The Crimes of Mena:

William Duncan


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MISCONDUCT BY SENIOR MANAGERS IN THE INTERNAL REVENUE SERVICE
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Twentieth Report by the Committee on Government Operations,
House of Representatives, One Hundred First Congress,
Second Session, October 4, 1990.
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Washington : U.S. G.P.O. : For sale by the U.S. G.P.O.,
Supt. of Docs., Congressional Sales Office, 1990.
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GOV DOC # Y 1.1/8:101-800.
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The "senior-level Justice Department official" mentioned in this report who
was alleged to have received a $400,000 bribe from Adler Berriman "Barry" 
Seal - the Louisiana drug smuggler who operated out of the Intermountain 
Regional Airport in Mena, Arkansas between 1982 and 1986 - was U.S. Attorney
General Edwin Meese III (See former IRS Criminal Investigator William C. 
Duncan's letter to Congressman Doug Barnard, Jr., October 7, 1991, page 1, 
subsequently reproduced on page 309 of Continued Investigation of 
Senior-Level Employee Misconduct and Mismanagement at the Internal Revenue
Service: Hearing before the Commerce, Consumer, and Monetary Affairs
Subcommittee of the Committee on Government Operations, House of 
Representatives, One Hundred Second Congress, First Session, July 24, 
1991, U.S. Government Printing Office, 1992).

The following excerpts are from pp. iii, 117-131.



                         LETTER OF TRANSMITTAL
                               _________

                                     HOUSE OF REPRESENTATIVES,
                                     Washington, DC, October 4, 1990.

  Hon. THOMAS S. FOLEY,
  Speaker of the House of Representatives,
  Washington, DC.

     DEAR MR. SPEAKER: By direction of the Committee on Govern-
  ment Operations, I submit herewith the committee's twentieth
  report to the 101st Congress. The committee's report is based on a
  study made by its Commerce, Consumer, and Monetary Affairs
  Subcommittee.
                                
                                     JOHN CONYERS, Jr., Chairman.
 
                                (iii)



