Bitcoin. However, Coinbase and bitpay have both expressed their unwillingness to work with legal marijuana distributors. Likewise, drug paraphernalia sellers that accept Bitcoin are doing so without banks or third party payment processors (in this case, Bitcoin payment processors) because they have long since been choked out of the financial system, despite their technically legal offerings. As you can see, Bitcoin payment processors also feel the pressure from Operation Choke Point.
Porn and Dating Services

More recently, reports have started to circulate regarding porn stars having their personal bank accounts closed. The most recent article from Al Jazeera reveals that PayPal, along with Chase, has also been inexplicably shutting down the accounts of porn stars. Furthermore, PayPal has been tight-lipped on the reason for these account closures, and Operation Choke Point hasn’t been explicitly mentioned, at least by Al Jazeera. Porn stars first started reporting to the media that their personal accounts were being closed in early 2013 with Xbiz reporting that hundreds of porn stars have been affected. The DOJ doesn’t have to worry about bitpay and firearm/ammunition sales; however, bitpay has proven to be an incredible ally to the porn industry and has led Bitcoin’s charge into the high chargeback industry. Porn.com and now Verotel both accept Bitcoin using bitpay; both are able to charge lower fees without the risk of chargeback. OKCupid has been using Bitcoin for over a year now… Almost as long as the DOJ has been unintentionally pushing these industries towards Bitcoin. Every industry in the world can benefit from Bitcoin Blockchain technology; it’s just that these 30 have been given a forceful push by the government.
Image from nybe.
Updated: May 7, 2014 at 2:01 pm CET.
bitcoin industriesdepartment of justiceoperation choke point

• ONTIME
  I don’t use paypal for good reason, they do not perform well and the use of a untested monetary means is suicide, from what I have read your setting yourself up for a fall with bit coins..you’ll wonder where your money went…….If I owned and operated a firearms establishment, these two items would not be allowed as a means for payment…
  
  
  
• adaptune
  As such, turning a blind eye and failing to put in place guardrails for virtual currency firms while consumers use that product is simply not a tenable strategy for regulators.
  Translation: minding our own business is not an option. People might think they have the right to run their own lives! Oh horrors!!
  
  
  
• Tyler
  The DOJ behaviors towards these “high risk” businesses is quite troubling. Going after perfectly legal and stablished business and openly declaring itself unable to prosecute banks because they “to big to prosecute” is one more example of the corruption and double standards in the part of the authorities of the united states. They are literally sucking the blood out of anyone and anything that they do not see favorably, wipping their butts with the constitution and the civil liberties and their own country. However, as you noted in the article. Bitcoin and cryptocurrencies are without doubt our best hope at making a real pushback against these destructive actions.
  Thank you for your article.
  
  

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About The Author

Caleb Chen
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Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.

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[American Patriot]

Obama’s ‘Operation Choke Point’

December 18, 2014 by Arnold Ahlert 9 Comments



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Almost unbelievably, the Obama administration is involved in another scandalous abuse of power, one that has largely escaped the public’s attention. The House Oversight and Government Reform Committee released a report December 8 detailing the abuses by the Federal Deposit Insurance Corporation (FDIC), operating under the auspices of a program known as Operation Choke Point. Run by the Departments of Justice and Treasury, Operation Choke Point was supposed to target illegal businesses and prevent them from obtaining access to the U.S. financial system. Yet damning emails unearthed by investigators reveal regulatory officials were motivated by personal animus toward certain businesses. “It’s appalling that our government is working around the law to vindictively attack businesses they find objectionable,” Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, said in a press release.

“Internal FDIC documents confirm that Operation Choke Point is an extraordinary abuse of government power,” Issa. “In the most egregious cases, federal bureaucrats injected personal moral judgments into the regulatory process. Such practices are totally inconsistent with basic principles of good government, transparency and the rule of law.”

Operation Choke Point was publicly introduced in March of 2013, when Financial Fraud Enforcement Task Force Executive Director Michael J. Bresnickat bought it up in a speech at Washington D.C.’s Exchequer Club. Bresnickat assured his audience the reason the program was “focused on financial institutions and payment processors is because they are the so-called bottlenecks, or choke-points, in the fraud committed by so many merchants that victimize consumers and launder their illegal proceeds.”
Five months later, the Wall Street Journal revealed the troubling reality that one of the first targets of the program were payday lending operations. Peter Barden, spokesman for the Online Lenders Alliance, sounded the initial warning, noting government pressure forcing banks to stop payment processing “would cut off an important credit choice for millions of underserved consumers” and “send a troubling message to banks that at any point regulators can force them to stop processing legal transactions simply because they don’t like a particular merchant or industry.”
In January 2014, Issa, along with Economic Growth Subcommittee Chairman Rep. Jim Jordan (R-OH), sent U.S. Attorney General Eric Holder a letter expressing concern that “both the goal and mechanisms of Operation Choke Point may constitute a serious mismanagement and abuse of the Department’s FIRREA [Financial Institution Reform and Recovery Act of 1989] authority.”
Issa wanted answers. The DOJ felt it was under no obligation to provide them.
By the end of May 2014, Issa’s concern had morphed into outrage. He issued a report contending Operation Choke Point was so “flagrantly illegal” it was beyond legal rehabilitation. “In light of the Department’s obligation to act within the bounds of the law, and its avowed commitment not to ‘discourage or inhibit’ the lawful conduct of honest merchants, it is necessary to disavow and dismantle Operation Choke Point,” the report stated. It further noted that Holder knew about the program prior to its launch, that he knew it was aimed at targeting legal entities—and that he nonetheless fully supported its implementation. Furthermore, the report suggested that once the program became public, the DOJ may have attempted to cover up parts of its operation.
It was also discovered that Operation Choke Point had expanded beyond the payday lending industry, targeting manufacturers, distributors, and dealers of firearms and ammunition, as well as coin dealers. And it was also revealed that a January 23, 2014 deadline regarding Issa’s request for information came and went absent any indication the DOJ had fulfilled it.
Three days later, MyFoxdc.com issued a report on Operation Choke Point alleging the program targeted the gun industry because Obama failed to get gun control legislation passed by Congress. If such an effort has a familiar ring, it’s because Obama has employed precisely the same Congress-bypassing tactic with regard to illegal immigration. At that time, The National Shooting Sports Foundation revealed many of its members in the firearms and ammunitions manufacturing industries had had their banking relationships wrongfully terminated by the program.
The report released Dec. 8 put the pernicious scope of the program in full perspective. Its key findings reveal the FDIC “equated legitimate and regulated activities…with inherently pernicious or patently illegal activities,” via “circular argument policymaking”–an original list of high-risk merchants were determined by FDIC, who then justified formal guidelines for banks by claiming the categories “had been previously noted”—by the FDIC itself.

