The Intimidation Game (16 page)

Koskinen had spent most of his years as a corporate turnaround and fix-it artist at the Palmieri Company, a management consulting firm. He later parachuted into Freddie Mac, to stanch the financial and political fallout that hit the mortgage giant during the 2008 financial crisis. The story goes that Koskinen was offered an (unnamed) job in the early days of the Obama administration, but turned it down, telling the White House to call if they had something disastrous that no one else wanted to manage. The seventy-three-year-old breezed through his congressional hearings on promises to cooperate fully with Congress and get the IRS back on track. He was sworn in on December 23, 2013.

Not every Republican was taken in. Koskinen presented himself as a tough old bird, but Washington old-timers knew that he was first and foremost a tough old Democrat—and a savvy one. Freddie Mac ranks only behind Fannie Mae as one of the most politically incestuous companies in the country, and it was no accident that its board recruited Koskinen when it hit hard times. The corporate veteran had a reputation for talking tough and making sense, even as he greased the political machinery behind the scenes.

Jordan was highly skeptical from the start. “Right after he got confirmed, but before he testified, he came in for a meeting. He was on the edge of his chair and he just kept talking and talking and lecturing,” Jordan recalls. “And I wasn't mean about it, but I made the point that in this setting, I got to ask the questions. He got ticked. So from the get-go, we weren't exactly buddies.”

Jordan would relatively quickly come to the conclusion that Koskinen had obstructed Congress's investigation. He believed the new IRS head was there to make sure that the truth never came out, and to make sure the Obama administration was free to continue its war on conservative groups.

Luckily for the nation, there's another guy in Washington who is never taken in by anything—not by Republicans, not by Democrats, not by anyone. Tom Fitton might count as the biggest cynic on the planet. If a fluffy, dancing unicorn with a rainbow hovering over its head smiled at Fitton on a Washington street corner, Fitton would file a lawsuit to figure out what it was up to.

Because that's what Fitton does. Judicial Watch is a conservative watchdog group, and its president starts from the assumption that nearly everyone in Washington is lying and that the only way to hold them accountable is to drag their documents into the sunshine. The group specializes in Freedom of Information Act requests. At any one time it has thousands pending. When agencies ignore or delay or obstruct these requests, Judicial Watch's team of lawyers tee up litigation. Within a few weeks of Lerner's admission, that team had filed a FOIA demand with the IRS.

Fitton despises pretty much every government agency, but he had an extra-special reason to assume that the IRS and Lerner had done the worst. Judicial Watch, way back when, had dogged the Clinton administration, and the 501(c)(3)'s reward was a giant IRS audit. Fitton remembers an IRS official telling him, “What do you expect? If you're going to scrutinize the government, the government is going to scrutinize you.” As Judicial Watch pushed back against the tax agency, the IRS continued to add years to the audit—to the point that the group faced an audit pretty much every year of its existence. He also remembered who was running the Exempt Organizations unit at that time: Steven Miller. “Let's just say that when the Lerner apology happened, I wasn't very surprised by it, or to see that Steven Miller was sitting as acting commissioner,” says Fitton. “We'd already had a lot of experience with these tactics.”

He and his colleagues quickly plowed ahead on the Lerner case because they knew they had the best shot to expose what had actually happened. The underappreciated reality of watchdog groups is that they have far more power to obtain documents than even Congress. “It's the same dance every time,” explains Fitton. “Congress nicely asks an agency for documents, gets rebuffed. Then it gets in a subpoena battle, and has to go back and forth with an administration. And then its lawyer gets with their lawyer and they negotiate—how broad, and what Congress will or won't get, and back and forth, and on and on, and all this time the agency still hasn't told Congress much of anything. And if someone isn't happy with those discussions, they have to go to court. It's endless, and spotty. We are talking about two branches of government fighting. It doesn't get more dysfunctional and slow than that.”

Watchdog groups have far more power under the law. “Once a group like ours files a FOIA request, the government is obliged to tell us what documents it has, and then give them to us in a certain time frame. The burden is entirely on them, and the courts are generally supportive. It's all about disclosure from
government
—rather than citizens—and that's why it is effective.”