2. THE DUNCAN CASE

   This case involves a CID special agent from IRS' Little Rock
District Office who was assigned to a major narcotics trafficking case
in Arkansas. The case illustrates the type of impediments faced by
Congress when conducting IRS oversight.
   In the opinion of the agent, the narcotics case proceeded much too
slowly due to the inaction of the U.S. attorney. Following unfavorable
media reports of the case, a House Judiciary subcommittee scheduled
hearings on the case and subpoenaed the agent to appear.
   According to the agent, while he was being counseled on the
parameters of IRC 6103 (Internal Revenue Code section dealing with
disclosure of tax information) and Rule 6(e) (Federal Rules of
Criminal Procedure section dealing with disclosures) in anticipation
of the hearing, IRS Disclosure Litigation attorneys advised him (1)
not to give any personal opinion to the congressional subcommittee,
even if asked to do so, on the U.S. attorney's handling of the case;
and (2) although he would be testifying under oath, to deny the
existence of an allegation he had heard concerning a bribe of a
senior-level Justice Department official. The agent protested to the
IRS attorneys about this advice, and eventually threatened not to
testify rather than perjure himself. Only then was he advised that he
could provide an opinion and accurately answer any question relating
to the alleged bribe, if asked.
   A question about the alleged bribe was asked at the hearing, and
the agent believes he would have perjured himself had he followed the
original advice of IRS counsel.
   This matter is relevant to the subcommittee's investigation for
two reasons: (1) It illustrates interference on the part of IRS in a
congressional inquiry and an attitude of less than full cooperation
with the Congress similar to what the subcommittee found during its
investigation of IRS misconduct, and (2) it represents an allegation
of misconduct by senior and mid-level IRS officials and the failure of
IRS to address it. The following discussion summarizes the facts and
circumstances surrounding this case.
   In early 1984, CID Special Agent William C. Duncan became involved
in a Title 31 money laundering investigation of individuals believed
to be associated with and/or doing aircraft modification and repair
work for an international narcotics smuggling organization operated by
Adler Berriman ("Barry") Seal. Barry Seal allegedly based his drug
smuggling operation from 1982 to 1986 at Mena Intermountain Regional
Airport, which is located outside of Mena, AR. Special Agent Duncan
was an experienced and highly regarded CID agent, and was the IRS/CID
representative assigned to a grand jury investigation of this matter
opened in the Western Judicial District of Arkansas by U.S. Attorney
Asa Hutchinson. Assisting in the investigation were Thomas Ross, an
FBI agent, and Russell Welch, an investigator for the Arkansas State
Police. Mr. Duncan was assigned to the case until he transferred to
the IRS Southeast Region in Atlanta in March 1987 to assume new
duties.
   In 1985, Asa Hutchinson resigned his position to pursue other
career goals and was replaced by J. Michael Fitzhugh. At some point in
the investigation, it became apparent to Special Agent Duncan and
Little Rock IRS CID Chief N. Paul Whitmore that U.S. Attorney Fitzhugh
was not taking the necessary actions to complete crucial investigative
steps, such as subpoenaing and interviewing key witnesses and
presenting important information to the grand jury. Grand jury
witnesses complained to the media about the lack of action and
indictments on the case, and unfavorable reports on the lack of
movement on the case began to appear. One media report suggested that
U.S. Attorney Fitzhugh was directed by Washington to close down this
investigation. The House Judiciary Subcommittee on Crime became aware
of these complaints and media reports, and scheduled hearings on the
matter for early 1988. Agent Duncan was subpoenaed to testify under
oath before the Subcommittee on Crime.
   In December 1987, IRS Disclosure Litigation attorney Mary Anne
Curtin was assigned to advise Mr. Duncan on the parameters of Title
26, United States Code, section 6103, the Internal Revenue Code (IRC)
section that restricts access to tax returns and return information,
and Federal Rule of Criminal Procedure 6(e), the grand jury secrecy
rule, in anticipation of his subcommittee testimony. IRS attorney
Curtin was assisted by IRS Disclosure Litigation attorney James Beyer.
Mr. Duncan discussed the case over the phone with Ms. Curtin and Mr.
Beyer on several occasions, and made his first trip to Washington in
January 1988 with CID Chief Whitmore to further discuss the case and
anticipated testimony.
   Special Agent Duncan told Commerce, Consumer, and Monetary Affairs
Subcommittee investigators that as Ms. Curtin began to advise him, it
was quickly established that IRC 6103 would not be a problem because
Mr. Duncan's was a Title 31 money laundering case. Further, Mr. Duncan
and Ms. Curtin initially agreed to use the definition of Rule 6(e)
that he used during the course of his grand jury investigation.
However, it also became apparent to Messrs. Duncan and Whitmore that
Ms. Curtin's role went beyond advice on IRC 6103 and Rule 6(e),
and encompassed control over the nature, content, and tone of Mr.
Duncan's testimony. Messrs. Duncan and Whitmore allege that during
the course of preparing for the Subcommittee on Crime hearing, Ms.
Curtin advised Mr. Duncan to answer potential subcommittee questions
in a way that would be misleading at best, and would cause Mr. Duncan
to perjure himself, at worst. Ms. Curtin denies these charges, and has
told subcommittee investigators that Mr. Duncan was not prevented from
testifying to any issue, provided that he give the Subcommittee on
Crime the basis for his statement.
   Important Facts Relating to Attorney's Advice are Disputed: Key
facts and circumstances surrounding IRS attorney Curtin's legal advice
to Special Agent Duncan are in dispute. The first involves whether Mr. 
Duncan would be permitted to express his opinion on U.S. Attorney 
Fitzhugh's handling of the case. Mr. Duncan told the Commerce,
Consumer, and Monetary Affairs Subcommittee investigators he knew
the Subcommittee on Crime would question him about U.S. Attorney 
Fitzhugh's conduct on the investigation. Mr. Duncan had some evidence
of money laundering violations yet, in his opinion, Mr. Fitzhugh
impeded his progress on the case by not issuing the subpoenas for 
critical documents he requested and needed to quickly and completely 
pursue the violations. According to Mr. Duncan, U.S. Attorney Fitzhugh 
cited a lack of funds as the reason for not issuing the subpoenas, but 
CID Chief Whitmore noted during an interview with subcommittee staff
that no other CID office reported such a funding problem. Mr. Duncan
also told the subcommittee investigators that grand jury witnesses 
claimed they were not asked key questions in their appearances before
the grand jury that the witnesses thought were crucial to the case.
Mr. Duncan wanted to relay to the Subcommittee on Crime his observations 
and opinions of Mr. Fitzhugh's inaction and ineptness, if asked.
   Different accounts exist concerning the advice given by Ms. Curtin
with regard to the actions of U.S. Attorney Fitzhugh on this case. Ms.
Curtin maintains that she advised Mr. Duncan that it would be best for
IRS and him personally if he testified only to "the facts" in the
case. However, if Mr. Duncan wished to render a personal opinion on
the conduct and progress of the case he could do so provided that he
state clearly that it was his personal opinion and give the basis for
this opinion. In a written statement prepared in connection with this
Commerce, Consumer, and Monetary Affairs Subcommittee investigation,
Ms. Curtin explained that she gave the following advice to Mr. Duncan:

   Before the employees [Duncan and Whitmore] came to the
   National Office in January 1988 to discuss in more detail
   their potential appearances before the Subcommittee [on Crime],
   I confirmed with my supervisors the legal parameters of their
   authorizations and the advice we were going to offer. As to
   the legal parameters, the employees would not be authorized to
   disclose to the Subcommittee on Crime information protected by
   section 6103 of the Internal Revenue Code; information which
   would directly or indirectly identify a confidential informant,
   if any; or information protected by Fed. R. Crim. P. 6(e), as
   defined by the U.S. Attorney or the Department of Justice. Our
   best advice to the employees, as to any witnesses, was that
   they testify truthfully, listen carefully to the questions,
   answer accurately, and stick to the facts as they know them.
   While we maintained a witness' best interests are served by
   confining his/her answers to the facts as s/he knew them,
   should either opt to offer his opinions, do so with an
   appropriate qualification that it was a personal opinion
   rather than an agency position.

