Is The Department of Justice Behind The Chase Account Closures.

In researching these account closures it has become apparent that some Chase customers are unaffected and others have had their accounts closed for no apparent reason, despite Chase saying that all had Terms of Service Violations.

What has come up though is a memo from the Federal Deposit Insurance Corporation that lists Pornography (and many others) as a high risk business for defaults.  While the FDIC doesn’t require banks to close these accounts it is seen by some as a recommendation.

But the most interesting thing to come out of this is a Department of Justice initiative called Operation Choke Point.  Operation Choke point is directly targeting Payday lenders, Check Cashing Operations and Third Party Processors.

The adult industry on the internet is largely dependent on third party processors like CCBill, Paxum, Epoch and Zombaio to do billing for adult sites.  According to the Obama Administration and the Department of justice these ” third-party processors that route payments for merchants through banks are ignoring signs of fraud to rake in fees from transactions.

Chase account closures aside the industry should be keeping a very close eye on this as an attack on third party processors is at the very least an indirect attack on adult.

 

 

25 Replies to “Is The Department of Justice Behind The Chase Account Closures.”

  1. Lacey Blake

    We’re talking about the FDIC aka the Federal Deposit INSURANCE Corporation. The funds that are transacted through legit banking institutions are “backed” or “insured” by the federal government. If your bank fails then your funds with that bank are “insured” up to $250,000. This is to ensure trust & confidence in the banking system.

    Banks aren’t just individual companies with a CEO or shareholders to answer to…
    Banks are DIRECTLY linked to the federal government via the government’s responsibility to “insure” any and all funds placed within the banking system.

    The reason your money is safe in a bank is because of the federal government, NOT necessarily just the bank processing transactions.

    MANY banking regulations come directly from the government as opposed to the bank. The bank must follow any/all regulations or face huge penalties….

    It seems the fight here is with the FDIC/DOJ/Federal Reserve/Federal government as opposed to Chase (or any other bank.)

    No matter how much you bitch about the particular bank or their practices, they’re following necessary regulations from the feds. just as they have been doing for centuries…

    Fight the feds.
    You’re probably not going to get very far fighting the bank…….

  2. Lacey Blake

    You want to get the government off your back?
    Fight prostitution laws. It’s that simple.
    You can’t expect the federal government to be that stupid to ignore illegal activity.
    From an IRS standpoint, it’s almost insulting.
    Sex workers can live in la la land pretending 75% of the illegal shit that happens in the industry doesn’t happen, but the government isn’t that dumb.

    If sex workers truly believe in their personal right to exchange sex for cash then why not fight it nationwide to get the act of prostitution legalized? It’s working in Nevada. There are laws on the books for filming it in CA and NH. Strippers have been legalized forever.

    The industry is never going to be taken 100% seriously if there is well-known widespread illegal activity taking place. That kinda seems like common sense?
    Pushing 20 performers forward to show how “clean” and “ethical” the industry is doesn’t fool anyone either…

    The questioning of sex workers and/or the legitimacy of the industry will continue until prostitution laws are fought and won on a national level. I, personally, think it would be an interesting fight that would help sex workers on every level.

  3. rawalex

    My guess is that while this DOJ initiative exists, I suspect it wasn’t aimed at porn people at all. However, certain banks who have moral objections to porn have decided to use this as an excuse to add a 31st category (dirty porn poeple) and choke them out.

    the AG has already said in the past that he believes that mainstream porn may in fact be protected 1st amendment speech, so specifically targeting porn people in this manner would not exactly be a smart move by the DOJ.

    It would also make more sense if the republican’ts were running the show. Democrats generally aren’t this vindictive towards porn.

    • MikeSouth

      I think you are right and I think that because Chase has had DOJ problems in the past that they may be playing it very safe here. Despite a certain porn lawyers saber rattling (though not very load) theres no lawsuit at all here.

      • LurkingReader

        Thirty + years ago as part of my job I had to sit in classes for ABI (American Banking Institute) for stuff like the newly legal teller cards, the hope of cross county line banking, with the fear of regulating or monitoring large cash transactions. As the new girl at the S&L it was my job to accompany the FDIC auditors through a six month investigation that was nothing more than a data gathering expedition for the hoped for deregulation. We examined every share card, club account to every loan file for the required disclosures.

        At the time many in banking circles were incredulous that teller cards would be used on buses someday let alone in the ten years it was projected. I was mystified that large cash regulations could have anything to do with the ancient history of the 1920’s.

