IRS – DOJ Collusion On Potential Prosecution Of Tax Exempt Groups

by Tom Fitton –

New Documents Show IRS, DOJ Collusion on Potential Prosecution of Tax Exempt Groups

Your Judicial Watch announced a major find this week in its independent investigation of the Obama IRS scandal in which the IRS improperly targeted conservative groups for extra scrutiny when they applied for tax-exempt status.

Perhaps more than any other government official, former Internal Revenue (IRS) Director of Exempt Organizations Lois Lerner has become the defiant face of this scandal for the Obama administration.

From the time of her stonewalling appearance before the House Oversight and Government Reform Committee in May 2013 when she repeatedly took the Fifth Amendment, to her repeat performance this past March 4, Lerner has served notice on the members of Congress – and the American people – that what the IRS did under her direction is effectively none of their business.

And now, we have obtained a new batch of internal IRS documents revealing that Lerner directly communicated with the Department of Justice (DOJ) about whether it was possible to criminally prosecute certain tax-exempt entities.

The documents were dragged out of the Obama administration thanks to our October 2013 Freedom of Information Act (FOIA) lawsuit against the IRS after the agency refused to respond to four FOIA requests dating back to May 2013.

The newly obtained IRS documents contain a revealing email exchange between Lerner and Nikole C. Flax, then-Chief of Staff to then-Acting IRS Commissioner Steven T. Miller discussing plans to work with the DOJ to prosecute nonprofit groups that “lied” (Lerner’s quotation marks) about political activities. The tell-tale exchange includes the following:

•    May 8, 2013: Lerner to Flax

I got a call today from Richard Pilger Director Elections Crimes Branch at DOJ … He wanted to know who at IRS the DOJ folk s [sic] could talk to about Sen. Whitehouse idea at the hearing that DOJ could piece together false statement cases about applicants who “lied” on their 1024s -saying they weren’t planning on doing political activity, and then turning around and making large visible political expenditures. DOJ is feeling like it needs to respond, but want to talk to the right folks at IRS to see whether there are impediments from our side and what, if any damage this might do to IRS programs.

I told him that sounded like we might need several folks from IRS…

•    May 9, 2013: Flax to Lerner

I think we should do it – also need to include CI [Criminal Investigation Division], which we can help coordinate. Also, we need to reach out to FEC. Does it make sense to consider including them in this or keep it separate?

Lerner then “handed off” scheduling the issue to Senior Technical Adviser, Attorney Nancy Marks, who was then supposed to set up the meeting with the DOJ. Lerner also decided that it would be DOJ’s decision as to whether her old co-conspirators from the Federal Election Commission would attend.

By way of background, Democratic Rhode Island Senator Sheldon Whitehouse had held a hearing on April 9 during which, “in questioning the witnesses from DOJ and IRS, Whitehouse asked why they have not prosecuted 501(c)(4) groups that have seemingly made false statements about their political activities.” In a March 27, 2013, email to top IRS staff, Lerner made it clear that the impetus for the hearing was to go after political groups:

As I mentioned yesterday – there are several groups of folks from the FEC world that are pushing tax fraud prosecution for c4s who report they are not conducting political activity when they are (or these folks think they are). One is my ex-boss Larry Noble (former General Counsel at the FEC), who is now president of Americans for Campaign Reform. This is their latest push to shut these down. One IRS prosecution would make an impact and they wouldn’t feel so comfortable doing the stuff.

So, don’t be fooled about how this is being articulated – it is ALL about 501(c)(4) orgs and political activity. [Emphasis added]

But in an email sent a few minutes earlier, Lerner was forced to acknowledge prosecutions would evidently be at odds with the law:

Whether there was a false statement or fraud regarding an [sic] description of an alleged political expenditure that doesn’t say vote for or vote against is not realistic under current law. Everyone is looking for a magic bullet or scapegoat – there isn’t one. The law in this area is just hard.

The newly obtained emails show that the day before Lerner broke the news of the IRS scandal, blaming it on “low-level” employees out in the hinterlands, she herself was talking to a top Obama Justice Department official about whether the DOJ could prosecute the very same organizations that the IRS had already improperly targeted. That means the IRS emails show Eric Holder’s Department of Justice is now implicated and conflicted in the IRS scandal – which helps explain why we had to sue in federal court to get these documents.

The reaction to these new Judicial Watch revelations has been explosive.  Congress, which had been supposedly investigating this scandal for years, evidently hadn’t been given this information.  Once again, Judicial Watch proved itself better at ferreting out the truth than Congress.  But Rep. Darrel Issa (R-CA) and Rep. Jim Jordan (R-OH), who have been at least trying to get at the truth through their leadership roles at the House Oversight and Government Reform Committee, were quick to our react to our disclosures.