   Mr. Beyer told the subcommittee investigators that he witnessed
Ms. Curtin advising Mr. Duncan that he should state the facts as he
knew them and that if he (Duncan) wished to render an opinion, to be
sure to state it as his personal opinion and not an agency position.
Ms. Curtin told the subcommittee investigators that her last
face-to-face meeting with Mr. Duncan prior to the day of his testimony
occurred in early January, and said that she discussed issues relating
to his testimony on several occasions over the telephone before Mr.
Duncan's February 26 appearance before the Subcommittee on Crime. She
denied that she counseled Messrs. Duncan and Whitmore on February 25,
1988 - the day before Duncan's testimony was to be given - or early
on February 26 - the day of the hearings. Mr. Beyer also told the
subcommittee investigators that his last face-to-face contact with
Messrs. Duncan and Whitmore was in early January, and that he had his
last telephone contact with Mr. Duncan in mid-February 1988. Mr. Beyer
said he did not participate in any preparatory briefings immediately
prior to Mr. Duncan's appearance before the Subcommittee on Crime.
   Special Agent Duncan's and CID Chief Whitmore's account of these
facts and circumstances differ markedly from Ms. Curtin's. According to
Mr. Duncan, Ms. Curtin told him during a face-to-face meeting on February
25, 1988 - the day before the hearing - that IRS could not have its agents
criticizing the actions of the U.S. attorney, even if asked by
Subcommittee on Crime representatives about specific problems on the 
case. Mr. Duncan testified, under oath, at the Commerce, Consumer, and 
Monetary Affairs Subcommittee's July 1989 hearings that Ms. Curtin's 
orders were to testify only that "I would have done it differently." Mr. 
Duncan told subcommittee investigators that Ms. Curtin advised him not to
give his candid and personal insights into the case, even if asked, and 
even if he characterized them as strictly his opinion. It was apparent to 
Mr. Duncan that Ms. Curtin was extremely concerned that IRS could be 
involved in adverse publicity about the case, and her advice was designed 
to prohibit any potentially damaging statement from an IRS employee. 
According to Mr. Duncan's sworn testimony at the July 1989 hearings, 
after a particularly heated exchange in the final briefing process, Ms. 
Curtin told him that Bryan Slone, the Assistant to the Commissioner for 
Legislative Liaison, asked her how the briefing was going. Ms. Curtin 
told Mr. Slone that Mr. Duncan was very frustrated with the U.S. attorney 
and the lack of progress on the case. Mr. Slone reportedly told Curtin, 
"Well, Bill is just going to have to get the big picture." Mr. Duncan 
interpreted this remark to mean that as far as the Commissioner was 
concerned, it would be best to do what Ms. Curtin told him to do, and 
that the Commissioner's office concurred with Ms. Curtin's attempt to 
limit his testimony. CID Chief Whitmore was present during Ms. Curtin's
counseling that day, and concurs completely with Mr. Duncan's account
of the advice given by Ms. Curtin. Messrs. Duncan and Whitmore
testified under oath to this scenario at the Commerce, Consumer, and
Monetary Affairs Subcommittee's July 1989 hearings.
   The second major fact in dispute involves Special Agent Duncan's
allegation that he was given improper and possibly unlawful advice by
IRS attorneys. While reviewing case records in Arkansas in January
1988 in preparation for his testimony, Mr. Duncan received a telephone
call from Arkansas State Police investigator Russell Welch.
Investigator Welch told Mr. Duncan that he had received a phone call
from a former Deputy Sheriff concerning an alleged bribe of
about $400,000 from the Barry Seal organization to a high-level
Justice Department official. The circumstances of this alleged bribe
was that in return for the money the Justice official would see that
the case against Seal would die a slow death. Thus, U.S. Attorney
Fitzhugh's inaction on the case could be explained by the alleged
bribe. Soon after he received this information, Mr. Duncan telephoned
Ms. Curtin to discuss it. Mr. Duncan has stated to investigators from
the subcommittee and under oath at the subcommittee's hearings, that
as a trained and experienced CID special agent, he knew that this
allegation about a bribe to the Justice official was "incredible," and
that he never represented this information as fact, substantiated, or
corroborated. He only represented it to Ms. Curtin as information
provided to him and others that the Subcommittee on Crime might
question him about.
   Mr. Duncan told this subcommittee that this matter of the alleged
bribe was discussed at the February 25, 1988, meeting (the meeting
that Ms. Curtin said never took place). Mr. Duncan told Ms. Curtin
that he did not wish to volunteer this information to the Subcommittee
on Crime or represent it as fact. However, if questioned about an
alleged bribe or asked if he had any information along those lines, it
was Mr. Duncan's intention to relate the phone call from the Arkansas
State Police investigator and the information received. According to
Mr. Duncan, Ms. Curtin advised him that what he received from the
investigator was not information because it was not substantiated.
If asked about this phone call, Ms. Curtin advised Mr. Duncan to use
these exact words, "I have no information." Mr. Duncan, at this
subcommittee's July 1989 IRS misconduct hearings, testified, under
oath, that this advice was provided by the IRS attorneys. Paul
Whitmore, who was present at this meeting with Ms. Curtin,
corroborated Mr. Duncan's testimony when he (Whitmore) also testified,
under oath, at the July hearings.
   Mr. Duncan was upset with this advice because he believed that it
would cause him to perjure himself. At some point during the
discussion with Ms. Curtin, Paul Whitmore explained to her that CID
frequently receives telephonic information from informants, and that
the information is placed on a Form 3949, titled "Information Item."
According to Mr. Whitmore's sworn testimony before this subcommittee,
Ms. Curtin said that the name of the form should be changed because
what is received over the phone in such circumstances is not
information. Ms. Curtin, in her written statement to the subcommittee
not only denied that this conversation with Mr. Whitmore took place,
she stated she never saw Mr. Whitmore after the January meeting in
Washington, DC. Mr. Whitmore has vehemently denied this assertion by
Ms. Curtin.
   Long and sometimes heated discussions followed concerning Ms.
Curtin's advice. Mr. Duncan told this subcommittee at the July 1989
hearings that he was advised that IRS could not have an allegation
about a bribe to a high-ranking Government official attributed in the
newspapers to an IRS agent because it could be embarrassing and
somehow tarnish the image of the IRS; thus, the "I have no
information" advice. According to Mr. Duncan he was still not
satisfied with this advice, and asked Ms. Curtin for a second opinion
