The IRS Scandal: “I’m Sorry!” Is Not Enough, But That’s Apparently All Our Battered Democracy Will Get

 

I’ve been holding a draft of this post for two weeks until I calmed down. You should read the first version.

The Treasury Department  agreed to  a “very substantial” settlement covering damages to hundreds of tea party groups following a class-action lawsuit over the obstructive, discriminatory IRS scrutiny they received when applying for tax-exempt status leading up to the 2012 election. According to court documents,  the IRS admitted wrongdoing and apologized for its conduct. The IRS stated,

“The IRS admits that its treatment of Plaintiffs during the tax-exempt determination process, including screening their applications based on their names or policy positions, subjecting those applications to heightened scrutiny and inordinate delays, and demanding some Plaintiffs’ information that TITA determined was unnecessary to the agency’s determination of their tax-exempt status, was wrong. For such treatment, the IRS expresses its sincere apology.”

That’s nice. Isn’t that nice?

The department did not disclose the amount of money handed out to over 400 organizations: “The [Internal Revenue Service]’s use of these criteria as a basis for heightened scrutiny was wrong and should never have occurred,” Attorney General Sessions said in a statement.  “It is improper for the IRS to single out groups for different treatment based on their names or ideological positions.”

Ya think?

The scandal began in 2013, when an IRS official admitted the agency had been aggressively scrutinizing groups with names such as “Tea Party” and “Patriots.” It later emerged that some liberal groups had been targeted, too, but in less aggressive ways and although in far smaller numbers. I hate to be suspicious, but if a Democratic administration’s tax agency agency in advance of an election wanted to hobble Republican and conservative groups, picking out some progressive groups to harass would be the smart move. In “Jack Reacher,” a sniper who wants to kill one target shoots five, so it looks like a random mass shooting. Same theory.

The IRS accelerated its special treatment of conservative groups around 2010, as the election approached, and Tea Party applications for tax-exempt status surged. Some court decisions had eased the rules for tax-exempt groups to participate in politics. Something had to be done, and some obama loyalists in the IRS apparently decided to do it. Or it was all one big misunderstanding.

After the scandal broke, there was a mass exodus from the IRS’s management. Conservative groups sued. Congressional Republicans launched  years of hearings, amid allegations the Obama White House had ordered the targeting. It was a futile effort. In earlier administrations, the news media would have been asking questions. A non-political Justice Department would have investigated hard, but Obama’s Justice Department was entirely constructed to protect the President and Democratic interests. The situation screamed for a Special Counsel. This wasn’t a matter of speculation: Something was rotten in Washington, D.C. A supposedly apolitical agency of the US Government, in advance of a national election with a Democratic President in office, used its power to interfere with the rights of conservatives to organize and participate in the democratic process. If the IRS employees involved were sufficiently partisan—and they were–no explicit orders from the White House were necessary. They knew what to do. Continue reading

A Very Bad Month For Price Waterhouse Coopers

Earlier this month, Big Four accounting firm Price Waterhouse Coopers sustained a high-profile hit to its reputation when  the senior accountants the firm sent to ensure the integrity of the Oscars broadcast, a job the firm has had for more than half a century,  couldn’t manage to hand out the correct envelope at the televised ceremony’s surrounding.  Now it looks like the chaos that this botch created was a prelude to far, far worse.  For years, federal investigators have been scrutinizing Catapillar’s overseas tax affairs, examining the complex maneuvers involving billions of dollars and one of the company’s Swiss subsidiaries.

Now, a report commissioned by the government accuses the equipment manufacturing giant of carrying out a massive tax and accounting fraud involving billions of dollars. And the accounting firm Caterpillar employed to perform its audits?

The envelope please?

You guessed it.

The report, part of a wide investigation being undertaken by the United States attorney’s office for the Central District of Illinois, the IRS and the Inspector General of the F.D.I.C., thus far is neither public nor made available to Caterpillar for review.  It  describes an illegal company strategy to bring in billions of dollars from offshore affiliates while avoiding federal income taxes.  Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report, concluded that…

“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules. I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”

Dr. Robinson’s 85-page analysis, based on publicly available and internal financial data from Caterpillar as well as bank data tracking wire transfers from Switzerland into the United States, found that Caterpillar brought back $7.9 billion into the U.S. structured as loans, over and beyond the income that had already been taxed overseas. The company failed to report those loans for tax or accounting purposes, though under U.S. law those profits would be subject to federal taxes.

For example, the professor  found  correspondence between the company and the Securities and Exchange Commission in which Caterpillar said it had $2.5 billion  in income eligible to be brought to the United States tax-free. The company, she wrote, did not have “anywhere near” that much money still available to be brought in tax-free.