The most egregious revelations centered around FDIC policymakers whose “personal animus” towards the payday industry was so intense that their senior-most bank examiners “effectively ordered banks to terminate all relationships with the industry.” An email from Thomas Dujenski, FDIC’s Atlanta regional director, to Mark Pearce, director of the Division of Depositor and Consumer Protection underscores that personal animus:

I have never said this to you (but I am sincerely passionate about this) … but I literally cannot stand the pay day lending industry … I had extensive involvement with this group of lenders and was instrumental in drafting guidance on stopping abuses.

Another damning email reveals that John Miller, Deputy Director for Policy and Research in the Division of Depositor and Consumer Protection at the FDIC, was concerned about “taking pornography” out the equation in letters about targeted businesses to Congress. The redacted writer of the email expressed his concern that lumping pornography in with online gambling and payday loan companies might make it appear that the FDIC was making “moral judgments regarding the types of businesses with which our institutions deal.” The email continues:

Jonathan heard where we were coming from but nonetheless wants to retain a reference to pornography in our letters/talking points. He thinks it’s important for Congress to get a good picture regarding the unsavory nature of the businesses at issue. He repeated that ‘one is judged by the friends one keeps,’ and he seems to feel strongly that including payday lenders in the same circle as pornographers and on-line gambling businesses will ultimately help with messaging on this issue.
If you feel there is legal argument beyond the one I made, and would like us to push back on this issue, please let me know.

The report’s conclusions are unambiguous. “The practical impact of Operation Choke Point is incontrovertible: legal and legitimate businesses are being choked off from the financial system,” it states, further noting the experiences endured by firearms and ammunition dealers “is a testament to the destructive and unacceptable impact of Operation Choke Point.” The report’s last paragraph is a testament to the corrupt nature of the Obama administration and its power-abusing impulses:

“At a minimum, Operation Choke Point is little more than government-mandated de-risking. FDIC, in cooperation with the Justice Department, made sure banks understood–or in their own language, ‘got the message’–that maintaining relationships with certain disfavored business lines would incur enormous regulatory risk. The effect of this policy has been to deny countless legal and legitimate merchants access to the financial system and deprive them of their very ability to exist. Accordingly, Operation Choke Point violates the most fundamental principles of the rule of law and accountable, transparent government.”

Last June, Senator Rand Paul (R-KY) filed an amendment to the Science Justice Commerce Appropriations bill attempting to cut off the administration’s efforts to effectively shut down gun stores via Operation Choke Point. It followed the May 2014 passage of a House amendment sponsored by Rep. Blane Luetkeymeyer (R-MO) to defund the program. It was ultimately approved by 204 Republicans and 117 Democrats. An article published by Human Events on Nov. 17, 2014 indicates the program has yet to be addressed in the still Democratically-controlled Senate.

After trying several senators’ offices, FrontPage contacted a source in Washington, D.C. who requested anonymity. He made a valiant effort to find any mention of the Operation Choke Point in the recently passed $1.1 trillion CRomnibus bill funding the federal government for FY2015. The search proved unsuccessful, indicating that it is more than likely Operation Choke Point remains alive and well. It behooves a GOP-controlled Congress to kill this egregious abuse of power as one of its first orders of business next year. The American public has no use whatsoever for public officials willing to trample the law to satisfy their personal worldview. In short, it’s time to strangle Operation Choke Point.
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Arnold Ahlert is a former NY Post op-ed columnist currently contributing to JewishWorldReview.com, HumanEvents.com and CanadaFreePress.com. He may be reached at atahlert@comcast.net.

[American Patriot]

Ammo Dealer Feels Targeted by Obama Administration’s ‘Operation Choke Point’
Oct. 7, 2014 10:05pm Fred Lucas
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Kat O’Connor, owner of TomKat Ammunition, was puzzled as to why her Gaithersburg, Maryland business was denied certain services from a bank and suspects the Obama administration’s Operation Choke Point.
Ammo Dealer Feels Targeted by Obama Administrations Operation Choke Point

A 9 mm bullet rests on top of others in a box on the counter at Duke’s Sport Shop in New Castle, Pa., Friday, April 5, 2013. Gun enthusiasts fearful of new weapon controls and alarmed by rumors of government hoarding are buying bullets practically by the bushel, making it hard for stores nationwide to keep shelves stocked and even putting a pinch on some local law enforcement departments. (AP Photo/Keith Srakocic)

“I believe the failure of Congress to enact strict gun control led to this method of starving manufacturers out of business,” O’Connor told TheBlaze. “I also believe this is an unfortunate abuse of power. Sadly, I don’t see how this is any different than a mafia-style shakedown, promising to leave banks and card processors alone if they ‘play along’ by foregoing money from certain industries, regardless of their legal status.”

In her case, O’Conner said she was denied a credit card gateway for customers and an online pay portal even though her business has always complied with federal and state regulations.

“I do not believe this is mere coincidence,” she said. “It would not make good business sense and is counter-intuitive for banks and card processors to drop or deny legitimate business activity on their own, unless it was somehow in their best interest to do so.”

Operation Choke Point is run through the Department of Justice and the Federal Deposit Insurance Corporation that targets how banks handle accounts with the gun industry, payday lenders, porn shops, casinos, check cashers and debt collectors among other businesses deemed as high risk by the government.

On Monday, Republican members of the Senate Banking Committee asked Attorney General Eric Holder to scrap the program, saying it goes after legally operating businesses.

“This list appears to have been created with no public input, no compliance guidance or metrics for private entities to follow, and with disregard for the legality of a merchant’s operation,” the GOP letter said. “Further, the list has been used as a pretext by DOJ to limit essential banking services for industries out of favor by this Administration.”

Though the Obama administration’s Justice Department has pushed the program for the last four years, it could become very unpopular for the left, said Brian Wise, senior adviser to the U.S. Consumer Coalition, which is lobbying to end the program.

“This is not a popular program whether you’re on the left or the right,” Wise told TheBlaze. “Check cashing businesses primarily do business with people that don’t have bank accounts and those people primarily fall into very specific demographic categories and those demographic categories typically align with the left. What you’re talking about is harming a lot of consumers across the country. I would venture that every person in this room has done business with one of the industries that is on that list.”

Wise spoke about Operation Choke Point Tuesday at the Heritage Foundation, a Washington, D.C.-based conservative think tank, where he talked about O’Connor’s story as the latest example. He added that casinos, which primarily employ union workers, are also a target.

