July 16, 1998

H. Marshall Jarrett, Counsel
Office of Professional Responsibility
U.S. Department of Justice
Room 4304
950 Pennsylvania Avenue, NW
Washington, DC 20530

RE: Request For Review of Tax Division's Refusal to Authorize a Grand Jury to Investigate Senator Carol Moseley-Braun

This letter constitutes a formal request for a review by the Office of Professional Responsibility (OPR) of two decisions by the Justice Department's Tax Division and Public Integrity Section which have been called into question by former Justice Department officials and renowned tax experts. These decisions denied two Internal Revenue Service (IRS) requests to authorize a grand jury to investigate whether U.S. Senator Carol Moseley-Braun (D-IL) illegally converted campaign funds to personal use, and violated criminal tax laws.

In particular, OPR should determine whether any improper political interference dissuaded the Tax Division and its Director, Loretta Argrett, or any of her colleagues, or the Public Integrity Section, from authorizing a grand jury investigation of Senator Moseley-Braun. OPR should determine whether any Justice Department official handling Senator Moseley-Braun's case has engaged in misconduct involving violation of any standard imposed by law, applicable rules of professional conduct, or Justice Departmental policy.

On July 12, 1998, WBBM/TV-News aired a report suggesting that Senator Moseley-Braun may have converted campaign funds to personal use, and failed to pay taxes on those funds. According to the transcript of that report,

News 2 Chicago has learned that after 15 months of investigation in 1995, top Administrators of the IRS told the Tax Division of the Justice Department "we believe there are sufficient indications that tax crimes may have been committed" to warrant further investigation. And there are "allegations that Ms. Braun converted campaign funds to her own use that she did not report as income."

For instance, in 1992 and 1993, according to documents obtained by News 2 Chicago, the IRS determined Braun and [Kgosie] Mathews spent nearly $70,000 in campaign money for clothes, mostly designed wear by Giorgio Armani, almost $64,000 in travel including trips to Hawaii, Europe and Africa, $18,000 in jewelry, $25,000 for 2 jeeps and $12,000 in stereo equipment.

In all over $281,000 in campaign funds allegedly diverted to personal use....

The IRS told Justice a grand jury was needed to explore allegations going all the way back to Moseley-Braun's tenure as Cook County Recorder of Deeds, the allegations relating to possible bank fraud, bribery and other federal crimes.

Without a grand jury, said the IRS, certain documents, certain witnesses were out of their reach.

On June 20, 1995, the Tax Division of Justice, headed by Loretta Argrett said no, a grand jury was "not warranted."

Months later, top Administrators at the IRS made a 2^nd federal grand jury request and again the Justice Department said no, arguing the IRS's facts were quote "insufficient to support a grand jury."⁽¹⁾

The Justice Department decisions in 1995 to block an Internal Revenue Service criminal probe of Sen. Carol Moseley-Braun are extremely unusual, according to tax experts and former Justice and IRS officials....

[Justice Department spokesman Bert] Brandenburg said it is not unusual for Justice to reject IRS requests for grand juries. But some tax experts strongly disagreed. They noted the distinction between the IRS asking Justice to pursue an indictment versus asking Justice to open an investigative grand jury inquiry.

"It's virtually unheard of," said John Bray, a former Justice Department criminal tax division official who now practices at King & Spalding.

Robert Fink, a New York criminal tax attorney, agreed and called the decisions "highly unusual." The IRS doesn't have subpoena power and can find its investigation stymied by an inability to obtain documents, or it may be prevented from proceeding by the statute of limitations. In those cases, he said, the IRS criminal investigative division would routinely seek and the Justice Department would routinely grant the impaneling of a grand jury to continue gathering evidence.

"The Department of Justice basically sees the IRS as their client and as their attorney they should do as requested," Fink said.

Cono Namorato, a former IRS special agent and a former chief of the criminal tax division at Justice now at the tax firm Caplin & Drysdale, said the request procedure "is not that formalistic. They don't need to show much."

He said that the IRS can investigate under its own administrative powers but that "if they think that documents are being destroyed or witnesses are being tampered with, they will immediately try to get a grand jury authorized.... By and large, if it is requested, it is approved."⁽²⁾

Royal Martin: When you have the Internal Revenue Service as an institution making a request to the Department of Justice for grand jury authorization, it would be most, most unusual for that request to be rejected.

Question: Have you ever known it to happen?

Royal Martin: No.

Q: In 28 years?

Martin: Never.

Dennis Czurylo: I am shocked that it would not be approved.

Q: Is there any precedent for it?

Czurylo: I've never seen it

Q: Could it mean some sort of political intervention?

Czurylo: That is one conclusion that I would draw, yes.

Q: Some clout from above?

Czurylo: Yes, there's something else going on.⁽³⁾

The United States Constitution is grounded in the notion of the "rule of law." The aspiration is that rulers and the ruled should face equal justice before the law, and that no person should be above the law. OPR should determine whether or not that aspiration has been met regarding the investigation of Senator Moseley-Braun, and, if not, who is to blame.

Sincerely,
 

Gary Ruskin
Director

1. Carol Marin, transcript of news broadcast. WBBM/TV-News, 12 July 1998. Attachment #1 also includes Carol Marin, transcript of news broadcast. WBBM/TV-News, 13 July 1998. Mary Jacoby, "FEC Questioned Personal Expenses From 1992 Campaign." Roll Call, 16 July 1998. Mike Dorning and Marla Donato, "Federal Prosecutors Rejected IRS Probe of Moseley-Braun in '95." Chicago Tribune, 13 July 1998. Lynn Sweet, "IRS Request for Probe of Senator Was Denied." Chicago Sun-Times, 13 July 1998. "Sen. Carol Moseley-Braun Learns of 1995 IRS Investigation." Associated Press, 13 July 1998.

2. Damon Chappie and Mary Jacoby, "Justice Department Rulings Questioned." Roll Call, 16 July 1998. See Attachment #2.

3. Carol Marin, transcript of news broadcast. WBBM/TV-News, 12 July 1998. Formatting changed from original to clarify who is speaking.