Seven Oregon residents file fifth lawsuit challenging new federal financial regulations

By DON JENKINS/Oregon Capital Press

Seven Oregonians have filed the fifth federal lawsuit challenging the Corporate Transparency Act, alleging the financial reporting law invades their privacy and positions the government to chill political speech.

The lead plaintiffs are former hazelnut processor Mike Firestone and his wife, Lindsay Berschauer, a Yamhill County commissioner. Other plaintiffs include small business owners and a student financing college by selling handmade jewelry.

All are subject to the act, according to the lawsuit, which requires them to send their names, birthdates, addresses and photo identification to the Treasury Department’s financial crimes unit.

The plaintiffs are representative of Oregon’s reliance on small businesses, said Julie Parrish, one of their attorneys. “I think these plaintiffs have interesting stories,” she said.

The suit, filed in the U.S. District Court for Oregon, is the first on the West Coast seeking to overturn a law intended to uncover money laundering. Other lawsuits are pending in Alabama, Michigan, Maine and Texas.

In the only opinion so far, a U.S. District Court judge in Alabama ruled the act exceeded Congress’ authority to regulate commerce or foreign affairs. The Treasury Department is appealing to the 11th U.S. Circuit Court of Appeals.

The department defends the law as a shortcut to compiling without warrants the raw data to investigate illicit activities, such as financing terrorism, drug trafficking and tax fraud.

The law exempts large businesses, but applies to incorporated businesses and some nonprofits with fewer than 20 employees or with annual revenue of less than $5 million. The department estimates 32.6 million entities must report by Dec. 31. Failing to report can result in fines of $500 a day.

The sweeping law has provoked a backlash from diverse groups. The American Farm Bureau submitted a friend-of-the-court brief to the appeals court opposing the law.

The Oregon lawsuit echoes previously stated arguments, but also calls attention to a provision of the act that authorizes the government to study financial activities by foreign authoritarian regimes and their proxies.

The investigation will target funding for political groups, academic initiatives and media organizations that “undermine democratic governance” of the United States and its allies, according to the act.

The provision should give people pause, particularly if they’re “engaged in political speech that holds opposing views to whichever presidential administration is in charge,” according to the lawsuit.

“You don’t know how the data will be used and to what purpose,” Parrish said. “A potential cudgel against political speech is a problem.”

The Oregon plaintiffs have moved for a preliminary injunction barring the Treasury Department from enforcing the act in Oregon until the suit is settled. The Justice Department has yet to respond to the motion, but filed a brief last week opposing a preliminary injunction sought by plaintiffs in Texas.

The Corporate Transparency Act combats serious crime and safeguards national security and any intrusion on privacy would be minimal, according to the government brief. Photos, along with full names, birthdates and addresses submitted to the Treasury Department will be available to domestic and foreign law enforcement officials.