Federal officials have charged a former IRS official – Dennis Lerner – with outing an IRS whistleblower.
“Dennis Lerner’s violations of basic conflict of interest laws were brazen and continued in the face of warnings about his conduct,” said U.S. Attorney Preet Bharara. “Not only did he flout those laws in order to curry favor with a prospective employer, but he also illegally disclosed the identity of a whistleblower.”
Lerner 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 Lerner’s chief responsibilities involved conducting an audit of an international bank related to approximately $1 billion in allegedly unreported income.
The audit was triggered by confidential whistleblower information Lerner reviewed during the course of his IRS employment.
Shortly before his resignation, Lerner led negotiations on behalf of the IRS which resulted in a proposed $210 million settlement between the bank and the IRS.
The settlement was still pending final approval at the time of his departure.
Federal officials alleged that unbeknownst to his colleagues and supervisors, Lerner applied and interviewed for the position of tax director at the bank during the time period in which he was representing the IRS in the bank settlement discussions.
He 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 bank job.
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, he received written notification of certain restrictions imposed on former IRS employees regarding improper contacts with current IRS officials.
However, when the IRS sent the bank additional inquiries regarding the audit after he began working as tax director in September 2011, Lerner subsequently placed numerous phone calls to IRS employees and initiated meetings with them regarding the continuing audit.
Federal officials alleged that Lerner persisted with attempts to encourage IRS employees to provide information regarding the audit, and to approve the settlement between the IRS and the bank, despite warnings that he should not be participating in the audit or settlement discussions.
Lerner also engaged in improper disclosure of IRS tax return information during the time period that he worked as an IRS international examiner.
Federal officials alleged that Lerner divulged the identity of a whistleblower who had provided the IRS with confidential information regarding the bank that had triggered the audit to someone not employed by the IRS, and provided details regarding pending IRS audits of other companies to individuals who were not employed by the IRS.
Lerner, 59, of Edgewater, New Jersey, is charged with two counts of violating federal conflict of interest laws and two counts of disclosing confidential IRS information to individuals who were not IRS employees, including disclosure of the identity of an IRS whistleblower.
He faces a maximum of 20 years in prison.