“The release of new documents underscores the political nature of IRS Tea Party targeting and the extent to which supposed apolitical officials took direction from elected Democrats,” said House Oversight Chairman Issa.  “These e-mails are part of an overwhelming body of evidence that political pressure from prominent Democrats led to the targeting of Americans for their political beliefs.”

“Now I see why the IRS is scared to give up the rest of Lois Lerner’s emails,” said Rep. Jordan. “Not only do these e-mails further prove the coordination among the IRS, the Federal Election Commission (FEC), the Justice Department and committee Democrats to target conservatives, they also show that had our committee not requested the [IRS] Inspector General’s investigation when we did, Eric Holder’s politicized Justice Department would likely have been leveling trumped up criminal charges against Tea Party groups to intimidate them from exercising their Constitutional rights.”

Media coverage was significant and our revelations gained national headlines.  It is easy to see why.
Talking about throwing people in jail is a lot easier to understand than talking about an effort to delay approval of an application for exemption under Section 501(c)(4) of the Internal Revenue Code.

I encourage you to look at all the emails as there’s plenty more than the big headline about jailing Obama’s political opponents. The documents include email exchanges showing that before Lerner’s May 10, 2013, speech to the American Bar Association blaming “low-level” employees in Cincinnati for targeting tax-exempt organizations, the IRS Exempt Organizations division was desperately scrambling to defuse the emerging targeting scandal:

•    May 1, 2013: After receiving an email from an assistant showing that 501(c)(4) applications had increased from 1591 in 2010 to 3398 in 2012 , Lerner wrote back, “Looks to me like 2010-2012 doubled too. Oh well – thanks.”

•    May 2, 2013: Discussing an upcoming conference call with approximately 100 congressional staffers on May 22, Lerner cautions aides, “Need to be careful not to mention sequester/furlough unless asked although can allude to budget and resources restraints.”

•    May 2, 2013: In response to an email reminding her about the upcoming conference call with congressional staffers, Lerner responded, “Arrgh – I just saw it. Sharon [White] could skate, but Cindy [Thomas] is the person who could answer that stuff. We need to give them some type of language in the event that type of question comes up” [apparently in reference to earlier email referencing “sensitive issues”].

The new documents also include emails exchanged after Lerner’s May 10 ABA speech – including a scathing email from Cindy Thomas, the former program manager of the Cincinnati office, to Lerner:

•    May 10, 2013: An email from former Cincinnati program manager Cindy Thomas excoriates Lerner for her comments blaming “low-level” employees in its Cincinnati office for targeting tax-exempt organizations that had “Tea Party” or “Patriots” in their names during the 2012 election. Highlighting the words “low-level workers” in bold-face type each of the seven times she used it in short, pungent email, Thomas asked, “How am I supposed to keep the low-level workers motivated when the public believes they are nothing more than low-level workers and now will have no respect for how they are working cases?” Lerner’s response nearly an hour later was a terse, “I will be back shortly and give you a call.”

•    May 10, 2013: In an email to an aide responding to a request for information from a Washington Post reporter, Lerner admits that she “can’t confirm that there was anyone on the other side of the political spectrum” who had been targeted by the IRS. She then adds that “The one with the names used were only know [sic] because they have been very loud in the press.”

•    May 15, 2013: In an email from an aide to Lerner, the aide specifically mentions “Tea Party Organizations”, the “Tea Party movement,” and “Patriots” as organizations targeted by the IRS.

The Judicial Watch FOIA requests came on the heels of an explosive May 14, 2013, Treasury Inspector General report revealing that the IRS had singled out groups with conservative-sounding terms such as “patriot” and “Tea Party” in their titles when applying for tax-exempt status. The IG probe determined that “Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to (e.g., lists of past and future donors).” According to the report, the illegal IRS reviews continued for more than 18 months and “delayed processing of targeted groups’ applications” preparing for the 2012 presidential election.

(Lois Lerner, who headed the IRS division that handles applications for tax-exempt status, retired from the IRS with full benefits on September 23 after an internal investigation found she was guilty of “neglect of duties” and was going to call for her ouster, according to news reports. On April 9, 2014, the Ways and Means Committee referred Lois Lerner to the DOJ for criminal prosecution. On April 10, 2014, the House Oversight Committee voted to hold Lerner in contempt of Congress.)

