Please, FedEx, Fight Back Against Federal Extortion

Stolen entire from Forbes.  California Bob started working at Fedex this week and I was going to do a post on his trials and tribulations, but then I came across this story from a month ago.

by Bill Frezza

“Nice business ya got there. Pity if sumpin’ were to happen to it.”

Using fear and intimidation to extort money from legitimate businesses is a tried-and-true mafia tactic. But what happens when the federal government gets into this racket, demanding billions in “settlements” from an ever-expanding array of companies by threatening them with a corporate death sentence if they don’t knuckle under? We’re going to find out. Because this time, maybe they chose the wrong victim.

Tired of closing down state-approved medical marijuana dispensaries and seizing the property of their landlords, U.S. Attorney for the Northern District of California Melinda Haag, an Obama appointee, is hunting for bigger game. Flush from shaking down Walmart, Johnson and Johnson, and UPS for tens of millions, she has indicted the FedEx Corporation on drug trafficking and “conspiracy to launder” money charges. The prize purse this time? $1.6 billion.

What did FedEx allegedly do? The company shipped prescription drug packages from Internet pharmacies that Haag doesn’t like. That’s the drug trafficking accusation. Then it accepted payment for their services. That’s the conspiracy to launder money.

But wait, isn’t it the job of the Drug Enforcement Agency to prosecute Internet pharmacies that flout the law? That’s what FedEx thought. How are package delivery services – or insurers, landlords, or even utilities for that matter – supposed to distinguish between legitimate online pharmacies and fly-by-night operators? Have “know your customer” laws imposed on banks now metastasized into the forced deputation of all businesses to root out and deny services to anyone the federal government doesn’t like? Between prosecutions like this and the infamous Operation Choke Point, it seems that way.

FedEx long ago agreed to cut off shipments from customers identified as operating illegally, repeatedly asking the government for a list for which it is still waiting. That would put the investigatory onus where it belongs, while shielding FedEx from lawsuits by disgruntled customers. Why was this not enough? Where in the Constitution, or in what federal statute, is every business obligated to serve as police, judge, and jury over any potentially illegal activities of its customers?

The stakes are high, not just for FedEx, but for American competitiveness, free enterprise, and ultimately the rule of law.

If the principle is established that every corporation can be held criminally liable for the alleged transgressions of its customers, will every business have to hire an army of compliance officers like the Too-Big-Too-Fail banks? (Citigroup will have almost 30,000 compliance employees by year’s end.)

Will every customer have to fill out an intrusive government-approved questionnaire to satisfy every vendor that they are not breaking any of the tens of thousands of laws and regulations pouring out of Washington? And will even that be enough, given that many laws are so vague that they can’t even be defined until a prosecutor decides to use them as a cudgel to extract fat settlements in order to advance her career? And companies shouldn’t expect any help from the media, for whom corporate scandal allegations always make good copy.

The old Soviet intelligence apparatus relied on citizens spying on each other on behalf of the state. No one knew who to trust, children were turned against parents, and the all-purpose charge of “Hooliganism” could be used at any time to put anyone prosecutors didn’t like in jail. We don’t have hooliganism charges in the U.S.—at least not yet—but we do have vague and flexible federal crimes like “conspiracy” and “obstruction of justice.” These, combined with the threat of federal debarment, have become powerful tools used by prosecutors to bludgeon corporations into settlements rather than risk going to trial to clear their names.

Think it can’t happen here? It already is. Under Operation Choke Point, the Justice Department and other federal agencies are going after certain politically incorrect businesses by trying to cut off their access to the financial system. Their tool? Threats of subpoenas to banks. Already, many banks are cutting relations with payday lenders, a prime target of Choke Point, as my CEI colleague Iain Murray documents in a recent study.

For example, Al LePage, owner of Al’s Check Cashing in suburban Minneapolis, last February got a call from Wells Fargo giving him 30 days to cease and desist or risk losing his bank account. “The only explanation I got was that they’re not doing payroll advances anymore,” said LePage. “But I run a legal business.” As Peter Barden of the Online Lenders Alliance described it, Operation Choke Point “should … 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.”

That is why FedEx must avoid becoming fodder for FedExtortion. Unless and until corporate America fights back, forcing rogue prosecutors to take their cases to trial, we will keep seeing more and more of this. Meanwhile, federal prosecutors will continue using these cases to go on to greater glory, often seeking political office, by brandishing the corporate scalps they’ve claimed. Eliot Spitzer was just the beginning.

Antonio Perez had a story in Epoch Times two months ago about the indictment where he wrote:

But in a country where the government demands its portion of taxes on illegal drug dealing (such earnings must be reported to the IRS), FedEx must think it has a chance.