The Crimes of Mena:

The IRS Blocked an Investigation


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IRS SENIOR EMPLOYEE MISCONDUCT PROBLEMS
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Hearings before the Commerce, Consumer, and Monetary
Affairs Subcommittee of the Committee on Government
Operations, House of Representatives, One Hundred First
Congress, First Session, July 25, 26, and 27, 1989.
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Washington : U.S. G.P.O. : For sale by the Supt. of Docs.,
Congressional Sales Office, U.S. G.P.O., 1989.
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GOV DOC # Y 4.G 74/7:Em 7/11.
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Congressman Doug Barnard, Jr. (D-Georgia) was Chairman of the Commerce, 
Consumer, and Monetary Affairs Subcommittee.

The following exchange occurred on July 27, 1989 between William Alexander, 
Congressman (D-Arkansas), Michael Murphy, Senior Deputy Commissioner of 
the Internal Revenue Service, and Fred Goldberg, Commissioner of the 
Internal Revenue Service.

Excerpts are from pages 554-559.


   Mr. BARNARD. Well - I want to take that back up. I think we need to.
I have invited Mr. Alexander, who is not a member of the committee, but
a former member of the committee, to come - to sit in at these hearings
and according the accommodations that we have in Congress, I will give
him the opportunity to ask any questions.
   Mr. ALEXANDER. Thank you very much, Mr. Chairman.
   First, I would like to thank the chairman, the minority, and the entire
committee for permitting these hearings and I would explain my reason for 
being here, to state for the record and under oath, if you wish, Mr. Chairman,
that the House Appropriations Committee, specifically the Subcommittees 
on Commerce, Justice, State, and Judiciary and Treasury, both of which I 
am a member of, together and in cooperation with the Subcommittee on 
Crime, Chairman Hughes of the House Judiciary Committee, the General 
Accounting Office, and in cooperation with the Criminal Investigation 
Division of the Arkansas State Police, have been investigating events 
surrounding the Mena, AR, Airport for several years.
   The allegations here are of the most serious nature involving allegation
of high crimes in high places in Washington.
   They involve allegations that a C-123/C-130 operation, contract operation,
was operating out of Mena Airport transporting guns to Central America 
and running drugs to Arkansas, and laundering money in Arkansas from the 
sale of those drugs.
   I wish at this point to state publicly my appreciation for the cooperation
of the Federal Bureau of Investigation and the Drug Enforcement
Administration, both of which agencies have cooperated with the House 
Appropriations Committee, the General Accounting Office, the Subcommittee 
on Crime, and the Arkansas State Police.
   This investigation led us to the Internal Revenue Service about 1 year 
ago, at which time I attempted to obtain that agency's cooperation by 
asking IRS to provide access to one of the witnesses here today.
   I believe it was in September of last year, because of the failure of
that cooperation, I wrote a letter to Mr. Gibbs, who was then Commissioner,
and I will submit a copy of that letter for the record, requesting the 
cooperation of the Commissioner and specifically requesting the access to 
information and testimony of Mr. Duncan. 
   I did not receive a reply to that letter by March of this year, and I 
spoke directly to Mr. Murphy, who appeared before our Committee on Treasury
appropriations. Mr. Murphy appeared to be cooperative and stated his
cooperation, but as of this moment, except for the evidence that I have 
heard here today and through the General Accounting Office resulting 
from the resignation of Mr. Duncan as a criminal investigator for the 
Internal Revenue Service, the IRS has not provided any evidence or any 
access to that evidence to me, to the Subcommittee on Crime nor to the 
General Accounting Office or the Arkansas State Police Criminal
Division.
   I will state for the record that it has only been through the resignation
of Mr. Duncan and his testimony here today that we have discovered part 
of the truth that, we think will lead us to an indictment on money laundering
charges for drug trafficking in Arkansas.
   The action of the Internal Revenue Service has prevented the Government
from investigating and prosecuting these cases in Arkansas.
   I don't think that it is intentional on your part to do so, but I 
would like to state to you that I have for over a year been trying to gain
access to Mr. Duncan's testimony.
   It has been explained to me that you could not provide it because it 
was prevented by the security provisions of the confidentiality requirements
on tax returns and grand jury information.
   I might say that the emissary that you have sent to me has been
most polite in explaining that to me.
   The effect of the failure of your cooperation has been to permit
the statute of limitations to continue to run on persons that we believe
to be drug traffickers, in effect, to protect drug traffickers and
their drug lords that are profiting from the illicit drug trafficking in
the United States and specifically in my State of Arkansas.
   That is to say, that little children in Arkansas are buying drugs
because we are unable to discover sufficient evidence to bring indictments
to prevent that from happening. I don't think you intend to do that, but 
that is the effect of the Government and the bureaucracy not cooperating 
with law enforcement officials.
   It is a serious problem in this country, and one of the most serious 
obstacles to attacking the problem, the war on drugs, is the bureaucracy,
the rules and regulations, and the intentional prevention of the submission
of evidence that we have heard from the witnesses today.
   I would just like to ask a couple of questions about those witnesses,
because my committee, together with the Subcommittee on Crime, and in
cooperation with this committee, will be subpoenaing you gentlemen in the 
future if that is necessary to get all the information. We hope that is 
not necessary.
   Mr. Murphy, did you know that since I talked to you in March my
effort to acquire access to needed information to pursue a prosecution
in Arkansas has not been forthcoming?
   Mr. MURPHY. Mr. Alexander, I am aware that there has been a serious 
issue as to what information, if any, we could provide to you.
   As you well pointed out, on the day that I testified before the House 
Appropriations Committee, we met and I thought we had - a good 
communication privately.
   Mr. ALEXANDER. We had a good communication. We can stipulate that, but
we still don't have any evidence.
   Mr. MURPHY. I understand that.
   I thought you showed me a letter that you wrote to the Regional 
Commissioner in Southeast and I also recall that I apologized to you for 
not responding to it. I had.
   Mr. ALEXANDER. You are correct. The letter was to the Regional
Commissioner in Atlanta.
   I am mistaken about that. I will submit a copy of the letter for
the record.

