A former Internal Revenue Service employee was sentenced in a 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.
Dennis Lerner, an international examiner in the New York office of the IRS, 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 U.S. District Judge John F. Keenan, who also imposed sentence on him Tuesday (see Ex-IRS Official Pleads Guilty to Disclosing Tax Audit Information to Future Employer). In addition to his probation, Lerner, 60, of Edgewater, N.J., was ordered to pay a $10,000 fine and a $200 special assessment fee.
According to prosecutors, Lerner worked for the IRS from June 2010 until he resigned in August 2011. For several months leading up to his resignation, one of his main responsibilities involved conducting an audit of an international bank, identified by prosecutors only as Bank-1, related to approximately $1 billion in allegedly unreported income. According to Forbes, the bank was Commerzbank AG.
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. Unbeknownst to his colleagues and supervisors, Lerner applied for, interviewed for, and accepted the position of tax director at the bank during the time period in which he was representing the IRS in settlement discussions with the bank. 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.
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.
Manhattan U.S. Attorney Preet Bharara praised the outstanding investigative work of the Treasury Inspector General for Tax Administration, which included the assistance and cooperation of IRS management.
“Whether you cheat on complying with the tax laws or cheat on enforcing the tax laws, you corrupt our tax system,” Bharara said in a statement. “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.”