No charges have been filed yet. Last week, federal agents raided three Caterpillar buildings near its headquarters in Peoria, Ill., as part of the investigation. Caterpillar said it was cooperating with law enforcement, but denied wrongdoing. The Internal Revenue Service is currently seeking more than $2 billion in income taxes and penalties on profits earned by the Swiss unit.

Continue reading

Now THIS Is An Unethical Lawyer…In Fact An Unethical ETHICS Lawyer AND A Law Professor! [UPDATED]

breaking-bad

[ My apologies: when this was first posted, I had inadvertently pasted in an excerpt from the Justice press release when I thought I had inserted a link to the complaint. The result was gibberish, and I apologize profusely. Thanks to reader Neil Dorr for alerting me. No more posts composed on my netbook while watching the O.J. miniseries, I promise.]

Today the Justice Department announced a criminal complaint  charging attorney Jack Vitayanon with conspiring to distribute 500 grams or more of methamphetamine. Incredibly, Vitayanon, who is under arrest, is an attorney with the Internal Revenue Service Office of Professional Responsibility in Washington, D.C. That’s the office that monitors IRS lawyers’ ethics. He’s also an adjunct professor at Georgetown University Law Center, where I got my law degree. I’m so proud.

Well, AMC needed a “Breaking Bad’ sequel.

The complaint says that Vitayanon conspired with others in Arizona and on Long Island to distribute methamphetamine for several years.He recently negotiated and competed the sales of distribution quantities of methamphetamine to undercover HSI special agents, and were recorded on internet-based video chats and text messages. Then the professor shipped the methamphetamine from his apartment in Washington D.C. to Long Island via Federal Express.

Vitayanon was also observed in his residence smoking methamphetamine from a glass pipe. A search of the defendant’s Washington D.C. apartment executed pursuant to a warrant led to the seizure of additional quantities of  methamphetamine, drug paraphernalia, packaging materials and drug ledgers.

In other words, they’ve got him dead to rights.

The defendant graduated from Dartmouth, got his law degree at Columbia, and received his Masters in Taxation from NYU. A lawyer cannot be admitted to any bar without a showing of reliable and honest character. The system and the profession could not have failed more miserably.

Vitayanon is the criminal, but the legal profession and the IRS allowed the rot to get into works.

____________________

Facts:Washington Post

 

More E-Mail Deception From State: Does Anybody Care? Well, I Do. And You?

Another day, another Hillary advisor, another scandal...

Another day, another Hillary advisor, another scandal…

The private server of Hillary Clinton isn’t the only intrigue going on the should make us wonder just how corrupt our leaders and aspiring leaders are. There has been a new development involving another set of emails that should cause public outrage and alarm…if the news media had the integrity to report on it.

In 2012, Gawker filed a Freedom of Information Act (FOIA) request asking the State Department to produce e-mails related to Deputy Assistant Secretary of State Philippe Reines (now a top Hillary Clinton adviser) and his contacts with  thirty-three listed media outlets. Reines was involved in an intemperate email exchange with Gawker journalist Michael Hastings in which he told Hastings to “fuck off;” naturally Gawker, being Gawker, wanted to dig up dirt on him.

[It’s a side issue, but any high ranking government official  that tells any journalist to “fuck off” should be forced to apologize and be punished or sacked.  This just one more example of the Obama Administration’s aversion to accountability and management competence.]

The U.S. State Department officially stated in 2013 that there were no such emails, reporting that “After a thorough search . . . no records responsive to your request were located.”

Last week, after a federal judge demanded a“court-ordered status report,” Justice Department lawyers, reporting on behalf of the State Department, announced that the previous statement was a teeny bit off. The State Department had found of “5.5 gigabytes of data containing 81,159 emails of varying length” sent or received by Reines, of which about 17,855, or 22%, were relevant to the initial FOIA request.

Wait…what?? Continue reading

Brief Notes: Healthcare.gov’s Contractor, Netanyahu, and Charles Blow

life-preserver

I am drowning in important ethics topics and short of time, so I’m reluctantly employing the rarely-used (here) flotation device of briefly noting three stories that would normally warrant full posts. I’ll reserve the right to change my mind and fully explore one or more of them later.

1. Wait: who’s the journalist here?

Six days after Ethics Alarms noted the ridiculous fact that the IRS has hired—for about 5 million dollars of taxpayer money— the same group of incompetents who botched their 800 million dollar job of getting Healthcare.gov up and running, the Washington Post ran the story (on page 18). The new contract itself dates from August: I regard my nausea over it as late, but I regard the Post’s failure to report the story until now a) suspicious, b) incompetent and c) indefensible.

2. Netanyahu lobbies Congress Continue reading

It’s STUPIDITY SATURDAY, Celebrating That Fascinating Nexus Between Dumb and Unethical! First Up: The IRS Picks A Contractor

Fool_Alfred

Perusing the many ethics issues that have slopped into my inbox, I realized that a fascinating theme was developing: wanton, willful, inexcusable stupidity. Being stupid is not intrinsically unethical, for in many cases it is a malady, a Nature-dictated state like being short or bald, just one that is more limiting than most. Being stupid and allowing yourself to be placed in a position where your stupidity will harm others, however, is unethical.

