A Justice Department program targeting pornography, gambling, predatory lending and other trades said to be at "high risk" for financial fraud is now going after legitimate gun dealers, a prominent Second Amendment supporter told Newsmax TV on Tuesday.
"Operation Choke Point," which involves at least three federal agencies, is being used to starve some gun-shop owners and arms manufacturers of the financial credit they need to do business, Bill Frady, host of the radio program "Lock and Load," told "America's Forum" hosts J.D. Hayworth and Morgan Thompson.
Frady cited the case of a small Florida gun shop owner who lost access to her business funds when regulators told the bank that the gun shop was a fraud risk.
"She was essentially shut down for two weeks while she had to wait for her funds to be released," Frady said.
Story continues below video.
Under rules promoted by U.S. trade and banking regulators — and pushed by the Justice Department — persons working in industries considered prone to financial fraud face possible prosecution, civil investigation and loss of their bank privileges.
"Authorities have publicly said they are focusing on 'high risk' activities — potentially predatory activities like payday lending, as-seen-on-TV retailers and Internet gambling," The Washington Post
reported. "Those categories, according to regulators, have high rates of returns for unauthorized debit transactions, an indication of fraud."
"Prosecutors are also investigating whether third-party processors that route payments for merchants through banks are ignoring signs of fraud to rake in fees from transactions," the Post reported.
But critics, including Democrats and Republicans in Congress, say the Obama administration is just trying to punish businesses it finds distasteful by scaring banks into cutting them off.
Frady said the banks scare easily.
"The banks, when you're labeled high-risk, rather than step up to the DOJ and say, 'Well, you know, they've been a customer of ours for 12 years, can you prove it?' instead they just sever the relationship," he said.
One of Operation Choke Point's first targets, according to Fray, was the rifle manufacturer, McMillian.
"They were with Bank of America," said Frady. "They had $10 million-plus in the bank with them, and one day they woke up and their line of credit was called in, their credit card servicing was shut off, and they were told that they had to get their money out of the bank in 10 days."
The company fought back by launching its own credit card servicing operation "geared toward the gun industry partners out there that were getting stepped on by the banks," said Frady.
But Frady said Congress ultimately needs to stop regulators and prosecutors from behaving like a fictional "pre-crime" strike force targeting legitimate businesses on the mere suspicion that they might someday commit fraud.
© 2016 Newsmax. All rights reserved.