Wise pointed out that the administration is selective about what it considers a high-risk industry.

“The irony about that is you would think if they were doing that, they would go after all industry,” Wise said. “They would go after Planned Parenthood, that is certainly a fairly high risk industry. They would go against marijuana dealers.”

The DOJ’s list lumps gun dealers and coin dealers in with Ponzi schemes in passing the program off as anti-fraud, said Alden Abbott, a senior legal fellow at the Heritage Foundation. He said there is effectively a “wink and the nod” from the bank regulators warning against these industries.

“The real problem is that banks do not need to be told stop doing business with particular small businesses,” Abbot said. “If they feel they will be subpoenaed or subjected to serious audit if they do business, they don’t have to be told or ordered to stop doing business. So this has been very effective.”

Assistant Attorney General Stuart F. Delery defended the program in front at a hearing of the Senate banking committee on July 17.

“In November 2012, our attorneys proposed a concentrated effort to pursue the fraud committed by the banks and payment processors,” he told the committee. “This strategy aims both to hold accountable those banks and processors who violate the law and to prevent access to the banking system by the many fraudulent merchants who had come to rely on the conscious assistance of banks and processors in facilitating their schemes. This effort is sometimes referenced as Operation Chokepoint.”

As for O’Connor, she hopes people in her industry speak up against this program and seek out and promo tote banks that don’t give into the federal pressure.

“Obtaining a federal firearms license was an honor for me,” O’Connor said. “Not everyone who applies will qualify and I take my responsibility very seriously. It is extremely disheartening to be subject to undeserved targeting by the very agency that deemed me to be worthy of such responsibility.”

[American Patriot]

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House Report: FDIC Targeted Gun Dealers Under Operation Choke Point
Dec. 8, 2014 5:06pm Pete Kasperowicz
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The House Oversight and Government Reform Committee released a report Monday that said the Federal Deposit Insurance Corporation unfairly treated gun dealers and other companies as illegal entities, and convinced banks to stop doing business with them under the Obama administration’s Operation Choke Point.

Choke Point is a program run by the Departments of Justice and Treasury that is ostensibly aimed at making sure illegal businesses don’t have access to the U.S. financial system. But many Republicans have said the Obama administration is using it to create hurdles for companies it doesn’t support, such as gun dealers and payday lenders.
Screen Shot 2014-12-08 at 5.01.32 PM

Gun dealers across the country have been unfairly targeted by a federal bank regulator as businesses that banks should not serve, according to a new House report.
Image: AP Photo/Jeff Roberson

The secretive program is rarely cited by banks as they close down banking services to companies. But many have said they believe they are victims of Choke Point, such as the Oregon gun maker who was told this year it no longer had access to credit card processing services.

The House oversight committee, run by Rep. Darrell Issa (R-Calif.), has been looking at Operation Choke Point for the last year, and said in its final report that the initiative has prompted banks around the country to end relationships with “high-risk” companies identified by the government. But those companies, which FDIC encouraged banks to abandon, including many legal businesses, such as gun and ammo dealers, coin dealers and others.

“FDIC explicitly intended its list of ‘high-risk merchants’ to influence banks’ business decisions,” the report said of the federal banking regulator. “FDIC policymakers debated ways to ensure that bank officials saw the list and ‘get the message.’ ”

Another industry listed were payday lenders — the report found that FDIC had what amounted to a moral vendetta against these companies, even though they are legal.

“Personal animus towards payday lending is apparent throughout the documents produced to the committee,” the report said. “Emails reveal that FDIC’s senior-most bank examiners ‘literally cannot stand payday,’ and effectively ordered banks to terminate all relationships with the industry.”

Opponents of Choke Point have said that while the program should be used to fight companies engaging in illegal practices, it’s unfair of the Obama administration to assume all business in a certain industry are breaking the law and should be cut off from banking services.

In the case of gun dealers, Issa’s committee found that the FDIC in some cases reached “memorandums of understanding” with banks that explicitly prohibited them from dealing with these companies.

“MOUs between supervised banks and FDIC Regional Offices, as well as bank policies submitted pursuant to FDIC Consent Orders, variously ‘prohibit’ payment processing for firearms merchants, characterize loans to firearms dealers as ‘undesirable,’ and generally subject firearms and ammunitions merchants to significantly higher due diligence standards,” it said.

[American Patriot]

This is from last year:

Operation Choke Point a harbinger of big-government activism to come?
posted at 2:01 pm on May 27, 2014 by Ed Morrissey

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What happens when a government accrues so much power that it can force legal enterprises out of business through specific, intentional, and targeted regulatory abuse? It’s a fair bet that such a government will eventually abuse its power in this fashion, but will set the precedent with an unpopular-yet-legal industry. That seems to be the point behind Operation Choke Point, a Department of Justice attempt to kill off funding of the porn industry — and gun shops.

Tom Blumer wrote about this effort at the beginning of the month, with a focus on the payday lending industry:

DOJ is essentially employing a variant of the tactics former New York Attorney General Eliot Spitzer used against mutual fund companies last decade: threatening to smear them in the business community and otherwise make their lives miserable unless they settle.

Even despite the tactics, some readers may be reacting to all of this as a good idea. After all, payday lenders don’t have the cleanest of hands, and some — but far from all — may be operating illegally. There are two problems with this position.

The first is that DOJ doesn’t have the constitutional authority to go after businesses whose illegality has not been established by threatening their bank and financial services providers with legal sanctions and regulatory harassment if they don’t participate in the persecution. There are these things called laws which must be passed to declare certain financial practices and contracts illegal. That hasn’t happened. Short of that, there at least need to be court rulings having the same effect. There is apparently no evidence that DOJ has involved the courts at all.

The second is that although the bankers’ montage concentrated on payday lenders, many more business endeavors besides payday lending are involved. At least some of them, as odious as nanny-state officials and other might believe they are, operate legally.

TechDirt reported that Operation Choke Point also targeted porn stars:

After we just talked about Chase Bank appearing to close the personal bank accounts of a bunch of employees in the adult performing business, a few of you pointed us to reports that this may just be Chase Bank dancing to a federal piper. That report has expanded upon Teagan Presley, a former porn star, and her comments upon finding out she was suddenly no longer a Chase customer. …

So, the obvious question to ask next is what makes her “high risk”? After all, Chase Bank really likes money, even when it is generated by doing some pretty crappy things, so what’s the deal? Well, the latest is that this may be a part of the US Department of Justice’s “Operation Choke Point” program, in which the government has apparently decided that some extremely legal businesses don’t get to exist anymore, but since they can’t just disappear companies and industries in good standing, they’ve decided to route around the whole “freedom” thing and get the financial industry to act as contract hitmen.