Incompetence is not the same thing as stupidity necessarily, but it is a kind of stupidity and it generates stupidity: stupid risks, stupid decisions, stupid statements, stupid policies, stupid results. The recent Pew study showing that the two most common descriptions of President Obama were “good” and “incompetent” was intriguing on that issue. A man can be both “good” and “incompetent,” but a leader cannot. Obama can be a good man (though after hearing his defiant, dishonest, petulant and self-destructive State of the Union address, I find that hard to believe), but he cannot be a good leader while being an incompetent one.

The President is incompetent, and the incompetence has, as it always will with those serving under incompetent leadership, metastasized throughout his administration into incontrovertible stupidity of a sort that it is unethical for a leader to tolerate or allow to continue. Yet he does.

This brings us to the IRS. Believe it or not, just even months after federal officials fired the firm CGI Federal for its botched work on the Obamacare website Healthcare.gov, the IRS awarded these same bunglers a $4.5 million IT contract for its new Obamacare tax program.

Let me say that again, slowly, so it sinks in: Continue reading

If The Ethics Alarm Post About The I.R.S. Swearing That Lois Lerner’s Subpoenaed Emails Had Been Lost Forever Mated With The Story About The Obama Administration Dumping Documents So That The Media And Public Wouldn’t Notice, THIS Would Be The Ugly Offspring

That's some ugly baby.

That’s some ugly baby.

News Item:

Up to 30,000 missing emails sent by former Internal Revenue Service official Lois Lerner have been recovered by the IRS inspector general, five months after they were deemed lost forever. The U.S. Treasury Inspector General for Tax Administration (TIGTA) informed congressional staffers from several committees on Friday that the emails were found among hundreds of “disaster recovery tapes” that were used to back up the IRS email system.

The announcement of the existence of the potentially incriminating emails—-that I.R.S. officials kept swearing were lost, a statement that every computer expert asked about it said was ridiculous—-was made, and the emails turned over, Friday afternoon, while everyone was freaking out over the President’s immigration order and the impending Ferguson grand jury decision. It also occurred well after the recent election, so if the communications do prove a coordinated effort within the Obama administration to illegally sabotage conservative groups prior to the 2012 election, there will be no electoral consequences to Democrats, and, as we all know, stupid voters can’t remember things like this for another two years.

Bazinga.

You’re right, I’m sure it’s just a coincidence.

The proud parents of this mongrel story can be review here ( “If a private company “lost” key  and potentially incriminating evidence like this, indictments would follow. (RIP: Arthur Andersen) Recall, please, that Lerner pleaded the Fifth Amendment to avoid self-incrimination—her right, but hardly cooperative or comforting. This news is even less so.”) and here (“Look up “appearance of impropriety,” and a picture of this document dump is under the entry. OK, not really, but it would be appropriate.”)

Your assignment for tomorrow: see how many news sources take note of the sudden appearance of the emails.

_______________________

Pointer: Instapundit

Source: Examiner

Is It Possible That The Democratic Party Is As Corrupt As Its Conduct In The I.R.S. Investigation Suggests?

Corleone testifiesThis began as an Ethics Dunce post, but designating Congressional Democrats as ethics dunces for their current, apparently agreed upon and coordinated response to the disgraceful I.R.S. scandal—and it is a scandal—appears far more sinister than that. This appears to be a cover-up, and a particularly blatant, clumsy and desperate one, as well as a sickening display of a major political party abandoning its principals and constituency—meaning the American people and not donors, sycophants or “the base”—to impede an effort to get to the truth.

Here’s Post columnist Michael Gerson’s fair summary of the I.R.S. affair to date:

“To review: After President Obama blamed “two Dilberts in Cincinnati,” an inspector general’s report found that high-level IRS officials in Washington were involved in directing additional scrutiny toward tea party groups seeking tax exemptions. [I.R.S. official Lois]Lerner admitted as much, before taking the Fifth Amendment to avoid testifying before the House oversight committee. The House of Representatives held her in contempt. And now the evidence of possible communications between Lerner and other agencies (including the White House) has gone missing under suspicious circumstances. It could be a regrettable series of rogue operations, IRS management failures and technical glitches. Or they could be taking us for fools. If there was any political motivation for this abuse of power, it is a form of corruption — the kind of thing Americans like to criticize in countries they regard as less developed. And the circumstantial evidence is strong. This wave of heightened IRS scrutiny came after Democratic senators, warning of possible abuses spawned by the Supreme Court’s Citizens United decision, demanded additional IRS scrutiny of nonprofit political groups. Because evidence of political influence is both plausible and circumstantial, a special counsel is needed to sort out the truth.”