Judicial Watch would by that summer file four FOIA requests related to the IRS scandal. The group gave Werfel time to reply, but by fall, when it was still getting the stiff arm, it went to court. Had it not, the country to this day wouldn't know the degree to which the IRS and other parts of the administration were using government to shut down their opponents' speech.

It's thanks
to Judicial Watch that the nation now knows that the targeting wasn't contained within the “independent” IRS. It was done in tandem with other parts of the Obama administration. Indeed, one big reason why the Justice Department showed no interest in prosecuting anyone for the IRS scandal is that it might well have been forced to prosecute itself.

Fitton was among the biggest skeptics of the Justice Department's probe. “We all know the indications of a real probe. Ask Karl Rove what a serious grand jury investigation looks like,” he wryly remarks, referring to the special prosecutor investigation into the “outing” of Valerie Plame, which required Rove to testify in front of a grand jury. At least some of the documents Fitton had received from the IRS also made him suspicious about Lerner's interaction with other parts of the federal machinery. So they kept combing through the IRS documents.

Jackpot.

The Judicial Watch litigation is how the world came to find out about a May 2013 e-mail Lerner received from Richard Pilger at Justice. Lerner ultimately e-mailed Commissioner Miller, explaining that Pilger wanted to work with the IRS to “piece together false statement cases” against nonprofits. It was an idea that had come out of a hearing held by Democratic senator Sheldon Whitehouse, she explained, and “DOJ is feeling like it needs to respond.”

Miller's chief of staff was enthusiastic, suggesting that Lerner and Pilger also rope in the criminal investigations department at Justice, and the Federal Election Commission. The exchange was remarkable. It happened only two days prior to Lerner's public apology, and proved that the administration was even then working on ways to bring down nonprofits. It provided yet more evidence that the IRS (and other departments) were acting at the pressure and request of congressional Democrats. And it exposed Justice's willingness to prosecute Americans for exercising free speech.

The exchange was remarkable to Jordan for a separate reason: It was the first he'd heard about it. Justice for nearly a year had been “investigating” the IRS scandal, and had never once revealed to Congress that it had previously been in on discussions with the IRS about how to go after conservative groups.

Jordan demanded that Pilger submit to an interview. The Justice Department attorney did, and within minutes of its start fessed up that he'd in fact first reached out to Lerner about prosecutions all the way back in 2010, in the wake of the
Citizens United
decision. He also divulged that Lerner had shipped to the FBI that 1.1-million-page database of information about nonprofits, inviting the nation's G-men to go on a fishing expedition. Jordan later found out that the database contained legally protected taxpayer information that should never have been handed to FBI investigators. “So what we've got here,” Jordan says, “is this interaction beginning in 2010, and building into full-fledged targeting not long after, and now the knowledge that lots of Washington was in this from the get-go.”

Not that Pilger divulged much beyond this terse confession. In the rest of the interview, a Justice attorney, who had insisted on accompanying Pilger to the meet with Congress, instructed him to refuse to answer questions on at least thirty-four separate occasions. Pilger was not allowed to answer any queries about what internal discussions DOJ had about (c)(4) groups following
Citizens United
, what interaction Justice had with the FEC on the issue, or whether Pilger had talked to anybody at the IRS since the Lerner confession.

Judicial Watch's lawsuit led to a second, equally damning revelation: that the IRS had destroyed Lerner's e-mail.

That's not how Koskinen put it, of course. Not that Koskinen would have mentioned the issue at all, had not the agency been caught out.

Fitton, even before he received the Justice Department e-mails, knew the IRS was playing some sort of obscene game with document production. Everything about the process was weird. “Usually we get documents from a government agency all at once, or in a rolling production. But the IRS here started giving us the material in reverse chronological order—starting with things in 2013 and working back. I can't think of a time that has ever happened,” says Fitton. “Now, in retrospect, it's clear it was to help avoid anyone finding out too soon that there were missing e-mails.”