This is the key point to remember. While many people think the porn industry and payday lending exploit people, the proper expression of that kind of cultural consensus would be to pass laws barring their operation. That hasn’t happened in these two cases, or the 30 other industries noted by Blumer in his post. This exercise in power is completely illegitimate, an intervention into private transactions of legal operations simply because those in power don’t happen to like their operations. It’s the rule of whim writ large — and getting larger.

Glenn Reynolds warns that this precedent could very well be used against other industries more favored by the current elite:

Justice Department targetsinclude 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. …

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.

No, it smells like autocracy at the least, if not outright tyranny. Congress needs to rope in the DoJ, but we need to recognize that this is a symptom of a far greater problem. The impulse to regulate everything at the federal level, and the lack of distinct limits on regulatory power granted to the executive branch, inevitably leads to this kind of politicization of law enforcement. Just because we don’t think highly of the first targets of such abuse of power doesn’t mean we should wait until it starts getting applied to us. Martin Niemöller had a thing or two to say about that.

[American Patriot]

Exclusive: Senator Aims to Use Budget Process to End Operation Choke Point

Kelsey Harkness / @kelseyjharkness / March 18, 2015 /

Sen. Mike Crapo, R-Idaho, is set to offer an amendment that aims to defund the Justice Department’s Operation Choke Point.

UPDATE: The Senate Budget Committee approved the amendment to end Operation Choke Point on Thursday by a 13-9 vote. They also passed the committee’s 2016 budget proposal. Sen. Crapo’s Operation Choke Point amendment will now go to the full Senate with the budget package for a vote. Debate in the Senate will begin at 2 p.m. on Monday.

The Daily Signal has exclusively learned that Sen. Mike Crapo will offer an amendment Thursday to the Senate’s budget proposal that would defund the Justice Department’s controversial program known as Operation Choke Point.

“The Department of Justice must not politicize its enforcement policies, and we must not let Operation Choke Point become an end run around the Second Amendment by threatening the financial security of gun and ammunition manufacturers,” said Crapo, R-Idaho, in a statement to The Daily Signal.

In Idaho, we have heard from several business owners involved in the guns and ammunition business who experienced difficulty finding essential banking services as a result of this fear and uncertainty on the part of the banks.

Crapo’s measure would be the strongest effort yet to shut down the program by creating a “deficit-neutral reserve fund” that authorizes Congress to end Operation Choke Point in the future with fewer procedural hurdles.

Norbert Michel, The Heritage Foundation’s expert in financial regulations, said, “This is great news and shows that Congress is making progress toward stopping the program. Gun owners should be happy, but Choke Point targeted many lawful businesses outside of the gun industry.”

Crapo is a member of the Senate Budget Committee and was previously a ranking member of the Senate Banking Committee, where he initiated his probe into Operation Choke Point.

The program was originally designed in 2013 as a way to stamp out consumer fraud, but has since come under fire for denying legal business owners access to the financial sector.

The introduction of Crapo’s measure before the Senate Budget Committee will mark the first time since the start of Operation Choke Point that committee members will be forced to go on the record regarding their stance on the program.

If the Banking Committee approves Crapo’s amendment, it would then move to the Senate floor for a full vote as an amendment to the budget proposal.

Crapo has been an outspoken critic of Operation Choke Point.

Last year, he released a statement saying the program “has morphed into an attempt to shut down entire industries of law-abiding and legitimate merchants.” He also sent a letter to Attorney General Eric Holder expressing “strong concerns” about its impact on merchants, financial institutions and consumers.

Since then, The Daily Signal has reported on multiple instances of banks and third-party payment processors suddenly refusing to do business with long-time customers—all lawful business owners.

Many of those business owners happen to sell guns.

The Justice Department, on the other hand, maintains that it has “no interest in pursuing or discouraging lawful conduct.”

But in 2011, the Federal Deposit Insurance Corporation (FDIC) created a list, subsequently adopted into Operation Choke Point, which labeled a range of both legal and illegal industries “high risk.” The agency advised banks against doing business with those enterprises.

highrisk-shokepoint

Next Tuesday, FDIC officials will face questions before the House Subcommittee on Oversight and Investigations about its involvement in Operation Choke Point and why citizens—specifically in the firearms sector—don’t have access to some basic financial services.

The hearing will be led by Rep. Sean Duffy, R-Wis., who told The Daily Signal his goals are to find out “who was involved,” “how high does it go,” and whether “anyone has been held accountable.”

“The countless people who have been impacted by this deserve those answers,” Duffy said.

A group of House Republicans introduced similar legislation Tuesday also aiming to defund Operation Choke Point.

This post has been updated to reflect the Budget Committee’s vote.

[American Patriot]

Thursday, 19 March 2015 Congress Threatening to Defund Operation Choke Point

Written by Bob Adelmann


Today Idaho Republican Senator Mike Crapo, a member of the Senate Budget Committee, will offer an amendment to the budget bill demanding that Operation Choke Point be defunded.


It’s a move designed not only to put more pressure on Operation Choke Point, which continues to harass and starve legitimate businesses that the Obama administration considers high risk and politically incorrect (i.e., gun and ammunition dealers, tobacconists, porn shops, etc.) but also to smoke out the positions of those on the committee about the program.


Previously there have been efforts to abort the program, with little success. For example, in January Representative Blaine Luetkemeyer (R-Mo.) met with the heads of the FDIC who agreed to soften their approach. Instead of using the mandate from the Department of Justice to shut off funding for these undesirable business (without proofs they were breaking any law or violating any regulations) using thuggish tactics such as threatening banks with increased scrutiny, investigations, and possible subpoenas, the FDIC instead “recommended” that enforcement people show cause as to why particular businesses were being targeted instead of the shotgun approach aimed at all businesses on Obama’s hit list.
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The FDIC also removed from its website the notorious and now infamous list of 20 industries deemed “disreputable” and thus ineligible for continued banking services and loans.


Despite claims that this was a victory for the little guy, that these slight surface modifications “effectively end[ed] Operation Choke Point” as reported by the Washington Times, a visit to the Las Vegas 2015 Shot Show, the world’s largest gun exhibition, by Kelsey Harkness of The Daily Signal put the lie to such claims.


She interviewed numerous participants, including Patrick Williams, owner of the SBR Tactical gun store in Corpus Christi, Texas, who told her that he was booted from Square, PayPal, and Intuit simply because he was an Obama target. After several such interviews, Harkness concluded that “it appears that little — if anything — has changed.”