The summary, in an accurate article titled “An arrogant and lawless I.R.S..” doesn’t include the fact that nobody has been disciplined or held accountable in any way for what occurred, including any of the imaginary scapegoats in the Cincinnati office. It doesn’t note that I.R.S. Commissioner Koskinen delayed informing Congress of the lost e-mails for months, after assuring members, under oath, that they would be provided. Yesterday, Koskinen stooped to Bill Clinton levels of deceitful parsing, arguing that when he swore to Congress that he would deliver all e-mails, he meant only all the e-mails that existed, since he couldn’t deliver those that no longer existed. Why didn’t he mention that those key Lerner e-mails had vanished? He wasn’t asked! Meanwhile, a government archivist testified yesterday that not informing Congress that the e-mails had been lost indeed violated a federal statute. Also yesterday, the I.R.S. admitted that it illegally played politics in 2012, leaking confidential tax information from an anti-gay marriage group to the pro-marriage Human Rights Campaign. Continue reading

The I.R.S. E-Mails: The New York Times, Flagship Of The Respectable Mainstream Media, Proves Its Corruption

IRSInvestigations

Washington, DC – Today, Ways and Means Committee Chairman Dave Camp (R-MI) issued the following statement regarding the Internal Revenue Service informing the Committee that they have lost Lois Lerner emails from a period of January 2009 – April 2011. Due to a supposed computer crash, the agency only has Lerner emails to and from other IRS employees during this time frame. The IRS claims it cannot produce emails written only to or from Lerner and outside agencies or groups, such as the White House, Treasury, Department of Justice, FEC, or Democrat offices.

You can be forgiven if you somehow missed this story, though it is obviously alarming, newsworthy, and possibly sinister. Many in the mainstream media have gone out of its way to ignore it. Yet this is likely or certainly possible spoliation, the illegal destruction of documentary evidence during litigation or an official investigation, which the House inquiry into the IRS’s irregularities regarding the approval of conservative groups prior to the 2012 election certainly is. If a private company “lost” key  and potentially incriminating evidence like this, indictments would follow. (RIP: Arthur Andersen) Recall, please, that Lerner pleaded the Fifth Amendment to avoid self-incrimination—her right, but hardly cooperative or comforting. This news is even less so.

Oversight Subcommittee Chairman Charles Boustany Jr., M.D. (R-LA) added, “In the course of the Committee’s investigation, the Administration repeatedly claimed we were getting access to all relevant IRS documents. Only now – thirteen months into the investigation – the IRS reveals that key emails from the time of the targeting have been lost. And they bury that fact deep in an unrelated letter on a Friday afternoon. In that same letter, they urge Congress to end the investigations into IRS wrongdoing. This is not the transparency promised to the American people. If there is no smidgen of corruption what is the Administration hiding?”

Good question.

And yet, The New York Times decided that this wasn’t “news fit to print” anywhere. Roger Kimbell marvels: Continue reading

OK, OK, He Steals Our Money Too. But I Still Hear Eric Holder’s One Hell Of A Guy….

But what really matters is whether he's better than Alberto Gonzalez, right?

But what really matters is whether he’s better than Alberto Gonzalez, right?

From the Washington Post:

The agency that tracks federal travel did not report hundreds of personal and other “nonmission” trips aboard government planes for senior Justice Department officials including Attorney General Eric Holder and former FBI Director Robert Mueller, according to a watchdog report.

Congress’s nonpartisan Government Accountability Office determined that the 395 flights cost taxpayers $7.8 million. But the General Services Administration, which oversees trips aboard federal jets, did not require documentation because of a GSA reporting exemption that covers intelligence agencies, even in cases of unclassified personal travel.

The GSA exemption contradicts decades-old executive-branch requirements, specifically guidelines established by President Bill Clinton and the Office of Management and Budget, according to the report. The report said GSA “has not provided a basis for deviating from executive branch requirements.”

The findings, released Thursday, came out nearly 19 months after Republican lawmakers began questioning Holder’s use of an FBI jet for travel unrelated to Justice Department work. Sen. Charles Grassley (R-Iowa), the ranking member of the Senate Judiciary Committee, asked the GAO to look into the matter.

In its report, the non-partisan Congressional GAO reprimands the GSA, noting that “GSA regulations that allow intelligence agencies not to report unclassified data on senior federal official travel for non-mission purposes are not consistent with executive branch requirements, and GSA has not provided a basis for deviating from these requirements.” Now the GSA is promising to rectify the non-mission exemption.

But never mind all that. The gravamen of the report is that Attorney General Holder and former FBI Director Robert Mueller spent $7.8 million dollars of taxpayer money for personal travel, and haven’t reimbursed it. What does this tell us? Nothing we shouldn’t have been able to figure out before:

Continue reading