        Two years later I was so nervous that I signed my maiden name to my bonding application. My nerves had nothing to do with the bonding process, I’d been hired to assist the bank with their ongoing FDIC audit and I was scared because I knew nothing about commercial banking.

        My initial banking home had three branches and a total of 14 teller windows including drive ups. My new home was the third largest banking corporation in America despite being required to incorporate each county as a separate entity. After the FDIC audit it was my job to enforce large cash transaction paperwork.

        In 1984 South Shore Plaza in Braintree Ma. was the car theft capital of the US. It was also the source of many of our accounts with daily cash handling of over $1 million. Even our small depositors regularly had cash over 10k every Monday. We also did foreign currency and travelers checks which meant filling out forms for business travelers for most transactions.

        Our branch had to hire three people two tellers and myself just to handle the large cash paperwork. The resentment over policing customer transactions was enormous as was the record keeping requirements on both sides of the equation. Customers started showing up with multiple deposits and $9,900 was a new norm for depositors wanting to skip the time required to fill out paperwork.

        Operation Chokepoint is just the newest name to the game. It’s all about curtailing the underground economy, regardless of whether you call it booze, drugs, terrorism or porn.

    • Lacey Blake

      I don’t think it was necessarily aimed at porn people either, BUT I’d place a large bet that the sex trade is most certainly on that list.

      I just don’t buy the bank hates porn star theory… this is so much bigger than just a bank.

      “the AG has already said in the past that he believes that mainstream porn may in fact be protected 1st amendment speech, so specifically targeting porn people in this manner would not exactly be a smart move by the DOJ.”

      May in fact be protected under the 1st amend.?
      Do you honestly believe the government operates under the “I believe so,” “maybe” or “it could be possible” theories?
      They’re not going to approve of potential illegal activity with some theory that “well, it might be protected. But, no one really knows?”

      Btw – Do you honestly believe banks have “morals” and “ethics” when it comes to their customers unless it’s bad business-wise”? As if they hold meetings to discuss those dirty filthy whores selling their body and soul for some cash?

      If the industry wants to feel victimized by someone it should be the feds. and not the banks.

      • LurkingReader

        @lacey

        The DOJ isn’t targeting porn but porn has lots to be scared of with them targeting the underground economy.

        When Lawyers for the FSC refuse to file taxes and file bankruptcy that ultimately lead to paying five grand on a 92k debt it gets easy to see the conflict. Reading the case I had to wonder if Jeffrey Douglas thinks I ought to pay the judges, custodians and maintenance along with clerks etc so he has a courthouse to plead his case or ply his trade? Lucky for him other folks paid for the judicial system that kept his ass out of debtor jail.

      • rawalex

        Lacey, the AG’s comments were a few years ago and they were more in regards to things like 2257 and obscenity charges, and not in any way directly related to the current situation. The only point is that if the AG believes that trying to prosecute straight porn as obscenity is a losing battle, then they would also be facing a real firestorm if they listed “adult video stars” in the same document as “drug traffickers”, “fraudsters” or “known gang members”… or whatever is on this list. Putting pressure on banks to not serve a legal business would earn them an insane amount of liability that the feds generally don’t want to take.

        • LurkingReader

          @rawalex

          This is why DOJ & AG memos to banks list suspect & illegal “transactions” with pages of definitions about the specific transactions to be targeted. Reading those definitions it becomes apparent very quickly that the only descriptors relate to cash (asset) handling and none to the potential perpetrators.

          Even gender is left out on looking for suspect transactions..IG internal embezzlement signs to watch for “joint absenteeism” was how the memo read when a branch manager and head teller took an affair to the level of clearing out the head teller vault the day before fed shipping for a loss of 360k

          Each night when batch processing is run for statements random flags are chosen to eliminate accounts that may pose an issue for the institution. Some institutions use the last four of social to determine when statements are issued while others use first initial of last name.

          Even using the example of the pissed off commercial lender it’s difficult to target a specific industry segment unless you are flagging a specific type transaction known to that individual(s) and then your ass is covered because it isn’t a problem unless the problem is evidenced.

          From the simplest depositor account to most complex commercial loan data entry is segregated to ensure compliance with affirmative action without regard for the individual account in question. When the percentages are off the bank has to start an ad campaign to attract the demographic they are short on but cannot use this as an excuse to turn away account applications.

          This being said not every bank employee is following the PC memo when speaking with customers and this often sends the idea that an individual or societal segment is being targeted.