It’s not just gun shops that are being targeted, although some observers think they are the main one. Brennan Appel, the owner of a tobacco shop in Charlotte, N.C., recorded a conversation he had with Alex Bacon, one of Appel’s payment processers after learning that they had closed his account. Said Bacon:


[Bank regulators] are taking aim at industries like yours and others to eliminate you from business by choking you off from payment processing….
Operation Choke Point [is promoting a political] agenda by legislative fiat without judicial review or legislative process. They’re going after clinics, collection agencies, gun dealers, ammunition dealers [and] payment processors.


Operation Choke Point, first revealed by the Wall Street Journal in August 2013, has been secretly pressuring banks and other lenders to terminate financial relationships with customers in those businesses ruled unseemly by the Obama administration. Back in 2012, Bank of America ended abruptly its 12-year relationship with McMillan Group International, a gun maker in Phoenix, and with American Spirit Arms located in Scottsdale. As Joe Sirochman, American Spirit’s owner, said:


At first [Operation Choke Point targeted] the bigger guys — gun parts manufacturers or high-profile retailers. Now the smaller mom-and-pop shops are being choked out….


They need cash [and credit lines] to buy inventory. Freezing their [accounts] will put them out of business.


Kelly McMillan, spokesman for the McMillan Group, was blunt:


This is an attempt by the federal government to keep people from buying guns and a way for them to combat the Second Amendment rights we have.
It’s a covert way for them to control our right to manufacture guns and individuals to buy guns.


Polite requests by congressmen and senators to cease and desist have been ignored by the ideologues infesting the Department of Justice, and so stronger measures will be required to end the program. Back in October, Senator Crapo, along with five other senators, wrote to Attorney General Eric Holder expressing their “concerns” that the DOJ had stepped out of bounds, had exceeded its congressional authority, and had created a “list [that] has been used as a pretext by the DOJ to limit essential banking services for industries out of favor by this Administration.”


Please, wrote Crapo and his supporters, “cease seeking to use subpoenas and legal actions to unfairly impose liability on parties not involved in fraud [which] put out of business merchants engaged in legal and legitimate commerce that DOJ disfavors.”


Oh, and by the way, wrote Crapo to Holder, “we request that you provide us with the following information,” including steps Holder would be taking to rein in the program, and “respectfully request[ing] all responsive information be provided to us by November 2, 2014.”


That date has long passed without response from Holder or the DOJ.


That’s why Crapo has upped the ante. He’s dealing with an agency on a mission with little or no regard to constitutional limitations or politely expressed concerns from senators. As Crapo said:


Operation Choke Point has morphed into an attempt to shut down entire industries of law-abiding and legitimate merchants….
The Department of Justice must not politicize its enforcement policies and we must not let Operation Chokw Point become an end run around the Second Amendment.


Within days Crapo will learn if he has enough support to bring his bill to the floor of the Senate, or whether the program will continue harassing law-abiding business owners to promote the Obama administration’s anti-gun agenda through administrative agency fiat.


A graduate of an Ivy League school and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at www.LightFromTheRight.com, primarily on economics and politics.

[American Patriot]

Let’s stifle Operation Choke Point

By Rep. Blaine Luetkemeyer - 03/04/15 08:39 PM EST
The following is the first paragraph of a letter I received back in December: “I am an employee of the Federal Deposit Insurance Corporation (FDIC). I was proud of my job and the FDIC’s mission before Operation Choke Point. During the past two years, however, we have been told to examine banks much more harshly, if they deal with a class of customers prohibited by Choke Point.”
The letter was obviously from a whistleblower within the FDIC and reaffirmed that Operation Choke Point is still happening despite the fact that many inside the agency recognize the dangers and inappropriate nature of this reckless program.
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Operation Choke Point is an organized attempt by the administration, the FDIC and the Department of Justice to bully and intimidate financial institutions so they won’t offer financial services to certain licensed, legally operating industries the government doesn’t like in an attempt to choke off those industries from our country’s banking system. The program has been in effect for a few years now, but it has gone into overdrive within the past year.Over the past year I have introduced legislation, held meetings with FDIC officials, and sent letters to the FDIC — including the agency’s inspector general — and the Department of Justice in an effort to gain information and ultimately put an end to this unprecedented program.
And I am not the only one working to stop this activity. Members of Congress from across the country and political spectrum have been working together to end Operation Choke Point, and we have been joined in our efforts by a diverse array of organizations dedicated to protecting consumers and businesses that serve them.
While our work is not yet complete, strides have been made over the past few months.
In December, I met with FDIC Chairman Martin Gruenberg and asked him to act swiftly to bring Operation Choke Point to a final close and to actively work to change the culture at the agency. Gruenberg, accompanied by FDIC Vice Chairman Tom Hoenig, came back to my office last week to provide a status update. After an hour-long discussion, not only did the chairman and vice chairman acknowledge wrongdoing within the FDIC, they accepted many of the policies contained in my legislation, the Financial Institution Customer Protection Act.
In addition to implementing pieces of my legislation, 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 played or may have played a role in the Operation Choke Point.
The administrative actions taken by FDIC are undoubtedly steps in the right direction, but more work must and will be done. We must ensure that the FDIC and other federal banking and credit union examiners and supervisory staff understand not only the importance of the changes implemented by the FDIC leadership but also that the federal government does not have the right to dictate which legal businesses survive and which are forced out of business.
The future is unknown, and consumers and small businesses need to remain vigilant, which is why I
reintroduced my legislation this week and will continue to work with members of Congress on both sides of the aisle that see the dangers of this program and want it stopped.
Luetkemeyer has represented congressional districts in eastern and central Missouri since 2009. He sits on the Small Business and the Financial Services committees, and is chairman of the Financial Services Subcommittee on Housing and Insurance.