from her superior. Ms. Curtin took Messrs. Duncan and Whitmore to the
office of Peter Filpi, the Chief of the Disclosure Litigation Section.
Ms. Curtin explained the situation and her advice for Mr. Duncan to
state, "I have no information." According to Messrs. Duncan and
Whitmore, Mr. Filpi agreed with Ms. Curtin and said what Mr. Duncan
received on the phone was "not information, it's nothing." After
further heated argument, Mr. Duncan told Ms. Curtin and Mr. Filpi that
if they insisted he had to make a false statement at the hearing, then
he would refuse to testify. According to Mr. Duncan, after his threat
not to testify, Mr. Filpi agreed to allow him (Mr. Duncan) to testify
that "I have no knowledge - other than the phone call from the Arkansas
State Police investigator." This is what Mr. Duncan wanted to tell the
Subcommittee on Crime all along, and he was satisfied with this
advice. At the hearing, Mr. Duncan was asked about information
relating to a bribe to a Government official, and he answered the
question in that manner. However, had he not been persistent in his
demand to be allowed to testify accurately and truthfully, he would
have been in a position to commit perjury.
   IRS attorneys' advice to Mr. Duncan to be less that truthful with
a congressional subcommittee is certainly very disturbing, but it was
not unique. During the course of this subcommittee's investigation of
IRS senior-level misconduct, four different witnesses told the
subcommittee that they were advised by IRS attorneys not to provide
opinions or speculation relating to cases under review, and also to
volunteer as little information as possible. The Commerce, Consumer,
and Monetary Affairs Subcommittee believes such advice is not proper
because it denies congressional oversight committees important
information from individuals who have a first-hand knowledge of
program operations and specific incidents.
   IRS' Reaction: Inaction and Denial. - Messrs. Duncan and
Whitmore were very aware of the implications of Ms. Curtin's advice.
Adhering to such advice would have caused Mr. Duncan to perjure
himself. Hayden Gregory, Chief Counsel for the Subcommittee on Crime,
told the Commerce, Consumer, and Monetary Affairs Subcommittee
investigators that if Mr. Duncan had followed Ms. Curtin's initial
advice, he would have perjured himself during the 1988 hearings by the
Subcommittee on Crime. Mr. Gregory said that he was aware of the
alleged bribe and would have perceived a response of "I have no
information" from Mr. Duncan as perjury.
   Believing that Ms. Curtin's improper advice constituted a conduct
violation or possibly a criminal violation, Messrs. Duncan and
Whitmore decided to report her wrongdoing to their superiors. Messrs.
Duncan and Whitmore told subcommittee investigators that immediately
after Mr. Duncan's testimony on February 26, 1988, before the
Subcommittee on Crime, they went directly to the Office of the
Assistant Commissioner for Criminal Investigation and complained about
the Disclosure Litigation advice to Joseph Pagani, then the Deputy
Assistant Commissioner for Criminal Investigation. Messrs. Duncan and
Whitmore gave Mr. Pagani a detailed briefing on the nature and scope
of Ms. Curtin's advice. Mr. Duncan told subcommittee investigators
that upon his return to the Southeast Region, he also gave a detailed
account of his concerns to David Palmer, the Assistant Regional
Commissioner for Criminal Investigation; Al Freeland, the Assistant
Regional Commissioner's Executive Assistant and Duncan's supervisor;
Jean Pete, the Region's Disclosure Officer; Jack Morton, the Regional
Counsel; and Melvin Benson, the Atlanta District CID Chief. Mr. Duncan
later relayed these concerns to Jimmy Martin, who succeeded Freeland
as Executive Assistant. While these officials purportedly agreed with
Mr. Duncan on the impropriety of Ms. Curtin's advice and apparently
sympathized with his alarm over the dangers and risks such advice
presents to IRS, none took action to contact Inspection or the
Treasury Inspector General to prompt a formal investigation of the
matter. According to Mr. Duncan, there is no way these officials could
have misinterpreted the facts and circumstances he presented - they
simply chose not to act on this serious impropriety.
   This subcommittee became aware of this matter in early December
1988, when a senior CID agent, who requested anonymity, brought it and
several other allegations of CID misconduct to the subcommittee's
attention. The subcommittee arranged to interview Mr. Duncan on the
telephone on March 6, 1989, and again in person on March 23, 1989, in
Atlanta, GA, without the presence of Disclosure Litigation attorneys,
at Mr. Duncan's request. On both occasions, subcommittee investigators
spent hours questioning Mr. Duncan on the specifics of the matter, and
his account of the facts and circumstances did not change. On April
19, 1989, Chairman Barnard formally notified IRS of our interest in
interviewing Messrs. Duncan and Whitmore "on their knowledge of IRS
procedures and policies." Once the subcommittee's interest in Mr.
Duncan was transmitted to IRS, an interesting series of events
commenced.
   The subcommittee staff director, the subcommittee investigators,
and a minority staff person were working in Los Angeles on the Saranow
case during the week of May 8-12, 1989. This trip was formally
arranged with the knowledge of IRS officials, and Disclosure
Litigation attorneys were present during the subcommittee's official
Los Angeles interviews. On May 9, while the subcommittee staff was not
in Washington, CID officials had Mr. Duncan report to the National
Office to discuss the "Barnard subcommittee's" interest in
interviewing him. At this meeting were Bruce Milburn, the Assistant
Commissioner for Criminal Investigation; David Palmer, the Southeast
Assistant Regional Commissioner for Criminal Investigation; and Warren
Harrison and John Jennings, technical assistants to Mr. Milburn.
According to Mr. Duncan, he again gave his account of the facts and
circumstances surrounding his work on the Seal case and Ms. Curtin's
advice for him to testify falsely before the Subcommittee on Crime.
Mr. Duncan was urged to reduce his allegations to writing and forward
them to Inspection.
   On May 25, about 2 weeks after this meeting, Assistant
Commissioner Milburn sent a memo to Assistant Regional Commissioner
Palmer in which he states, "These recent (emphasis added)
allegations about events occurring some fifteen months ago are
serious; they cannot be permitted to remain unresolved."
   Mr. Milburn goes on to state that he discussed Mr. Duncan's
allegations with representatives of Chief Counsel and urged that Mr.
Duncan ". . . reduce his concerns to writing and forward them for
appropriate action directly to the Office of Inspector General,
Department of the Treasury . . .". On the matter of the U.S.
attorney's conduct on the Seal case, Mr. Milburn again advised that
Duncan ". . . reduce his concerns to writing and report apparent
misconduct by the U.S. Attorney to the Office of Professional