        • Lacey Blake

          And, that’s exactly where our viewpoints differ…
          You look at “the industry” as legal.
          The “industry” is unequivocally “legal” in CA, NH and parts of Nevada.

          That leaves out the rest of the country where there are no specific laws on the books…
          Is porn in FL considered a part of the “legal porn industry?” Or, does it fall under prostitution laws? We can guess and reason, but there isn’t an “on the books” legal answer.

          So, then what do you do with a performer who shoots porn in CA, then goes to FL to shoot some more porn, then works at the bunny ranch for a week and has an ad on an escort website?
          Are they “across the board” LEGAL?

          Or, take a producer/performer who works legally in CA, but then tours the states having sex with people where a sexual encounter for money takes place…
          Are they “legal” or “not legal?”
          Is the same performer “legal” in CA, but “illegal” in Texas?

          If a performer based out of CA travels anywhere other than CA or NH to film than is the performer and/or producers participating in illegal activities?

          Those are the key points and the government isn’t going to sit around picking and choosing who is abiding all laws and who is abiding a few laws…

          You mentioned obscenity in your comment…..
          I don’t think obscenity laws have anything to do with this….
          I, personally, feel there are too many “unknowns” in regard to laws, no regulation with widespread well-known escorting and performers “shooting” in various location/states.

          The only way to fight these battles is through nationwide prostitution law victory’s.

          • rawalex

            Lacey, we can parade the same lawyers through here that always seem to appear in these debates, and they will tell you the same thing:

            The feds (and even local) are not going to try to prosecute obscenity if they think they are going to lose, because they do not want to establish once and for all that straight porn is legal and fine. They cannot make the case so they don’t. It’s why you even have one of the largest online adult companies based in North Carolina.

            There are adult clubs from coast to coast, and girls are routinely paid to get naked in them. Adult webcams are operated from every community and every town in America, or just about. Quite simply, the DOJ knows that any attempt to go against straight, mainstream porn is like to lead to it being declared legal, so they don’t do it.

            I don’t need a ruling to say I can speak in public. The first amendment grants that. Protected speech is protected speech, even if you don’t like the speech.

            • Lacey Blake

              Understood. My point is that if it’s truly that easy to win than the “industry” should be fighting for legalization across the country so these stupid “consequences” of unknown legality wouldn’t continue and would make the “porn industry” a legitimate industry in mainstream instead of fighting battles within one state.

              I don’t see OSHA releasing specific regulations in other states relating to pornographic sex workers? The biggest question is “why not?”
              (The “industry” isn’t even legally recognized. .. that’s why.)

              We’re not talking about an individual’s right to free speech. We’re discussing professions which are part of a larger “industry.”
              Strippers/legal brothel workers have regulations in place without limiting freedom of speech. I don’t see everyone bitching about their freedom of speech being taken away because they have regulations to abide by?

              Your looking at it from the government perspective.
              I’m looking at it from the industry perspective.
              If the porn industry is that confident that their content is protected free speech then fucking fight for it to make the industry legitimate across the country…
              They have very little political power. Why not fight and get the full protection afforded by the government including not being thrown in with illegal activity.

              It’s risky. That’s why neither side does shit other than make generalized statements for/against/maybe/I guess/I think/probable arguments while throwing in “freedom of speech” tirades.

              • LurkingReader

                @Lacey

                This is the crux of my issue with the industry and FSC in particular…in 25 years they haven’t fought to legalize porn production outside Florida yet have spent vast amounts of time and cash to fight 2257 in many states and on the federal level.

                There were over 6000 convictions in 2013 for child porn and they are raising the argument that a home that is used for commerce needs to be treated as a private domain.

                I get and agree with no warrant criminal search, however they aren’t trying nor have they tried to eliminate just this overbroad section of 2257. It is however the only place they have made any in roads in over 25 years.

              • LurkingReader

                It isn’t risky for the industry to try and legalize porn in other states, it’s a philosophy that says the government doesn’t exist beyond the ways they way the government to exist. Aka they want their cake after they eat it.

                Prosecutors aren’t going after porn productions in other states because they see it as a losing case. If prosecutors saw adult film as a winning case I can bet NYC would have used it when they cleaned up Times Square but they didn’t.

              • rawalex

                Lacey, basic rule of law, you can’t “sue” the government into court on a criminal matter. You need someone to get charged and then you fight from there. All of the obscenity cases made in the last decade have pretty much been slam dunks (Max Hardcore with girls puking after getting throat fucked is a great example). The feds get to decide when and where they will pull the trigger on prosecutions, and they are loath to take any case that will establish porn as nationally legal without limits.

