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The IRS Scandal: Hiding In Plain Sight
Walter Olson
If you had asked me who would actually try to defend the behavior of the IRS employees, I would have guessed, “Oh, maybe someone at the New Yorker…. Jeffrey Toobin?” Bingo.
ABC News reports on the bewildering experience of Marion Bower after she sought exempt tax status for her Tea Party group, not expecting the process to drag on for two years:
The Ohio woman also did not expect that providing information about the books her group read would be part of the application process.
“I was trying to be very cordial, but they wanted copies of unbelievable things,” Bower told ABC News today. “They wanted to know what materials we had discussed at any of our book studies.” …
“They wanted a synopsis of all the books we read,” Bower said. “I thought, I don’t have time to write a book report. You can read them for yourselves.”
The thing is, the essentials of the IRS scandal were clear to anyone with eyes to see more than a year ago – before the intervening false denials by IRS officials, the more recent admissions and apologies, and the promises of house-cleaning from the President and leading Democrats. Here’s an AP story from March 2012 citing “instances in which the IRS has asked for voluminous details about [Tea Party] groups’ postings on social networking sites like Twitter and Facebook, information on donors and key members’ relatives and copies of all literature they have distributed to their members, according to documents provided by some organizations.” Here are more reports on IRS demands for transcripts of speeches and radio shows, donor lists, and the like. It is perhaps needless to add that many other groups seeking 501 (c)(4) status were not subjected to overbearing demands of this sort.
Regarding Jeffrey Toobin, it seems to me that there are two main possibilities. Either he is unaware that the IRS’s scrutiny of politically dissident groups has included these sorts of crushingly burdensome demands, in which case he has not made much of an effort to get up to speed on the story. Or he is aware of it, but sees nothing wrong enough with such demands to give him pause in his defense of the agency’s conduct.
Incidentally, Mrs. Bower of Ohio eventually figured out how to respond to the IRS’s demand for synopses of the reading materials provided to her group’s members. She sent them a copy of the U.S. Constitution.
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No Charge for That: Hiding Millions and Getting Away With It
When we last addressed California’s hidden money scandal, the state’s Attorney General found that the state Parks had concealed only $20.5 million and the remaining $33 million was “simply obscured by long-term complexities in managing that fund.” The AG passed the buck by letting the state Natural Resources Agency decide whether to bring in local law enforcement. Now the Sacramento County District Attorney Jan Scully, a Republican, has declined to bring charges because the Attorney General failed to identify any crime. That made sense on one level.
Governor Jerry Brown had asked the AG, a law-enforcement body, to conduct an “administrative” investigation, like asking the police to make sure a threatened business has all the right permits and signs in place. To “knowingly keep any false account,” is a felony according to section 424 of the state penal code, legal experts told the Sacramento Bee, which broke the hidden money story. If the AG knew about that statute, which may well be doubted, they still declined to file charges. With local law enforcement opting out Parks bosses are considering the case closed. Whoever hid the money got away with it, but the case still has educational value.
Government is clearly unqualified to investigate itself but remains unwilling to let independent investigators see the books. That’s why government employees can hide millions with impunity. One witness told the AG that the money was hidden so the state would not further reduce the Parks Department budget, a perfectly plausible motive. The scandal also revealed that a criminal background is no object to promotion in state government.
Career bureaucrat Manuel Thomas Lopez spent 12 of his 23 years in state government on court-ordered probation for a lengthy list of convictions, including felony drunk driving. But Lopez was duly promoted to deputy of administrative services in the parks department, where he presided over an unauthorized vacation buyout. His boss Ruth Coleman, who would not talk to the AG and has retained an attorney, accused Lopez of hiding the $54 million.
When the story broke Sen. Noreen Evans, Santa Rosa Democrat, wondered how much more “deceit and thievery” was going on in state government. That remains unanswered but prompts another question. California has long been a trendsetter for the rest of the nation. Could such deceit and thievery also be going on in agencies of the federal government, which operates scores of national parks? Odds are we’ll never find out.
