Kat O’Connor, owner of TomKat Ammunition, was puzzled as to why her Gaithersburg, Maryland business was denied certain services from a bank and suspects the Obama administration's Operation Choke Point.
A 9 mm bullet rests on top of others in a box on the counter at Duke's Sport Shop in New Castle, Pa., Friday, April 5, 2013. Gun enthusiasts fearful of new weapon controls and alarmed by rumors of government hoarding are buying bullets practically by the bushel, making it hard for stores nationwide to keep shelves stocked and even putting a pinch on some local law enforcement departments. (AP Photo/Keith Srakocic)
"I believe the failure of Congress to enact strict gun control led to this method of starving manufacturers out of business," O'Connor told TheBlaze. "I also believe this is an unfortunate abuse of power. Sadly, I don't see how this is any different than a mafia-style shakedown, promising to leave banks and card processors alone if they 'play along' by foregoing money from certain industries, regardless of their legal status."
In her case, O’Conner said she was denied a credit card gateway for customers and an online pay portal even though her business has always complied with federal and state regulations.
"I do not believe this is mere coincidence," she said. "It would not make good business sense and is counter-intuitive for banks and card processors to drop or deny legitimate business activity on their own, unless it was somehow in their best interest to do so."
Operation Choke Point is run through the Department of Justice and the Federal Deposit Insurance Corporation that targets how banks handle accounts with the gun industry, payday lenders, porn shops, casinos, check cashers and debt collectors among other businesses deemed as high risk by the government.
On Monday, Republican members of the Senate Banking Committee asked Attorney General Eric Holder to scrap the program, saying it goes after legally operating businesses.
“This list appears to have been created with no public input, no compliance guidance or metrics for private entities to follow, and with disregard for the legality of a merchant’s operation,” the GOP letter said. “Further, the list has been used as a pretext by DOJ to limit essential banking services for industries out of favor by this Administration.”
Though the Obama administration’s Justice Department has pushed the program for the last four years, it could become very unpopular for the left, said Brian Wise, senior adviser to the U.S. Consumer Coalition, which is lobbying to end the program.
“This is not a popular program whether you’re on the left or the right,” Wise told TheBlaze. “Check cashing businesses primarily do business with people that don’t have bank accounts and those people primarily fall into very specific demographic categories and those demographic categories typically align with the left. What you’re talking about is harming a lot of consumers across the country. I would venture that every person in this room has done business with one of the industries that is on that list.”
Wise spoke about Operation Choke Point Tuesday at the Heritage Foundation, a Washington, D.C.-based conservative think tank, where he talked about O'Connor's story as the latest example. He added that casinos, which primarily employ union workers, are also a target.
Wise pointed out that the administration is selective about what it considers a high-risk industry.
“The irony about that is you would think if they were doing that, they would go after all industry,” Wise said. “They would go after Planned Parenthood, that is certainly a fairly high risk industry. They would go against marijuana dealers.”
The DOJ’s list lumps gun dealers and coin dealers in with Ponzi schemes in passing the program off as anti-fraud, said Alden Abbott, a senior legal fellow at the Heritage Foundation. He said there is effectively a “wink and the nod” from the bank regulators warning against these industries.
“The real problem is that banks do not need to be told stop doing business with particular small businesses,” Abbot said. “If they feel they will be subpoenaed or subjected to serious audit if they do business, they don’t have to be told or ordered to stop doing business. So this has been very effective.”
Assistant Attorney General Stuart F. Delery defended the program in front at a hearing of the Senate banking committee on July 17.
“In November 2012, our attorneys proposed a concentrated effort to pursue the fraud committed by the banks and payment processors,” he told the committee. “This strategy aims both to hold accountable those banks and processors who violate the law and to prevent access to the banking system by the many fraudulent merchants who had come to rely on the conscious assistance of banks and processors in facilitating their schemes. This effort is sometimes referenced as Operation Chokepoint.”
As for O'Connor, she hopes people in her industry speak up against this program and seek out and promo tote banks that don't give into the federal pressure.
"Obtaining a federal firearms license was an honor for me," O'Connor said. "Not everyone who applies will qualify and I take my responsibility very seriously. It is extremely disheartening to be subject to undeserved targeting by the very agency that deemed me to be worthy of such responsibility."
