He had no idea why. Brookman says his store in Grand Haven, Mich., never had been in trouble with federal or state officials. And being in the pawn industry, he was required by law to get a city license every year.
“If there was ever a problem, they wouldn’t renew my license,” Brookman, a former police officer and Army veteran, told The Daily Signal.
After researching his case on the Internet, Brookman says he concluded that his banker, JP Morgan Chase, closed the account because two of his business activities — dealing in vintage coins and selling firearms — were labeled “high risk” by federal bureaucrats as part of an Obama administration initiative called Operation Choke Point.
Critics say Operation Choke Point, so dubbed by Department of Justice officials, seeks to weed out businesses that the White House considers objectionable.
The Justice Department contends the goal of the program is to combat unlawful mass-market consumer fraud, although recent evidence suggests otherwise.
A House report indicates that a primary target of Operation Choke Point is the short-term lending industry. A more expansive list of out of favor, non-financial businesses includes certain ammunition merchants, coin dealers, home-based charities, and sellers of pharmaceutical drugs – also lawful enterprises.
Alden Abbott, a senior legal fellow at The Heritage Foundation, describes howOperation Choke Point works: Banks receive notifications from federal regulators, including the Federal Deposit Insurance Corporation (the agency responsible for insuring bank deposits), that the government considers certain types of businesses “high risk.” Banks then are pressured, though the implied threat of government investigations, to sever ties with customers engaged in those enterprises.
This puts business owners such as Brookman in jeopardy of losing their livelihoods without ever being prosecuted for doing anything illegal. Abbott said:
Government officials have no authority to deny lawful industries access to credit merely because the government dislikes their line of business. That runs counter to the rule of law. Only unlawful activity merits sanction.
Though they consider themselves in peril of losing customers and coming under further government scrutiny, Brookman and three other owners of small businesses spoke with The Daily Signal about being caught up in Operation Choke Point. Each previously came forward through the United States Consumer Coalition, a grassroots, free-market organization that encourages business owners to share their stories.
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