It’s surprisingly easy to make money by participating in one of the many paid informant programs run by various US government agencies. But before you jump in, it’s crucial to understand the risks and ethical implications, as well as how to protect yourself from becoming a victim of these very programs.
IRS and SEC Paid Informant Programs
Think your neighbor—or that brother-in-law you don’t like—is a tax cheat? Then download IRS Form 211 to claim your reward—at least 15% of the “additional taxes, penalties, and fines collected as a result of the informant’s information.”
Not satisfied with 15%? The IRS will pay you up to 30% of the taxes, penalties, and interest collected in cases where $2 million or more is at stake.
The Securities & Exchange Commission (SEC) also runs paid informant programs that offer rewards of up to 30% to those who provide original information leading to prosecutions for violations of securities or commodities laws.
FBI and DEA Paid Informant Programs
Perhaps the easiest way to earn money as a snitch is to accuse someone of hoarding cash. If information you provide to the Drug Enforcement Administration (DEA) or another government agency leads to the forfeiture of cash or other property, you’re eligible for a commission of up to 25% of the amount recovered.
Recently, we learned that the FBI’s Charlotte Field Office issued a press release. It reminded citizens that if they tip them on where “drug cash” is being stored or transported, they could get up to 25% of the seized money.
The Reality of ‘Drug Cash’ Contamination
While the press release didn’t go into detail about what “drug cash” is, we know from experience what it means. In order for what the FBI refers to as drug cash to be seized from its owner, all that’s required is for the cash to be contaminated with narcotics residues. And at least 85% of circulating cash is contaminated in this manner. Chances are that if you were to pull out your wallet, most of the bills in it have some trace of drug residues on them. It’s thought that the cash picks up drug residues by being put in counting machines with tainted bills.
If law enforcement wants to seize your cash, they’ll likely use a drug-sniffing dog to confirm the presence of narcotics residues on it. In 2013, the Supreme Court officially affirmed the practice, declaring that “evidence of a dog’s satisfactory performance in a certification or training program can itself provide sufficient reason to trust his alert.”
Civil Forfeiture: A Tool for Policing for Profit
Civil forfeiture laws have their roots in the early 1980s, during the height of the “War on Drugs.” These laws were originally designed to target large-scale drug traffickers by allowing the government to seize assets tied to criminal activity. However, over the years, the scope of civil forfeiture has expanded dramatically, often ensnaring ordinary citizens who have committed no crime.
While the most notorious cash seizures we’ve written about occur in airports or during vehicle highway stops, there’s nothing stopping someone you thought was your best friend from calling the FBI’s tip line and telling them they think you’re storing a large quantity of “drug cash” in your home.
It’s not just Charlotte. Almost every US city has a “Crimestoppers” number. You can call it anonymously to report suspicions about illegal activities by friends, neighbors, or family.
When Civil Forfeiture Goes Too Far
While we don’t condone criminal activity, in real life, many of the cash seizures we’re aware of have no connection whatsoever to any crime. The vast majority of them occur under America’s notorious civil forfeiture laws, which we’ve referred to as “the beast that won’t die.” We’ve also warned that cash is especially vulnerable to this despicable legal process.
In civil forfeiture cases, police don’t need to convict you of a crime or even accuse you of one to snatch your property. They merely need to allege that your property is somehow involved in or facilitating a crime.
Once your assets are seized through civil forfeiture, recovering them can be a long and expensive process. If you’re proven innocent, the burden of proof is on you. You must show that your assets were not involved in any crime. Often, the legal fees to fight the seizure exceed the value of the property, forcing victims to abandon their claims.
From Bank Bail-Ins to Civil Forfeiture: How to Protect Your Cash
Discover how to keep your money safe from banks and the law: civil forfeiture cash.
Policing for Profit: A Growing Concern
Many studies show that, in most civil forfeitures, the owner of the seized property is never accused of a crime, or the charges are dropped. But the cops keep the property anyway. A 1984 law, championed by then-Senator Joe Biden, allows agencies to keep most or all confiscated property.
That’s led to a practice critics call “policing for profit,” in which police agencies become addicted to civil forfeitures. In some jurisdictions, 40% of police revenue comes from forfeiture.
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