Jordan began wondering why his staff hadn't been in possession of that Pilger e-mail to Lerner in 2013, or of the interaction between Lerner and Pilger back in 2010. Congress, after all, had demanded all of Lerner's e-mails. But they'd never got any of the Pilger-Lerner correspondence.

Congress in August 2013 had first issued a subpoena for all of Lerner's documents from 2009 to 2013. The IRS ignored this request, arguing over its scope, taking a months-long hiatus from its promise of biweekly production, forbidding individual IRS employees from turning over their own correspondence to Congress, and redacting tens of thousands of pages of information. Congress as a result repeated the subpoena to Koskinen the moment he was sworn in. Within a few months, Koskinen was already mocking Republicans over this request, claiming that their document demand was too “broad” and warning it could take “years” to fulfill. He nonetheless promised to hand everything over.

Jordan knew he was still missing some e-mails, but the Pilger correspondence made him take a closer look. He realized there were entire gaps in the Lerner documents. “Something was weird. The whole timeline didn't match up,” he says. “So we went to the IRS and starting asking why.” The IRS didn't answer him. Instead, it waited a bit. And then, in obscure language in an obscure attachment to an obscure letter it sent to the Senate in June 2014, it slipped in the news that Lerner's hard drive had crashed in June 2011. Therefore, said the agency bluntly, it had forever “lost” much of her correspondence from the early part of the targeting.

Jordan couldn't believe how long the IRS had kept that news secret, and couldn't believe the way in which it had then chosen to reveal it. Koskinen had vowed in March to get Congress all of Lerner's e-mails, yet it turned out his team had already known about the hard drive crash in February. According to the IRS's story, an attorney noticed that the agency had collected sixteen thousand documents for Lerner after April 2011, but only one hundred for the period before. The IRS was in February getting ready to deliver its first tranche of documents to Judicial Watch, and Fitton thinks it was his group's lawsuit that made the IRS notice the missing records.

Koskinen, according to his own testimony, learned the documents were missing in April (as did the White House), yet took until June to inform Congress, and then only did so by burying the detail in an attachment to a mind-numbingly boring letter to the Senate. “Here's my theory,” says Jordan. “I don't think he was ever going to tell us. If the IRS hadn't been called out, if we hadn't figured out something was up after that Pilger correspondence, they'd have kept this from us forever. What does that tell you about the man brought in to ‘reform' the IRS?”

The IRS also didn't bother to tell the
Justice Department
that thousands of e-mails from their prime suspect in their “investigation” had gone missing. “Imagine,” says Jordan, “what would happen to a corporate executive if he waited months to tell federal investigators that his company had mysteriously lost its e-mails.” Justice claimed it learned about the crashed drive in the news. Hans von Spakovsky, a free-speech hero who worked for years in the Justice Department, would later point out this little detail as proof that Justice's entire investigation was bogus. “The first thing you would do if you have the FBI as your investigator [in a] situation like this is go and seize all of the documents and information the way the FBI does when they're investigating a private organization. A year and a half later, they clearly had not done that and didn't even know that all of the evidence they were supposedly supposed to be looking at, all those e-mails, didn't exist,” he testified.

Koskinen would meanwhile insist, in sworn testimony, that the IRS had exhausted every means of tracking down Lerner's documents, but that all backups and copies had been destroyed. Jordan and Congress had by this point gone beyond trusting any words coming out of his mouth, and instantly asked TIGTA to look into the affair. Sure enough, “two weeks after Koskinen says he lost them all and forever, TIGTA gets in a car and in a matter of days tracks down all these tapes the IRS claims it no longer had,” recounts Jordan. (The discovery would ultimately prove disappointing, as the tapes contained but a small fraction of what Lerner likely stored on her hard drive.)

Government employees do experience hard drive failures, just like private citizens. And Democrats like to claim that Republicans who bang on about the missing Lerner e-mails are engaged in wild conspiracy theories. And it is also generally the case that government bureaucrats are too incompetent to pull off intricate schemes.

