Former IRS Official Sentenced In Manhattan Federal Court For Violating Conflict Of Interest And Audit Disclosure Laws
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DENNIS LERNER, a former employee of the Internal Revenue Service (“IRS”), was sentenced today in Manhattan federal court to three years of probation for violating a criminal conflict of interest law and to illegally disclosing confidential audit information during the time he was an IRS employee. LERNER pled guilty in March 2013 to one count of violating a criminal conflict of interest law and one count of illegally disclosing confidential audit information while he was an IRS employee before United States District Judge John F. Keenan, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Whether you cheat on complying with the tax laws or cheat on enforcing the tax laws, you corrupt our tax system. Dennis Lerner discredited his office and the integrity of the audit process by disregarding his responsibilities as an IRS Examiner in order to land himself a job. This Office will not hesitate to root out corruption wherever we find it, including among government officials.”
According to the allegations in the Criminal Complaint and the Criminal Information, along with statements made at Lerner’s plea and during today’s sentencing proceeding:
From June 2010 until his resignation in August 2011, 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 his chief responsibilities involved conducting an audit of an international bank (“Bank-1”) related to approximately $1 billion in allegedly unreported income. Shortly before his resignation, LERNER led negotiations on behalf of the IRS which resulted in a proposed $210 million settlement between Bank-1 and the IRS. The settlement was still pending final approval at the time of his departure. Unbeknownst to his colleagues and supervisors, LERNER applied for, interviewed for, and accepted the position of Tax Director at Bank-1 during the time period in which he was representing the IRS in the Bank-1 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-1 job. At no time did he notify the IRS of his efforts to obtain employment with Bank-1.
LERNER also engaged in improper disclosure of IRS tax return information during the time period that he worked as an IRS International Examiner. Specifically, he revealed the identity of a bank he was auditing to an individual who was not employed by the IRS.
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In addition to his probation, LERNER, 60, of Edgewater, New Jersey, was ordered to pay a $10,000 fine and a $200 special assessment fee.
Mr. Bharara praised the outstanding investigative work of the Treasury Inspector General for Tax Administration, which included the assistance and cooperation of IRS management.
The case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorney Randall W. Jackson is in charge of the prosecution.