Responsibility, Department of Justice . . .". Mr. Milburn closed the
memo by stating, "Please give Bill (Duncan) a copy of this memorandum
and encourage him to resolve his concern by properly reporting his
allegations." Assistant Commissioner Milburn's statements were
curious, since Mr. Duncan's allegations were not recent and Mr. Duncan
claimed he conveyed his concerns about Ms. Curtin's improper and
possibly illegal advice over a year before to at least seven CID
officials in his chain of command. The memorandum implies this was
the first time Mr. Duncan reported his allegations when, in fact, this
May 9 meeting was at least the second time Assistant Regional
Commissioner Palmer heard the allegations directly from Mr. Duncan.
   Soon after Mr. Duncan's May 1989 visit to Washington, his
allegations were made known to the Office of Chief Counsel, Disclosure
Litigation Division. Based on IRS documents obtained by
the subcommittee, on May 23 a meeting with the CID officials was called
by James Keightly, the Associate Chief Counsel for Litigation, at the
request of Peter Filpi, John Cummings, and Ms. Curtin of the
Disclosure Litigation Division. At the meeting, CID officials outlined
Mr. Duncan's allegations and requested, on Mr. Duncan's behalf,
certain Disclosure files, including copies of all memoranda to the
file memorializing briefings or telephone conversations related to
this matter. On June 2, Mr. Filpi forwarded to Inspection a memo
outlining the results of this meeting and "a complete copy (as of this
date) of our legal files concerning this matter."
   Upon receiving these allegations from Disclosure Litigation, Ted
Kern, the Assistant Commissioner for Inspection, turned the matter and
Disclosure files over to his Internal Security Division on June 5. Mr.
Kern's transmittal memo contains the following curious
statement: "From what I understand, Mr. Duncan is making allegations
that he was not allowed to testify to certain things of which he had
knowledge, however, the record of the hearing as I understand it shows
that he did testify specifically on these matters." This statement
presupposes that the major focus of Mr. Duncan's allegation was that
he was not permitted to testify to his knowledge. However, Mr. Duncan
has repeatedly stated that his allegation involves improper and
possibly unlawful advice which, if followed, would have led him to
commit perjury. It is unknown whether Mr. Kern's erroneous and highly
inappropriate statement resulted from his own reading of the matter or
whether it came from a briefing by Disclosure Litigation officials.
Either way, in the subcommittee's opinion, the statement in the
transmittal memo was very prejudicial against Mr. Duncan's allegation
and overall concern, and it was improper for Mr. Kern, the Assistant
Commissioner for Inspection, to attempt to bias the IRS investigators
in this manner. Subsequently, the matter was turned over to the
Treasury Inspector General for investigation.
   The Commerce, Consumer, and Monetary Affairs Subcommittee arranged
to formally interview Messrs. Duncan and Whitmore on June 8, 1989. Mr.
Duncan was interviewed first, under oath, and declined to have
Disclosure Litigation attorneys accompany him at the interview. For
the third time, Mr. Duncan testified to the subcommittee, in detail,
that Ms. Curtin advised him to report to the Subcommittee on Crime
that he had no information about the alleged bribe to a Justice
official, and that after he threatened not to testify, her
instructions were modified by Mr. Filpi on February 25, 1988, to
include the phrase ". . . other than a telephone call from an Arkansas
State policeman." He emphasized that as a special agent with 16 years
of experience he realized that the allegation required substantiation,
but he merely wanted to testify truthfully, if asked, that he had
heard the allegation. Mr. Duncan again testified that Ms. Curtin
advised him not to express his opinion about Assistant U.S. Attorney
Fitzhugh's handling of the Seal case other than to say "I would have
done it differently." Mr. Duncan stated that in his opinion, the
function of the Disclosure Litigation attorneys' intensive briefings
before his appearance before the Subcommittee on Crime was to control
his testimony and thereby limit that subcommittee's ability to oversee
and scrutinize the integrity of the Seal investigation. He
complained about what he considered to be improper and illegal advice
to everyone in the CID hierarchy. Mr. Duncan said they all agreed with
his observations and viewpoint, but they did nothing. He did not
report the allegation against Ms. Curtin to Inspection because it
would only get back to the Commissioner's office and he had very
little faith in Inspection's ability to perform a credible
investigation of a senior IRS employee. Mr. Duncan noted that once
IRS officials realized the nature of this subcommittee's (Commerce,
Consumer and Monetary Affairs) interest in his story, he was forbidden
from reviewing IRS documents pertaining to the Seal investigation.
   CID Chief Whitmore was interviewed immediately after Mr. Duncan.
Mr. Whitmore was also placed under oath, but opted to have Disclosure
Litigation attorneys present during his testimony. Mr. Whitmore
corroborated Mr. Duncan's testimony that Ms. Curtin advised Mr. Duncan
to state he had no information on the alleged bribe to the Justice
official, and to state only that he would have conducted the Seal
investigation differently than Assistant U.S. Attorney Fitzhugh. Mr.
Whitmore testified that Ms. Curtin told Mr. Duncan not to express his
personal opinions but rather to state only facts. Mr. Whitmore
believes that Ms. Curtin was concerned that IRS might somehow be
linked to bad publicity about the alleged bribe and the mishandling of
a major drug trafficking case, and she was attempting to preserve the
image of IRS - but at the risk of causing an agent to commit perjury.
Mr. Whitmore characterized Mr. Duncan as a hard working, enthusiastic,
conscientious agent whom he never knew to lie about or misrepresent
any facts or circumstances.
   Disclosure Litigation attorneys Lewis Carluzzo and Joseph Urban
attended the Whitmore interview. These attorneys have attended dozens
of subcommittee interviews during the IRS misconduct investigation
ostensibly to protect the interviewees from making illegal disclosures
of tax information. However, the subcommittee had long suspected that
there was another motive behind IRS strongly encouraging its employees
to have these attorneys in attendance - namely to report back to
management the substance and progress of the subcommittee's
investigation. The subcommittee's suspicions were confirmed after the
Whitmore interview.
   On June 9, 1989 (the day after the Whitmore interview), IRS
attorneys Carluzzo and Urban briefed Associate Chief Counsel Keightly
on Mr. Whitmore's testimony against fellow Disclosure Litigation
attorney Curtin. This conversation was followed up with a memo to Mr.
Keightly dated June 13, 1989, which stated in part:

   According to Whitmore: A third party source told Duncan that
   then [Justice official] was involved in criminal misconduct.
   Duncan viewed this as "information" which he wanted to provide
   to the Judiciary Subcommittee. Ms. Curtin did not agree with
   this characterization, since Duncan had no hard evidence to
   back up the allegation. Ms. Curtin told Duncan that if the
   Judiciary Subcommittee asked Duncan if he had "information" on
   [Justice official], Duncan should reply that he did not.
   Whitmore and Duncan were not comfortable with this advice, and
   the matter was brought to the attention of Ms. Curtin's
   supervisor, Mr. Filpi. Mr. Filpi resolved the disagreement to
   everyone's satisfaction.

This summarization missed key points of Mr. Whitmore's testimony.
First, it does not acknowledge the long and heated debates between
Duncan, Whitmore, Curtin, and later Filpi on what constitutes 
"information" and how potential questions should be correctly and 
truthfully answered. Second, the matter was not resolved to everyone's 
satisfaction, as Messrs. Duncan and Whitmore complained about the nature 
of Ms. Curtin's advice to numerous CID officials at the time Mr. Duncan 
received the advice.
   The memorandum went on to state that subcommittee investigators 
"pursued this matter as if Ms. Curtin directed Duncan to
lie to Congress. Whitmore never stated this to be the case, but in
answering questions, he appeared on numerous occasions to adopt that
premise." The memo later stated that the investigators ". . . often
asked judgement-laden questions which appeared to be designed to lead
Whitmore to a particular result, or to confirm a conclusion which they
had already reached . . . Nonetheless, Whitmore did appear to confirm
the suggestion that Ms. Curtin told Duncan to lie to and/or
intentionally withhold information from Congress."
   Mr. Whitmore was questioned about his interview by the Commerce,
Consumer, and Monetary Affairs Subcommittee when he testified, under
oath, at the subcommittee hearing on July 27, 1989. At the hearing the
following exchange took place:

   Mr. HASTERT. Mr. Whitmore, were you told about the memos that
   Mr. Duncan saw, or did you actually see them.

   Mr. WHITMORE. I have now seen them.

   Mr. HASTERT. Did you think those were accurate
   representations of your interview?

   Mr. WHITMORE. They were slanted.

   Mr. HASTERT. How?

   Mr. WHITMORE. I am trying to recall the exact wording.
   Leading questions were asked of me, which was asked this
   morning by the chairman. I didn't think any questions were
   leading.

   Mr. Whitmore has since told the subcommittee that he will never
allow IRS attorneys to accompany him on congressional interviews
because he believes they are there to protect only the organization
and not the individual. Associate Chief Counsel Keightly was asked at
that hearing whether this memorandum confirmed the subcommittee's
longstanding position that his Disclosure Litigation attorneys were
reporting to management on the substance and results of the
subcommittee's interviews of IRS employees. Mr. Keightly stated, under
oath, that he was informed of the results of this meeting and other
interviews of IRS staff, but that he did not consider himself to be
a part of management and, therefore, the subcommittee's allegation
was not true. Mr. Keightly is one of five Associate Chief Counsels who
report directly to the IRS Chief Counsel, who is a political appointee
and an advisor to the Commissioner. In fact, the IRS Chief Counsel,
along with the Commissioner, signs the IRS Annual Report. Thus, for
Mr. Keightly to assert that he is not "management" because he is an
attorney is simply ludicrous and is another example of the attitude of
less than full cooperation and candidness which IRS adopted with
respect to the subcommittee's investigation.
   The subcommittee interviewed Disclosure Litigation attorneys Jim
Beyer, Peter Filpi, John Cummings, and Mary Anne Curtin on the advice
given to Mr. Duncan in preparation for his testimony before the
Subcommittee on Crime. All requested that Disclosure Litigation
attorneys be present, and all were interviewed while under oath. Mr.
Beyer told subcommittee investigators that he was involved in
telephone discussions with Mr. Duncan on his testimony, and with
personal meetings with Messrs. Duncan and Whitmore, and Ms. Curtin in
early January 1988. Mr. Beyer witnessed Ms. Curtin telling Mr. Duncan
that he could give an opinion so long as he also stated the basis for
it. He recalled that Mr. Duncan was nervous about his upcoming
appearance, and that Mr. Duncan never complained about the advice. Mr.
Duncan telephoned Mr. Beyer to discuss the alleged Justice official
bribe, and he turned the matter over to Ms. Curtin. Mr. Beyer said his
last contact with Mr. Duncan was in mid-February. Mr. Beyer had no
reason to think that Mr. Duncan would intentionally lie about
anything.
   For his interview by the subcommittee, Mr. Filpi asked to be
accompanied by Joseph Scott, his personal attorney. Mr. Filpi
testified that he recalled the genesis of Mr. Duncan's testimony
before the Subcommittee on Crime and assigning the matter to Ms.
Curtin. In early January, when Messrs. Duncan and Whitmore came to
Washington to prepare for Mr. Duncan's appearance, Mr. Curtin
introduced them to Messrs. Filpi and Cummings. According to Mr. Filpi,
this was a congenial meeting lasting about 15-20 minutes during which
Mr. Filpi echoed Ms. Curtin's advice on rendering opinions - that Mr.
Duncan could express the facts of the case and his personal opinion,
provided he also give the basis for it. Mr. Filpi said that Mr. Duncan
seemed satisfied with this advice. Mr. Filpi testified that he did
recall Ms. Curtin telling him about the allegation involving the
Justice official, but could not recall talking about the matter with
Mr. Duncan. Mr. Filpi said he had no other meetings with Messrs.
Duncan and Whitmore aside from the brief meeting in early January.
   Mr. Cummings stated that Ms. Curtin and Mr. Beyer were assigned to
help prepare Mr. Duncan for his appearance before the Subcommittee on
Crime. He also recalled meeting Mr. Duncan when Ms. Curtin brought him
and Mr. Whitmore to Mr. Filpi's office in January 1988 to discuss the
facts developed on the case and the legal guidance provided by Ms.
Curtin. Mr. Cummings did not sense that a confrontation precipitated
that meeting. At this time, Mr. Duncan's testimony centered on the
assistant U.S. attorney's conduct of the case. He later learned from
Mr. Beyer or Ms. Curtin about the alleged bribe. Mr. Cummings did not
know what advice Ms. Curtin gave Mr. Duncan on reporting the alleged
bribe to Congress, but he assumed it would be the same as with other
issues.
   Ms. Curtin told the subcommittee about the genesis of her
involvement with Mr. Duncan and that the meeting in early January
was the only personal meeting she had with Messrs. Duncan and
Whitmore. She recalled that during the January meeting Mr. Duncan
was discussing allegations and opinions in absolute terms (as though
they were facts), and that she advised him that when testifying he
should state the facts as he knew them and only render a personal
opinion as long as he also provided the basis for it. She introduced
Messrs. Duncan and Whitmore to Attorneys Filpi and Cummings, and they
concurred with the advice she gave on rendering opinions - which was
consistent with advice given other employees testifying before
Congress. This advice is designed to protect both the employee and the
agency from criticism and loss of credibility. Ms. Curtin denied that
she advised Mr. Duncan to state only that he would have done it
differently.
   With respect to the allegation involving the Justice official, Ms.
Curtin recalled that Mr. Duncan telephoned her about the matter in
February. However, Ms. Curtin did not recall giving Mr. Duncan advice