[American Patriot]

Obama Administration’s Operation Choke Point Goes After New Target: The Tobacco Industry

Spencer Platt/Getty Images/AFP

by Michael Patrick Leahy4 Mar 2015153
Operation Choke Point, an under-the radar project launched by the Obama administration in 2013 to shut down third-party payment processors, payday lenders, and online lenders in the private lending industry as well as small dealers and retailers in the firearms industry by “choking off” banking and financial institution relationships, is targeting a new industry: tobacco distributors.
Federal bureaucrats at the Department of Justice, the FDIC, and the Consumer Financial Protection Bureau (the “untouchable” independent agency established by the Dodd-Frank legislation), are apparently behind the recent closure of the bank account and payment processing account of a North Carolina distributor of tobacco products.
Brennan Appel, owner of Global Hookah Distributors (GHD), one of the country’s leading distributors of hookahs (water pipes used to smoke tobacco) and the shisha tobacco used in hookahs, (through its Smokesouth.com website) says the federal government’s Operation Choke Point forced both his bank and payment processor to shut down the company’s accounts.
“Last year, Bank of America (BofA) abruptly shut down GHD’s numerous bank accounts after serving their business for 12 years. Initially, BofA offered no explanation as to why the accounts were closed,” according to a statement released by the U.S. Consumer Coalition.
Just last month, GHD’s payment processor, EFT Network, which processed the company’s ACH check payments “also shut down their account due to regulatory pressure from Operation Choke Point.”
According to its website, EFT Network, established in 1998, is “one of the largest check and ACH processors nationwide.”
Appel recorded a phone call with Alex Bacon, president of EFT Network, who clearly explained that pressure from the Consumer Financial Protection Bureau–the agency at the center of the federal government’s Operation Choke Point effort–forced EFT Network to shut down GHD’s account.
Appel said that everyone who calls GHD is informed their calls may be recorded.
“The nature of what we do in payment processing, at least with our processing bank, has become so more regulated and strict and focused on compliance and certain efforts in Washington,” EFT Network’s Bacon told Appel.
“Have you heard of a little thing called Choke Point and the CFPB?” Bacon asked Appel.
“They’re taking aim at industries like you and others to eliminate you from business by choking off your payment processing,” Bacon continued.
“They’re doing it by fiat,” Bacon said. “They’re doing it without a legislative process, they’re just doing it on a rather, you know, directed basis of their own free will.”
“They’re going after clinics, they’re going after collection agencies, gun dealers, ammunition dealers, payment processors,” Bacon explained.
He then elaborated on the leverage the federal bureaucrats and political operatives who manage the Obama administration’s Operation Choke Point use to intimidate and hurt small businesses.
“I’m an independent third-party payment processor,” Bacon told Appel.
“I act at the will and directive of my processing bank. If my processing bank says no, you can’t do this, then there’s nothing I can do. There’s literally nothing I can do,” Bacon said.
“They’re the ones on the front lines, they’re the ones that the Choke Point people are going after,” Bacon said of the processing banks.
Later, Bacon added the processing bank examiners can make life miserable for third party payment processors who don’t follow their directions to drop an account:

[They say] We’re going to make your life miserable. Instead of auditing you once a year we’re going to audit you four times a year. Now we’re going to come and look at all of this and if we find anything negative we’re going to write it up and then you’re going to incur increased cost, increased focus from your board of directors and from banking regulators. And they all run scared because they’re all sheep.

EFT Network itself was a victim of pressure from the CFPB, Bacon told Appel.
“Frankly, I hate to say it, but it’s [Operation Choke Point] succeeding, because it’s forcing my processing bank and then it’s forcing me to have to respond,” Bacon said.
“We had an account with J.P. Morgan Chase,” Bacon told Appel.

We had a mortgage with J.P. Morgan Chase. We got the same letter because of what we do as a business. We got a 30-day letter. . . We got a 30-day letter and it was almost 12 years as well, it was 14 actually, and I have to tell you my owner, he really took offense, he said, you know what we were thinking of refinancing anyway so we went and paid the mortgage and just kind of severed all relationships with them.

According to a timeline provided by the U.S. Consumers Coalition, GHD was founded in 2002. That same year, it established a banking relationship with the Bank of America.
In April 2014, “BofA reward[ed] GHD with perks for their positive banking relationship.”
But a month later, in May 2014, “BofA [shut] down all of GHD’s account without any explanation.” Later that month, “BofA express[ed] lack of knowledge on why they were pressured to shut down GHD’s accounts.” Subsequently, GHD opened “new accounts with Wells Fargo and PNC Bank” and filed “complaints with the Office of the Comptroller of the Currency.”
It is unclear if GHD has also re-established new payment processing accounts. Sources tell Breitbart News that the extraordinary length of time and bureaucratic paperwork it takes to set up new accounts with banks and payment processors are part of the federal government’s Operation Choke Point strategy to shut down business in industries which the bureaucrats behind it do not like.
Hookahs, which have been used to smoke tobacco in the Middle East for hundreds of years, have become increasingly popular in the United States over the past two decades. While their use is considered as harmful to health as smoking tobacco, hookahs and shisha (hookah tobacco) are legal in all 50 states. Across the past decade, an estimated 1,000 hookah bars have opened up across the country.
While hookahs can be used to smoke marijuana, they are specifically designed to be used to smoke tobacco. Bongs are the preferred devices for smoking marijuana.
Appel had seen his GHD’s sales increase by around 30 percent annually each year of operation since he founded the company more than a decade ago. Currently, GHD has more than 10 employees and annual revenues are estimated to be in excess of several million dollars.
The targeting of the tobacco industry is yet another example of the Obama administration’s brazen efforts to “weaponize the apparatus of the federal government against people and industries it opposes ideologically.”
For its part, the Republican controlled Congress has done little to push back against the abuses of executive power that continue with Operation Choke Point on a daily basis.

[American Patriot]

Holder’s ‘Choke Point’ is strangling American business

By M.D. Kittle / March 13, 2015 / 12 Comments
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AP file photo

ABUSIVE OPERATION: Operation Choke Point, run by U.S. Attorney General Eric Holder’s Department of Justice, is attempting to ‘choke’ out the businesses the Obama administration deems undesirable.

By M.D. Kittle | Watchdog.org

North Carolina businessman Brennan Appel found his successful company caught in the crosshairs of a murky U.S. Department of Justice initiative targeting merchants that don’t fit into the Obama administration’s idea of what an American business ought to be.

Appel, owner of Global Hookah Distributors, which sells tobacco and smoking-related products, says he’s the victim of Operation Choke Point, a shadowy, multi-agency effort ostensibly aimed at going after unlawful consumer fraud by “choking” off access to banking systems.

It appears the DOJ attempted to strangle Appel’s company, and it’s happening to good citizens and business owners all over the country in the name of “consumer protection,” according to the public interest group that has been shining a light on the stories of government abuse.

“We’re looking at one of the most prolific abuses of power this (Obama) administration has been a part of,” said Brian Wise, senior adviser to the U.S. Consumer Coalition, which bills itself as a “grassroots organization that works to protect consumers’ right to access free-market goods and services.”

Operation Choke Point, Wise said, has served to limit consumer access as it harasses and interferes with legitimate businesses.

USCC knows of more than 100 cases of victims targeted by the DOJ, but the organization is confident that there are thousands more under assault.

