Reading the government-cheer-leader press, you probably have the idea that over in Russia the government can take your property (or even put you in jail) on a whim, but here in the U.S. we have the rule of law.  To counter this naive notion, the Manhattan Contrarian is running a contest starting today to identify the "World's Largest Extortion Racket."  I'll put up the first few candidates today, and I invite readers to make nominations of their own.  Funny, but two of my three initial nominations are agencies of the U.S. federal government.  The one exception is "The Mob."  Does it have any chance of winning?

Nomination #1: Justice Department.  Some may say that the Justice Department actually prosecutes some real criminals, and if you look hard enough you can find some of that, but is there any doubt that their main business is shakedowns?  There's been plenty of coverage of some of those on this site, often to the tune of billions of dollars.  But today let's just focus on the latest one to hit the news.  On Wednesday the New York Times had a long article titled "Prosecutors Ease Crackdown on Buyers of China-Bound Luxury Cars."  It seems that many luxury cars like Mercedes, BMWs and Porsches that sell in the U.S. for $50,000 or $100,000 or even more can be sold in China for double or triple the U.S. price.  Some ambitious U.S. entrepreneurs have figured out the arbitrage and gotten into the business of buying as many of the luxury cars as they can get their hands on, shipping them to China, and making the arbitrage profit.  Does that sound to you like normal business?  To me too.  So how does the federal government get involved?

Here the Times article doesn't do a good job of giving the background, but reading between the lines, it seems that the car manufacturers want to keep the China profits for themselves, and therefore attempt to restrict the ability of customers to buy the cars in bulk.  The arbitrageurs are cleverer than that, and according to the Times, come up with "straw buyers" to make the purchases.  And that's where the federal prosecutors get their hook.

At this point you are undoubtedly asking yourself, why exactly is this a matter of interest for federal criminal prosecutors?  Not that they don't have at least some hook -- after all, essentially anything that can be described as "fraud" is a federal crime, and if the manufacturers are smart they are getting some kind of representation from the buyers that may be false.  But these manufacturers are big boys, and they have their own civil remedies that they can pursue against their customers if a contract term is breached.  Why exactly should taxpayer resources be devoted to doing the bidding of big auto manufacturers to protect their profits?  Here's the argument that the feds have made:

Federal authorities have argued that using straw buyers is a deceptive practice that potentially deprives American consumers of a chance to buy the luxury cars and limits the ability of automakers to keep tight control over sales to domestic dealers and to foreign countries.

"Deprives American consumers of a chance to buy luxury cars"?   That's pretty transparently bogus -- if there is come kind of supposed shortage, then explain why these companies spend by the tens of millions to fill the airwaves with their ads trying to get people to buy more cars.  But keep reading and the real reason for the federal intrusion becomes obvious: The prosecutors are stealing the cars, by the hundreds.  OK, they have a more genteel word than "stealing" -- they call it "civil forfeiture."

Since 2013, raids by the Secret Service have resulted in hundreds of Mercedes-Benzes, Land Rovers, BMWs and Porsches being seized, many of them just as they were waiting to be loaded onto cargo ships. . . .  Civil forfeiture is a powerful tool that prosecutors can use when pursuing cases involving money laundering, terrorism, drug dealing or other illegal activity. But it is a particularly punitive measure because the burden is often on the defendants to prove that any property and cash that are seized were obtained through lawful activities.

So first they seize the cars, and then they make you sue them to try to get your property back, in a proceeding where everything is stacked against you.  According to the Times, they have recently been "settling" some of these cases by giving back half the cars and keeping the rest.  The Times article also suggests that recent reforms of civil forfeiture by the Holder Justice Department may be reducing abuses in this area somewhat.  I'll believe that when I see it -- everything I've seen about these "reforms" indicates that they are extremely modest and in any event don't change the law in any way, so that the prosecutors can just go back to the old abuses as soon as no one is looking.

Nomination #2: SEC.  Crain's New York Business reported this week that on Monday March 30 the SEC had brought an enforcement proceeding against one Lynn Tilton, accusing her of "hid[ing] poor performance in three funds managed by her private equity firm Patriarch Partners."  The enforcement action seeks return of some $200 million in fees to which the SEC says Ms. Tilton was not entitled.

Oh, did I mention that the enforcement proceeding was brought not in court before an Article III federal judge (and potentially a jury), but rather in a so-called SEC administrative proceeding where the matter will be heard by one of the Commission's Administrative Law Judges?  Is there any problem with that?  Well, there is the small problem that the Constitution says that the "judicial power of the United States" is to be "vested" only in courts that have the characteristic that judges are appointed by the President, confirmed by the Senate, and serve for life -- all things that might lead someone to believe that the judges have some independence from the leaders of the agencies and might decide cases impartially.  How about the ALJs?  They are employees of the agency that prosecutes the cases.  In October 2014 the Wall Street Journal published an analysis of previously unpublished data on the SEC's record before its own ALJs, and found that in the 12 month period from September 2013 to September 2014 the ALJs had found in the SEC's favor in every single case.  Recent press reports have repeatedly observed that the SEC is steering an increasing percentage of its cases to its own ALJs as opposed to the legitimate courts.  A recent Reuters analysis showed that the SEC's win rate before juries in federal court was only 58%, and listed the string of high-profile cases that it had lost in 2013 and 2014.  Could the SEC's move to its own ALJs possibly be related to its likelihood of victory?

Two days after its initial article, Crain's had a follow up in which it reported that Ms. Tilton had hired Skadden Arps and had sued the SEC in federal court challenging the Commission's authority to prosecute its claim before its own ALJ.  Ms. Tilton tweeted:

"I hold hope that our nation will allow a fair fight for truth, to defend integrity and intent against allegations, and provide fair forums."

I do too, Ms. Tilton, but that's not how these people operate.  Don't worry, if (I mean when) you lose before the ALJ, you can always "appeal" -- to the Commission itself!

Nomination #3:  The Mob.  Puh-lease.  Nothing that The Mob does is within even an order of magnitude of the shakedowns perpetrated by the federal government.

RELATED: The Second Circuit Court of Appeals has denied the request of the U.S. Attorney for the Southern District of New York for rehearing en banc of the decision in United States v. Newman and Chiasson.  See prior coverage here and here.  No judge dissented.  The Wall Street Journal this morning urges Mr. Bharara to take his case to the Supreme Court, where it is confident he will receive an even more definitive thrashing.  But the betting in the legal press is that the Supremes will decline the case if asked, since there is no split among the circuits and no inconsistency of the Second Circuit's opinion with prior Supreme Court authority.  Meanwhile, how many of Bharara's vaunted collection of 80+ "insider trading" convictions have been undermined by the decision:  20? 30? 40? more?  Seems like it will still be a long time before we find out.