                Lurking Reader also touched on another subject: 2257. Just like taxation, nothing creates legality for a industry like government regulation. The 2257 rules are a direct admission that porn exists, and is legal, but must be documented. If porn was illegal, why would you have record keeping laws? 2257 pretty much defines legal porn:

                “(b) Any person to whom subsection (a) applies shall, with respect to every performer portrayed in a visual depiction of actual sexually explicit conduct—
                (1) ascertain, by examination of an identification document containing such information, the performer’s name and date of birth, and require the performer to provide such other indicia of his or her identity as may be prescribed by regulations;”

                Key words “actual sexual activity”. Legal admission that porn exists, and that it is regulated under 2257. You cannot mandate record keeping on an illegal act.

                So the only risk is having to defend yourself in court if an over zealous prosecutor tries to over ride the feds. His or her only actionable cause would be obscenity and that would be a pretty tough case to make on “boy meets girl, boy fucks girl” videos.

                • Lacey Blake

                  I’ll make sure to call the local filming permit office and the local OSHA office to get guidelines and permits to film my next porno in New Orleans. Then I’ll give the IRS a call to determine the tax implications relating to the filming of pornographic material within the state and maybe go to the bank and open up a bank account for my new company “I eat cum by the gallon” productions.
                  Hahaha…

                  Although I’m just joking around here… I hope they don’t laugh too hard… because I am totally going to do that shit just for fun now!!! I’ve got connections at the bank, IRS and OSHA. I could probably call the guy who usually issues mainstream permits and get his advice on obtaining permits for pornographic films? I wonder if they’ll even give me an answer or think I’m fucking joking?

                  This could get interesting…. I’m excited.

                  • BT

                    Banks refusing to do business with people – and not just industries – isn’t all that uncommon. MarketWatch says the number of bank accounts closed “for cause” is rising by 20% a year. A bank can refuse to do business with you if you have a.) a bad credit rating, b.) a history of bouncing checks, c.) if they suspect that you’re involved in fraudulent activity or d.) suspect that you’re involved in illegal activity – which means that they would be abetting money laundering. Although its changing, banks were refusing to do business with the legal weed business in Colorado as well as legal medical marijuana businesses in other states.

                    So …… if a porn star escorts on the side, he or she is engaged in an illegal activity; if he or she can’t balance a checkbook and bounces checks or has chronic overdrafts or a bad credit history, the bank can refuse to do business with them; and if the industry blatantly refuses to get permits, ignore OSHA or refuses to use condoms – and is public about it – its more or less saying: Screw the law, we’ll do what we want. Which is great. But that doesn’t mean the banking system has to give you credit or banking services.

                    Porn continues to confuse protected speech with its business practices. The fact that the First Amendment permits you to express yourself in a certain way – get naked and do the deed on camera – doesn’t mean that you have protection to violate the law or flout regulations when you conduct your business. And it doesn’t mean the bank has to finance your speech. The speech is protected, but that doesn’t mean the people within the industry are a protected class.

                    • LurkingReader

                      @BT

                      Free Speech is one thing the commerce (business) to make a buck off it is another thing entirely. Funny you should mention pot…

                      Check out Colorado House Bill 1398 to create Pot co-ops because they can’t get bank accounts despite pot being legal. Glanced at some guidance on old banking haunts the other day and most of it was about getting data to the government about how much cash is being handled legally so they can try and estimate how much cash pot contributes to the underground economy.

                      This type guidance isn’t reassuring Banks that they won’t run against the regs so they are skittish. The bill would create Co-ops that offer traditional banking services IG checking and offer credit but can’t be called a bank or credit union.

  4. BT

    LurkingReader – we are in agreement. Banks refuse to do business with people all the time, for all kinds of reasons. They can’t discriminate against protected classes – they can’t refuse to do business with Blacks, Hispanics, Women, or Muslims because they don’t like Blacks, Hispanics, Women or a particular religious group. But, they can choose not to do business with them if they deem that their occupation puts the bank at risk – either the bank’s capital is at risk; the bank’s reputation is at risk; or it’s at risk for an audit or fines. And, given that the number of accounts being dumped for cause is going up by 20% a year, porn really isn’t being singled out here.

    Kink.com is a great example. No idea whether they’re banking relationship has been severed, but even if the bank decides that it wants to be in bed with a guy who films what Kink films, you still have an owner whose place has been raided because of weapons and coke. That’s reason enough for a financial institution to say ….. I don’t think so.

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