I have previously written on this blog that Florida asset protection planning is often less effective against actions by Federal agencies such as the IRS, FTC etc. Federal agencies often have statutory authority to take preemptive collection actions against targets of their regulatory actions beyond the powers afforded commercial creditors in Florida state courts.
I received an inquiry from a reader who was involved in a legal dispute with the Commodities Future Trading Commission (CFTC) before a federal court in a state other than Florida. The reader stated that prior to their getting a court judgment the CFTC had frozen financial accounts in Florida owned by the reader and his wife as tenants by entireties (TE). The reader’s wife was not a party to the CFTC action. TE assets are immune from civil judgments against either spouse individually under Florida common law. The reader questioned how the CFTC could freeze his protected TE account in Florida before the CFTC even had a final judgment in the CFTC proceeding.
The reader said his CFTC attorney told him the agency had authority to freeze bank accounts. The issue is whether this or any other Federal agency can freeze an account preemptively which account under Florida law is not owned by the defendant and is immune from civil process. The reader did not retain me to research the issue so I don’t know if there are cases on this point, and therefore, I cannot offer now a definitive answer.
The point of this post is to illustrate to enforcement and collection power of federal agencies. Compared to creditors in typical civil disputes federal agencies have more remedies, more powers, and are usually more aggressive in pursuing defendants’ assets even before they prevail in their federal litigation. Florida civil courts rarely freeze defendant assets prior to judgment, and even then, the Florida courts would respect Florida exemption law (except in some cases of obvious fraudulent conveyance). Federal agency litigation poses more serious and immediate threat to otherwise exempt assets.