on the bribe other than the type of guidance she previously gave him
on the assistant U.S. attorney's handling of the case. This fact has
been vehemently denied by Messrs. Duncan and Whitmore. Ms. Curtin
testified that she did not recall talking to Mr. Whitmore about the
matter. Again, Ms. Curtin said there was no February 25 meeting
between her, Duncan, and Whitmore, and later Filpi. Another fact
that has been denied, under oath, by Messrs. Duncan and Whitmore.
   Subsequent to this subcommittee's July 1989 hearings, Mr. Whitmore
told subcommittee staff that his travel vouchers show that he was in
Washington, DC, on February 25 and 26, 1988. Mr. Whitmore stated he
was in Washington for only one reason - to attend Mr. Duncan's
counseling by the disclosure attorneys prior to his testimony before
the Subcommittee on Crime. Mr. Whitmore stated that the Southeast
Region Assistant Regional Commissioner requested he travel to
Washington to attend Mr. Duncan's counseling sessions.
   The issue of whether there was a February 25 meeting between
Duncan, Whitmore, Curtin, and Filpi is central to the subcommittee's
interest in this matter. According to Messrs. Duncan and Whitmore, it
was in these meetings that Ms. Curtin stiffened her advice to Mr.
Duncan on not criticizing the assistant U.S. attorney's conduct on the
Seal case and on not acknowledging the existence of information on the
alleged bribe to the Justice official. Messrs. Duncan and Whitmore
maintain that Ms. Curtin took extensive notes of the discussions for
each of their meetings, including the meeting on February 25.
Interestingly, the notes taken by Ms. Curtin and made available to
Inspection include every meeting except the one held on February
25. All four IRS attorneys interviewed by the subcommittee on this
matter deny that such a meeting took place. However, it is extremely
difficult, in fact almost impossible, to believe that IRS would allow
Mr. Duncan to breeze into Washington the day before testifying in
front of the Subcommittee on Crime without the benefit of some sort of
last-minute counseling - especially given the serious allegation
involving a top-level Justice Department official that Mr. Duncan
became aware of after the January meeting. Throughout this
subcommittee's investigation of IRS senior-level misconduct,
subcommittee staff were told by witnesses of the constant, self
injection of disclosure litigation attorneys into the interview
process. The attorneys were relentless in their pursuit of this
subcommittee's witnesses - to the point where some former IRS employees
who agreed to be interviewed by the subcommittee cancelled the
interviews after being contacted by disclosure attorneys who advised
the individuals not to permit the interviews until they could be
counseled by the disclosure attorneys in person.
   Immediately after this subcommittee's hearings ended on July 27,
1989, Mr. Duncan approached IRS Commissioner Fred Goldberg to discuss
the improper and possibly unlawful counseling provided by Mr. Curtin.
Mr. Duncan was particularly concerned that IRS attorneys denied that
the meeting in February ever took place. Mr. Duncan offered to take a
polygraph test to prove the veracity of his claim, and suggested to
Commissioner Goldberg that he direct Ms. Curtin and Mr. Filpi to do
the same. Commissioner Goldberg did not comment on the suggestion.
   As previously mentioned, the allegation of Ms. Curtin's improper
and possibly unlawful advice was forwarded to the Treasury Inspector
General for investigation in June 1989. As part of this investigation,
Mr. Duncan offered to take a polygraph test and Mr. Whitmore agreed to
do the same. A polygraph test was administered to Mr. Whitmore on
August 8, 1989. The test centered on three key questions: (1) Did Bill
Duncan and Paul Whitmore meet with Mary Anne Curtin and Pete Filpi in
February 1988? (2) Did they (the attorneys) advise to withhold
information from the subcommittee? (3) Are you answering truthfully
about the meeting? Mr. Whitmore answered "yes" to each of these
questions, and was told that the test indicated that he was telling
the truth. Mr. Duncan was administered a polygraph test on September
19, 1989, which keyed on the same questions. Mr. Duncan
responded "yes" to these questions and, as with Mr. Whitmore, was told
that the test indicated that he was telling the truth. Ms. Curtin and
Mr. Filpi declined to be administered a polygraph test, and asserted
that such tests are often inconclusive and often not permissible as
evidence in a court of law. These test results and the results of
other investigative work will be included in an Inspector General
investigation report that is imminent.
   Instructing an employee to lie to Congress is a serious charge
that this subcommittee does not take lightly. If true, such advice
calls into question the testimony of countless IRS employees who have
testified before the Congress in the past. Congress needs truthful and
candid information if it is to effectively carry out its oversight
responsibilities. Advice of the sort given by Mary Anne Curtin (even
the advice she admits to) calls into question the integrity of the IRS
in dealing with congressional inquiries.
   In a recent letter to subcommittee Chairman Barnard, Mr. Whitmore
charged Mr. Filpi, Ms. Curtin, and Mr. Keightly with a number of
offenses, which include perjury, destruction of evidence, and
conspiracy. (See letter at appendix 12). Considering Mr. Whitmore's
position as the Chief of IRS' Criminal Investigation Training Center
in Glynco, GA, his recent allegations are not to be taken lightly.
Upon completion of the Inspector General's investigation, this
subcommittee will request that the Justice Department evaluate the IG
report and the subcommittee's information on this matter.






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