by Brian Mahany
Last September, we reported on the arrest of Dennis Lerner, a former IRS agent. Prosecutors said that he had become a bit too cozy with a company he was auditing. Service employees are bound by strict confidentiality rules that prohibit disclosures of confidential tax information. When the story first broke, Lerner was suspected of negotiating an audit with Commerzbank while simultaneously trying to get hired by them. While some agencies and political bodies are known for being revolving doors to and from the private sector, the IRS is a bit more conservative.
According to court documents, Lerner was hired as the bank’s tax director before his audit was even final! We will always wonder how many millions the bank saved by hiring him. In the public’s eyes, Lerner got a sweet deal, the bank escaped millions in taxes and taxpayers were left holding the bag. For every dollar in taxes the bank doesn’t properly report and pay, other taxpayers are forced to foot the bill.
On Monday, Lerner pled guilty in a Manhattan federal court to corruption charges. In addition to arranging a sweetheart employment deal, we now know that Lerner disclosed confidential tax information to outsiders including the identity of a whisteblower.
Although his entire behavior is certainly despicable, we especially worry about the whistleblower. The IRS’ whistleblower program was set up to protect the identity of tipsters. Thats important because whistleblowers sometimes face retaliation and loss of their job. Although we think whistleblowers are the new American heroes, some folks in the banking industry probably disagree. It’s not difficult to imagine how easily one could be blackballed by a unethical employer. In some industries, one could even be in physical danger.
U.S. Attorney Preet Bahara released a statement on Tuesday saying, “Dennis Lerner betrayed the trust put in him as a public servant by parlaying his position at the IRS into a high-powered job at a bank he was auditing through a scheme that may now land him in prison. We will not tolerate corrupt government employees and will prosecute and punish them to the full extent of the law.” We agree.
Later this summer, Lerner will be sentenced. He faces 10 years in prison and has already lost his job. No word on whether Commerzbank will face another audit. According to published reports, they had as much as $1 billion in unreported income.
Mahany & Ertl is a leading U.S. whistleblower firm. We represent the whistleblower in the largest false claims act pending against a bank in the United States, HUD’s $2.4 billion case against Allied Home Mortgage. Unlike many other lawyers, we take whistleblower protection seriously and stand behind our clients and will continue to help them even if they face retaliation.
If you know of a fraud against the government and taxpayers – state or federal – give us a call. Whistleblowers are entitled to a percentage of whatever is collected by the government. Common false claims act cases include false Medicaid billings, mortgage fraud and military procurement violations.
Awards are generally available to the first person supplying information. If you have believe you have a claim, let us know right away.
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