The Hunters Are Now The Hunted — The Wolf’s Sheep Disguise Removed

5 Oct

It just came to my attention as a subscriber to the online newsletter, Accounting Today, that the TIGTA (Treasury Inspector General for Tax Administration) made an announcement on September 27, 2012 that they, together with The United States Attorney, were charging someone with violating conflict of interest laws while he was an  IRS employee, and continuing to do so after leaving the IRS. Incidentally, the TIGTA was established under the IRS Restructuring and Reform Act of 1998 to provide independent oversight of IRS activities and it’s good to know that those that wield such power over us are being monitored.

But back to the matter at hand, according to the press release of the United States Attorney’s Office Southern District of New York, one Dennis Lerner, has been charged with two counts of violating federal conflict of interest laws and two counts of disclosing confidential IRS information, including information regarding pending audit to individuals who were not IRS employees. The charges also include his alleged disclosure of the identity of an IRS whistleblower. What does all this have to do with IRS vs EXPATS, you ask? Well, this whole imbroglio involves money being held in foreign financial institutions, specifically the German bank, Commerzbank. This bank was not named in the press release and was only referred to as “Bank1.” The name of the bank appeared in an article by the news agency, Reuters. They stated, “A source close to the investigation said the bank involved in the case was German-based Commerzbank AG. Officials for Commerzbank could not be immediately reached.”The next day, it was reported by Business Recorder, Pakistan’s Premier Financial Daily, that a Commerzbank spokeswoman said, “The bank is fully co-operating with the authorities.” Also there is a press release on the Commerzbank web site dated October 1st, referring to this, however, as it is in German, I don’t know what it says. I’d be overjoyed if anyone could send me a translation of it to English.

Also no information was made public as regards the U.S. person or persons who hold the money in this foreign financial institution. Neither was it disclosed if the U.S. person or persons are residents of the United States or Expats. It is a known fact that most of these tax evaders already brought to justice by the Treasury were not Expats. They worked and lived in the States and were evading taxes by hiding money in foreign banks. They are the “big fish” that I have referred to time and time again. We small fish Expats are suffering under the magnifying glass of the IRS because of these Improper Illegal “Inpats.”

From June 2010 until August 2011, this “gentleman” worked as an International Examiner in the New York office of the IRS. For several months leading up to his resignation from the IRS, one of his chief responsibilities involved conducting an audit of an international bank (the name was not disclosed in the TIGTA press release) related to approximately $1 billion in unreported income. This audit was triggered by confidential whistleblower information Lerner reviewed during the course of his IRS employment. Shortly before his resignation, he led negotiations on behalf of the IRS which resulted in a proposed $210 million settlement between Commerzbank and the IRS. The settlement was still pending final approval at the time of Lerner’s leaving the employment of the IRS. Unbeknownst to his colleagues and supervisors, Lerner actually applied and interviewed for the position of Tax Director at Commerzbank during the time period in which he was representing the IRS in the settlement discussions with the bank. Talking about conflict of interests and playing both ends against the middle, this represents the height of chutzpah, or perhaps better labeled as stupidity. Lerner also sent multiple emails to an individual in which he expressed both his dissatisfaction with his job at the IRS and his hope that he would secure the Commerzbank job. It also is noted that at no time did he notify the IRS of his efforts to obtain employment with the bank.

After Lerner announced his resignation from the IRS, as must be customary, he received written notification of certain restrictions imposed on former IRS employees regarding improper contacts with current IRS officials. However, after he began working as Tax Director at Commerzbank in September 2011, when the IRS sent Commerzbank additional inquiries regarding the audit, Lerner placed numerous phone calls to IRS employees and initiated meetings with them regarding this ongoing audit. He even persisted to attempt to encourage IRS employees to provide information regarding the audit, and to approve the settlement between the IRS and Commerzbank.

Lerner, apparently also engaged in improper disclosure of IRS tax return information during the time period that he worked as an IRS International Examiner. Specifically, he divulged the identity of a whistleblower who had provided the IRS with confidential information regarding Commerzbank that had triggered the audit to someone not employed by the IRS, and provided details regarding pending IRS audits of other companies.

Dennis Lerner was arrested September 27, 2012 at his residence in Edgewater, New Jersey, and appeared in Manhattan federal court before Magistrate Judge Gabriel W. Gorenstein, He faces a maximum of 20 years in prison.

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