You can see how your support of Judicial Watch can have an extraordinary impact.  Thanks to the support of hundreds of thousands of Americans, Judicial Watch’s lawyers and investigators were able to uncover a new scandal that could have historic reverberations.
In the meantime, there are more IRS documents to uncover and we will pursue the conspiracy at Obama’s Justice Department.

Stay tuned….

ACLU “Retaliation and Harassment” against Conservatives

Judicial Watch announced this week that we are preparing a strong defense against a sweeping subpoena “witch hunt” filed by the American Civil Liberties Union (ACLU) against dozens of conservative organizations and individuals. The subpoenas were issued in an ACLU challenge immigration enforcement law SB 1070, Arizona’s “Support Our Law Enforcement and Safe Neighborhoods Act.”  The ACLU attacks are a move of breathtaking hypocrisy.   The ACLU is an organization billing itself as the “nation’s guardian of liberty” but is seeking to chill the First Amendment speech, association and assembly rights of Americans.

Among those targeted by the ACLU, along with your Judicial Watch, are more than twenty current and former members of the Arizona State Legislature, public interest groups such as the Center for Immigration Studies, NumbersUSA, and the American Legislative Exchange Council, nine police associations, including the Arizona Fraternal Order of Police and the Arizona Highway Patrol Association, political groups such as the Arizona State Republican Party, the Arizona African American Republican Club, the Arizona Republican Assembly, and three Arizona senior citizens who have no apparent connection to SB 1070.

The subpoenas are part of litigation brought by the ACLU, the Mexican American Legal Defense and Education Fund, and other leftist groups challenging SB1070 in federal court (Valle Del Sol, et al. v. Michael B. Whiting, et al. (No. cv-10-01061)). They demand “all communications” from the targeted organizations and individuals related to SB 1070, immigrants and immigration, including emails and computer files. The ACLU subpoenas specifically note all communications that include words such as “aliens,” “illegal aliens,” “illegals,” “Mexican,” “Latino,” “invasion,” “beaner,” “spic” and “wetback.”
In an op-ed appearing in the Wednesday, April 9, 2014, Washington Times, I detailed for readers how the subpoenas, “filled with racial slurs,” are parts of a politically motivated “ground war” against conservatives:

The ACLU knows full well it cannot win in the courts with such tactics. But this is not about winning in the courts. This is about winning a political ground war with ugly and false insinuations of racism. In a move of breathtaking hypocrisy, the ACLU is seeking to chill the First Amendment speech, association and assembly rights of Americans who played by the rules and worked to support a law they believed was in the best interests of the country.

In 2012, the Supreme Court upheld SB 1070’s key provision that police can check the immigration status of an individual if there is “reasonable suspicion” that the person is in the country unlawfully. “The ACLU objects to that decision,” we wrote in the Times op-ed. “It is trying to take another shot at the high court’s ruling with a lawsuit claiming that SB 1070 was the product of ‘racial animus’ and ‘invites racial profiling.’ So it has embarked on a witch hunt for racial profilers.”

One of the senior citizens targeted by the ACLU, Laura Leighton, is a 67-year-old Tucson, Arizona, resident who has been on disability for many years. In a letter to the ACLU, she pleaded, “I am not related to this lawsuit in any way and am not even sure what this lawsuit is about.” Another ACLU target is a 74-year-old grandmother who recently underwent three cardiac surgeries. She, too, says she had nothing to do with SB 1070. In both cases, the ACLU pressured the senior citizens to allow someone to come to their homes and search their computers.

The real motive for the ACLU subpoenas is retaliation and harassment.  Ms. Leighton and other subpoena recipients are targets simply because we hold views different from the ACLU and its clients. But the discovery process in civil litigation does not authorize the ACLU to trample on core First Amendment and privacy rights. Our message to the ACLU:  see you in court.

Judicial Watch, which represents many individuals and organizations targeted for harassment by the ACLU, plans to challenge the ACLU subpoenas in federal courts, if necessary.

(Judicial Watch has formerly represented the Arizona State Legislature in legal challenges to the SB 1070. In February 2012, Judicial Watch filed two separate amicus curiae briefs with the U.S. Supreme Court in support of SB 1070, one on behalf of former Arizona State Senator Russell Pearce, author of the law, and a second on behalf of State Legislators for Legal Immigration.  The amicus briefs asked the Court to reverse a Ninth Circuit Court of Appeals ruling placing key provisions of SB 1070 on hold. In June 2012, the Supreme Court upheld a key provision of the law, allowing police officers to check the immigration status of individuals they arrest or stop for questioning whom they suspect are in the U.S. illegally.)

Tom Fitton – President

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