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Business • Re: JP Morgan Is Still Hiding Large Amount of MF Global Cust
Morgan reportedly returns $600 million in MF Global customer funds
http://www.gata.org/node/11436
Submitted by cpowell on Sat, 2012-06-02 06:07. Section: Daily Dispatches
By Aaron Lucchetti
The Wall Street Journal
Friday, June 1, 2012
http://online.wsj.com/article/SB1000142 … 85006812...
J.P. Morgan Chase & Co. has returned roughly $600 million that was ensnared at the bank when MF Global Holdings Ltd. collapsed in October, people familiar with the matter said.
Most of the payments haven’t been disclosed publicly, and a bankruptcy trustee representing customers of the failed securities firm might pursue J.P. Morgan for as much as several hundred million dollars in additional claims, according to a person familiar with the investigation.
Still, the New York bank’s payments are a sign of progress in efforts to fill the estimated $1.6 billion hole left in customer accounts at MF Global. Money recovered by the bankruptcy trustee, James Giddens, eventually will be passed along to customers, though the amount depends on the outcome of continuing legal squabbles and negotiations.
A spokesman for Mr. Giddens said in a statement that "substantive discussions" are under way with the nation’s largest bank in assets for "the resolution of other claims" made on behalf of the former customers. J.P. Morgan continues to cooperate with the investigation, the spokesman added.
J.P. Morgan was one of MF Global’s biggest creditors and handled many of its trades as the New York securities firm scrambled to save itself in late October. MF Global also transferred $175 million to fix an overdraft in one of the firm’s accounts at the bank, according to congressional testimony.
Bank officials have said J.P. Morgan never intentionally accepted or held on to money that belonged in segregated customer accounts at MF Global. In May, the trustee announced that J.P. Morgan agreed to hand over $168 million that came from collateral held at the bank when MF Global filed for bankruptcy.
Bank officials contend that J.P. Morgan isn’t holding more MF Global money, according to people familiar with the matter. Mr. Giddens hasn’t reached the same conclusion and could demand additional payments, claiming that money passed through J.P. Morgan on its way elsewhere, according to a person familiar with his thinking.
If that happens, J.P. Morgan might counter that its repayments to date have exceeded $600 million, not including the losses suffered by the bank as a creditor to MF Global. While that $600 million could help lower the $1.6 billion shortfall, much of that money already had come back to MF Global before the shortfall estimate was made.
Mr. Giddens is expected to disclose in a report Monday details about where the money in customer accounts went, including the portions that are believed to have gone to J.P. Morgan.
The trustee also is expected to disclose more information about how the money went missing. It isn’t clear how detailed the report will be, partly because other investigators have expressed concern that too much disclosure by Mr. Giddens could hurt their continuing probes.
MF Global moved money out of customer accounts to cover margin calls and meet other obligations. No one has been charged with wrongdoing.
Jon S. Corzine, the former MF Global chief executive, and other officials at the firm have told lawmakers that they didn’t realize customer money had been tapped until employees told them the day before its bankruptcy filing about an apparent shortfall.
J.P. Morgan and MF Global had close ties. The bank facilitated trades on behalf of MF Global and in the firm’s final weeks, J.P. Morgan officials spoke to Mr. Corzine and other senior MF Global executives about liquidating assets and dealing with ratings firms, according to people close to those discussions.
J.P. Morgan even considered buying MF Global, but then backed away amid questions about money transfers that came up three days before the securities firm filed for bankruptcy.
MF Global officials never provided written documentation that J.P. Morgan asked for on two transfers. The bank wanted to know if the money moves were in accordance with Commodity Futures Trading Commission rules. A J.P. Morgan lawyer later told lawmakers that the bank received verbal assurances from MF Global that the transfers were proper.
Many U.S. customers have recovered 72 cents of every $1 from their MF Global accounts. They are expected to get another eight cents per dollar soon.
The $1.6 billion shortfall also includes about $700 million stuck in the U.K. bankruptcy process and is affected by money being held back by the trustee for potential legal claims. On Friday, a U.K. court scheduled a trial for April 2013 on the trustee’s issues in that country.
Statistics: Posted by DIGGER DAN — Sun Jun 03, 2012 3:31 am
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