Yet if ever there were a government scandal that rose to conspiracy levels, it's the IRS epidemic of hard drive crashes. TIGTA would later report that as many as eight custodians involved in the IRS scandal experienced a hard drive crash. Most were close to Lerner or closely involved in the affair. They included Judy Kindell (one of Lerner's top advisers); Justin Lowe (who briefed Lerner on aspects of the nonprofit cases); Ronald Shoemaker (who oversaw the cases that came to Washington); Nikole Flax (chief of staff to the IRS commissioner); and several determination specialists in Cincinnati. TIGTA would also later interview computer specialists who said that the method by which Lerner's hard drive had failed was “uncommon.” A technician noted the presence of concentric scoring of the hard drive platters on her drive, which an expert told TIGTA would “most likely” be caused by an “impact” to the hard drive or laptop. (Lerner, in her own interview with TIGTA, “denied hitting or damaging the hard drive intentionally.”)

We also know that the IRS for years was loosey-goosey in its e-mail policy, allowing Lerner to use two private e-mail addresses to conduct work, and making use of an instant-messaging system that was (in direct contravention of federal rules) never archived. Lerner in 2013 would in fact send an e-mail warning her colleagues to be “cautious” about what they put in electronic mail (because of congressional inquiries) and then asked if the agency's instant-messaging system was searchable. When told it was not, she responded, “Perfect.”

The IRS's decision to hide the crash from Congress meanwhile resulted in the destruction of Lerner documents. The IRS knew in February 2014 that Lerner's hard drive had crashed. TIGTA would find out that in March 2014, IRS employees had magnetically erased 422 tapes believed to contain Lerner's correspondence. The destruction of those tapes is suspicious, given that the IRS's chief technology officer had the previous year—in response to Congress's investigation—issued an IRS-wide directive ordering the agency was to retain all backup tapes. No more erasing. The CTO, Terry Milholland, would later tell TIGTA that he was “blown away” to discover those tapes had been erased, and that he believed the destruction “more significant than the loss of Lerner's hard drive.” The bigger point is that had Koskinen's office properly alerted Washington to Lerner's hard drive crash when it first discovered the fact—a month before the erasure—those tapes might have been saved.

Congress still has yet to see a fraction of Lerner's e-mail—and it may never. Koskinen spent his early months at the IRS worried about internal “morale” and telling Congress it needed to give his agency more funding. His appearances in front of Congress all follow the same arc: Dodge questions, jab at investigators, excuse his agency for its misdeeds. He at one point declared that the IRS hadn't even engaged in “targeting.” By July 2014—just six months on the job—he'd transitioned fully from reformer to partisan, joining Democrats in claiming that the Republicans calling for a special prosecutor were doing so for political reasons. “There are some people who don't want a straight story,” he sniped, after Republicans called for an independent probe. “I'm not sure if people really want a special prosecutor,” he claimed, since Republicans preferred to hold “all these fun hearings every week or two.”

Fitton notes that the e-mail games continue to today. The IRS at the outset created its own set of search terms for what
it
believed was responsive to Congress's request, and put all those e-mails in a separate database. “That database is all they've ever looked at in terms of our Freedom of Information requests,” says Fitton. “They refuse to go back to the original IRS system to fulfill our requests. Who knows what they are sitting on?” The watchdog chief says the IRS acknowledged in court that yet other officials “lost” their e-mail, but have refused to say who those individuals were, claiming that “people might criticize the agents in question. And apparently those government agents must be protected, no matter what happened to the Americans who employ them,” says Fitton. Koskinen has so doggedly sat on records that in August 2015 a federal court threatened to hold him personally in contempt if he didn't comply with document requests.

On the whole, Fitton says, “in terms of gamesmanship and dishonesty, there is nothing comparable.” This comes from a man whose group has sued pretty much every agency in government innumerable times.

Why? “What they were doing was unlawful, they knew it was unlawful, and they don't want anyone now to know the depth of their lawlessness—at least until enough time has passed to make it irrelevant,” says Fitton. “That's what the pushback is about. Making time pass. Allowing people to forget their outrage.”