“We know this because we have talked to bank executives who are intimately familiar with this issue and in a lot of cases have made the decision to shut down these accounts,” Wise said.

Must be a mistake

Appel was in the same position nearly a year ago when he began receiving letters from Bank of America warning him the financial services giant was planning to close his accounts.

Strange, the business owner thought. Global Hookah Distributors had been a customer in good standing with the bank for 13 years, he said. His financial services reps had even recently talked to him about expanding investment opportunities.

His local bankers said the letters must be a mistake, that he was a good customer and they would straighten it out. That’s when a regional manager got involved and confirmed Bank of America was shutting down all of GHD’s accounts with the institution — in less than 21 days. Nobody would explain exactly why, Appel said.

Bank of America communications representatives did not return several calls from Watchdog.org seeking comment. Neither did the Department of Justice.

GHD had to navigate through the turbulence of re-establishing accounts at a new bank, but the financial services provider had no problem with the company’s credit record, Appel said.

That didn’t seem to matter to Attorney General Eric Holder and the Justice Department.

‘A little thing called Choke Point’

Appel said he learned his tobacco sales company was a target of Operation Choke Point during a subsequent conversation with Alex Bacon, president of EFT Network, GHD’s electronic payment processing provider.

Appel taped the conversation. In it Bacon says EFT is closing GHD’s account, ostensibly because the company deals in higher amounts of cash. Appel tells Bacon that his company has often moved high amounts of cash with EFT, with no problem.

On the recording, Bacon struggles to offer Appel an answer.

“Um, that’s a question that I am asking myself with my own people and, uh, I guess the transaction from the 6th – I guess last Friday – triggered it in some way. I’m looking, quite honestly, frankly, I am asking the same questions and I’m looking,” Bacon says.

Later in the conversation, Bacon asks Appel if he has heard of Operation Choke Point and the Consumer Financial Protection Bureau, the secretive, Obama administration-created agency that oversees the initiative.
Photo by Foreclosurenation.org

CLOSED: Brennan Appel says he learned the hard way that his tobacco products distribution business was not favored by the Obama administration and the DOJ’s Operation Choke Point.

“The – the nature of what we do with payment processing at least with our processing bank, has become so much more regimented and strict and focused on compliance and certain efforts in Washington and have you heard – of a little thing called Choke Point and CFPB?”

“Yes.”

“They’re taking aim at industries like you and others to eliminate you from business by choking off your payment processing.”

“I know, they are publishing our report in the media next Wednesday,” Appel tells Bacon.

“What report is that?”

“Oh, because we had an account with Bank of America for 12 years and they closed them…”

“You got a letter?”

“Yeah, in the summer last year.”

“You got a letter that said, ‘Thank you very much but we can no longer be your bank.’”

“Yeah, after 12 years.”

“Wow.”

Appel tells Bacon that he believes the federal government appears to be blanketing industries instead of determining who is following the rules. Bacon seems to agree.

“Well, they are doing it by fiat — they’re doing it without a legislative process. They’re just doing it on a rather, you know, directed basis of their own free will,” Bacon says in the conversation.

Beyond ‘payday and porn’

The Federal Deposit Insurance Corp. earlier this year acknowledged its partnership role in Operation Choke Point and said it would take the appropriate steps to end its policies of targeting legal and legitimate industries that the Obama administration doesn’t like.

That list is long. Payday lenders, coin dealers, firearms and ammunition sellers, tobacco merchants and many more have landed on the target list of the DOJ and its accomplices, according to a House Oversight Committee report.

As reported earlier this year by the Daily Signal, the FDIC in an official Financial Institution Letter sent to all FDIC supervisory staff states decisions on accounts need to be made on an individual basis and not based on “industry or moral objection.”

“The (Obama) administration would like you to believe this is a program all about going after payday and porn,” Wise of the U.S. Consumer Coalition said. “The fact is they’re trying to discredit all of these legitimate industries by focusing on payday for instance.”

Forgotten along the way is the payday loan industry, like tobacco sales, is legal and highly regulated.

U.S. Rep. Sean Duffy, R-Wisconsin, has led the charge in the effort to reform of the Consumer Financial Protection Bureau. Last week, Duffy, chairman of the House Financial Services Subcommittee on Oversight and Investigations, along with several colleagues, reintroduced his Consumer Financial Protection Bureau reform package.

“After hearing testimony from (CFPB) Director Richard Cordray this week, I am convinced now more than ever that the CFPB is in dire need of structural reform,” Duffy said in a statement. “He continues to stonewall Congress, he won’t respond to (congressional) inquiries, and why would he? We have no tools in the toolbox to hold the fortress that is the CFPB accountable.”

The reform package includes a bill that would put the bureau under the regular congressional appropriations process; a bill that would require the CFPB to obtain consumers’ permission before the bureau collects data on them; and a bill, authored by U.S. Rep. Randy Neugebauer, R-Texas, that removes the director and replaces him with a bipartisan commission.

Another bill by Duffy would put the employees on the regular government pay scale. CFPB employees now set their own pay.

Have guns, must travel

Michael Schuetz, opened Hawkins Guns LLC in Hawkins, Wisconsin, in early November. He was in business less than two weeks when his credit union told him it was going to close his accounts. A credit union rep said a mistake was made. They weren’t supposed to open accounts for businesses that are in the business of selling guns.

Schuetz, too, recorded his conversation with the credit union regional manager, who told him the financial services firm could not service “certain industry” the federal government deems to be a high risk.
Photo by USConsumers.org

MICHAEL SCHUETZ: Owner of a Wisconsin gun store apparently targeted in federal Operation Choke Point.

The businessman said he had his gun sales permit in order, and the credit union found his credit solid enough to open the business.

Scheutz still is in business, but now he has to drive 45 minutes to do his banking. The credit union was the only financial institution in town, he said.

“I guess this further shows the administration is wanting to take away our freedom and using slick and sly ways to do it,” said Scheutz, who also is working with the U.S. Consumer Coalition on the campaign to stop Operation Choke Point. “Eric Holder and anyone else that’s involved in this, I think they should be held accountable for it. I personally am not going to stop until someone is held accountable.”

‘A constant struggle’

Wise doesn’t necessarily blame the financial institutions. The advocate said banks, for the most part, are just following orders from the federal government.

In the recorded conversation, Bacon of the payment processing company, told Appel that his hands are tied.

“I’m an independent, third-party payment processor, and I act at the will and directive of my processing bank. If my processing bank says ‘No, you can’t do this,’ there is nothing I can do.”

“Yeah,” Appel responds.

