A former Internal Revenue Service official has pleaded guilty to violating a criminal conflict of interest law and illegally disclosing confidential audit information while he was an IRS employee.
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Dennis Lerner, 60, a former international examiner in the IRS’s New York office, pleaded guilty Monday in a Manhattan federal court before U.S. District Judge John F. Keenan. He was arrested last September and charged with illegally exposing the identity of a whistleblower who reported tax compliance problems by an international bank to the IRS (see Former IRS Official Charged with Exposing Whistleblower’s Identity).
Lerner worked as an international examiner from June 2010 to August 2011, and for several months leading up to his resignation from the IRS, one of his chief responsibilities involved conducting an audit of the German bank Commerzbank related to approximately $1 billion in allegedly unreported income. Shortly before resigning, Lerner led negotiations on behalf of the IRS that 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.
Unbeknownst to his colleagues and supervisors, Lerner applied for, interviewed for, and accepted the position of tax director at the bank at the same time he was representing the IRS in settlement discussions with the bank, according to prosecutors.
He also sent multiple emails to a correspondent in which he expressed both his dissatisfaction with his job at the IRS and his hope that he would secure a job with the bank. He never notified the IRS that he was trying to get a job with the bank. After leaving for a job at the bank, he repeatedly spoke with former co-workers at the IRS to influence the pending settlement between the IRS and the bank.
“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,” Manhattan U.S. Attorney Preet Bharara said in a statement. “We will not tolerate corrupt government employees and will prosecute and punish them to the full extent of the law.”
Lerner also improperly disclosed tax return information during the time he worked as an IRS international examiner, revealing the identity of a bank he was auditing to an individual who was not employed by the IRS, according to prosecutors. He faces up to 10 years in prison and is scheduled to be sentenced in July.