“There is literally nothing I can do. … (the government says) ‘We are going to make your life miserable. Instead of auditing you once a year we’re going to audit you four times a year. And then, we’re going to come in and look at all this and if we find anything negative we’re going to write it up and then you’re going to incur increased costs, increased focus with your board of directors and from other banking regulators,’” Bacon says.

Appel estimates Global Hookah Distributors lost a conservative $100,000 in sales through the turmoil of the bank account and processing shut down. But he said there is a bigger price America is paying.

“The government already is looking bad in the American public face. This type of behavior is making them look worse,” Appel said. “At the end of the day, this is supposed to be the land of opportunity, with the American Dream. What are you talking about? It’s a constant struggle to stay in business.”

Wisconsin Reporter’s Courtney Mullen contributed to this story.
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[American Patriot]

Marco Rubio Is Attempting to End Operation Choke Point Once and for All

Kelsey Harkness / @kelseyjharkness / February 13, 2015 /

Sen. Marco Rubio is attempting to end Operation Choke Point—for good.


The Florida Republican and potential 2016 presidential candidate introduced legislation yesterday that would completely defund the Justice Department program while protecting gun sellers and manufacturers from future attempts to eradicate the industry.


“It has become clear that the FDIC and the Department of Justice can no longer be trusted to carry out Operation Choke Point without targeting the Second Amendment and firearms dealers and manufactures,” said Rubio in a press release. “We must stop this administration’s effort to target private industries and the Second Amendment rights of law-abiding citizens.”


Operation Choke Point was designed by the Justice Department in 2012 to “reduce dramatically mass market consumer fraud” by blocking their access to bank accounts and other financial institutions. Whether intentional or not, the initiative affected a range of legal and legitimate industries, including firearms sellers and payday lenders.

Much of the criticism about the program resulted from a 2011 list that was created inside the Federal Deposit Insurance Corp. (FDIC) and subsequently adopted by Operation Choke Point. The FDIC list labeled a range of both legal and illegal industries “high risk,” and the agency advised banks against doing business with those enterprises.



Although the FDIC has since removed that list and walked back its involvement in Operation Choke Point, industry insiders believe the operation still poses a serious threat to business owners and that legislation is needed to protect firearms sellers’ Second Amendment rights.




Rubio’s legislation, the Firearms Manufacturers and Dealers Protection Act of 2015 (S. 477), would prohibit funds to be used by the Justice Department or the FDIC to carry out Operation Choke Point “or any other program designed to discourage the provision or continuation of credit or the processing of payments for dealers and manufactures of firearms and ammunition.”


It is endorsed by two of the nation’s leading gun advocates, the National Rifle Association and the Gun Owners of America, and also has the support of U.S. Consumer Coalition, a Washington, D.C.-based organization that has been leading the fight against Operation Choke Point.


“We applaud Senator Rubio’s leadership in fighting against Operation Choke Point,” said Brian Wise, senior adviser at U.S. Consumer Coalition, adding:

We now need Senator Rubio’s colleagues to show their support for America’s consumers and join him in pushing back against Operation Choke Point. This legislation provides an opportunity for Senate Minority Leader Harry Reid to put his support for Second Amendment rights ahead of partisan politics and show the president that programs like Operation Choke Point will not have the support of either party in the Senate.

The Justice Department has not returned multiple requests for comment from The Daily Signal regarding Choke Point and how many taxpayer dollars are used to fund the operation.


Ira Goodstadt, a Florida resident who has witnessed the effects of Choke Point firsthand, told The Daily Signal he was relieved to hear his senator take on the issue in Congress.


“This is a great bill,” he said. “It will prevent political hacks from intruding on the rights of businesses who follow the law.”


Goodstadt created an online payment platform specifically for gun sellers called PistolPay.com, which operates with the support of Merchant Services LTD.

While at the 2015 Shot Show in Las Vegas in January, Goodstadt told The Daily Signal that he receives new customers on a regular basis as a result of Operation Choke Point’s blocking them from mainstream processors like PayPal, Square and Stripe.


Still, he supports Rubio’s efforts to end the Justice Department’s controversial program.


“My business has grown due to Choke Point but the firearms community is my community and although it helps me on one side, it hurts others I know unfairly,” said Goodstadt.

[American Patriot]

“Operation Choke Point”

By Todd Zywicki May 24, 2014


The Justice Department’s “Operation Choke Point” initiative has been shrouded in secrecy, but now it is starting to come to light. I first heard about the program in January through this article and since then it has been difficult to discover details about it. It is so named because through strangling the providers of financial services to the targeted industries, the government can “choke off” the oxygen (money) needed for these industries to survive. Without an ability to process payments, the businesses – especially online vendors — cannot survive.


The general outline is the DOJ and bank regulators are putting the screws to banks and other third-party payment processors to refuse banking services to companies and industries that are deemed to pose a “reputation risk” to the bank. Most controversially, the list of dubious industries is populated by enterprises that are entirely, or at least generally, legal. Tom Blumer’s extremely informative post summarizing what is known to date about Operation Choke Point reproduces the list, which includes things such as ammunition sales, escort services, get-quick-rich schemes, on-line gambling, “racist materials” and payday loans. Quite obviously, some of these things are not like the other; moreover, just because there are some bad apples within a legal industry doesn’t justify effectively destroying a legal industry through secret executive fiat.


Especially ironic, of course, is that while the DOJ and bank regulators are choking off financial services to legal industries, they are also encouraging banks to provide banking services to illegal marijuana sales.


The ability to destroy legal industries through secret actions to deprive them of banking services has obvious political consequences. For example, it was reported last week that firearms shops are alleging that Operation Choke Point is being used to pressure banks into refusing to providing financial services.

There are also reports that porn stars (and here) have had their bank accounts terminated for “moral” reasons related to the “reputation risk” of banking individuals in the porn industry. IRS officials must already be salivating about ways to apply Operation Choke Point to tea party groups.


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.


The larger legal and regulatory issue here is the expansive use of the vague and subjective standard of “reputation risk” to target these industries. In a letter to Janet Yellen, the chair of the Federal Reserve, last week, House Financial Services Committee Chairman Jeb Hensarling expressed concern over the growing use of “reputation risk” as a vehicle for attacking legal businesses. Is there any discernible principle as to why, for example, a payday lender or firearms dealer poses a “reputation risk” and an abortion provider does not?


So far, one of the porn stars has sued to try to determine why his loan application was denied. Given that Operation Choke Point seems to be doing exactly what was its alleged intent — to choke the life out of the businesses in the covered industries — I expect more lawsuits to come that will shed some light on this initiative.