   [The information follows:]




BILL ALEXANDER, M.C.                233 CANNON HOUSE OFFICE BUILDING    
     ARKANSAS                             WASHINGTON, DC 20515
                                             (202) 225-4078
   COMMITTEE ON 
   APPROPRIATIONS



                  Congress of the United States
                     


September 26, 1988


Mr. Thomas A. Cardoza
Regional Commissioner
Internal Revenue Service
Southeast Region
Post Office Box 926  (Room 600)
Atlanta, Georgia  30370


Dear Mr. Cardoza:

Please be advised that the General Accounting Office Congressman
William Hughes, Senator John Kerry and I are conducting a
Congressional investigation of illegal drug trafficking from
Latin American countries to the United States.

Of particular interest is the use of Mena Airport in Arkansas
as a staging area for the transport of arms to, and drugs
from Central America.

One of your special operations coordinators, Bill Duncan has
information relevant to this investigation. Accordingly, I herewith
request that you authorize Bill Duncan to share all relevant
information pertaining to the Congressional investigation which
I have herein described.

Thanking you for your cooperation in this matter, I am

                        Sincerely yours,


                        BILL ALEXANDER
                        Member of Congress


BA/js



   Mr. MURPHY. The apology for being nonresponsive to the letter, whether
you wrote to the Regional Commissioner, to me, or to the Commissioner, we
should have responded.
   Mr. ALEXANDER. It has been a year.
   Mr. MURPHY. I know that.
   Mr. ALEXANDER. The statute of limitations is running on the criminals.
   Mr. MURPHY. I understand, but I had Ms. Morin with me. I am going to ask
Mr. Keightley to respond to the question because there were issues that,
upon the advice of counsel I gave directions that if there was some way that
we could legally cooperate with your committee and provide information to
you, that was my objective.
   Mr. ALEXANDER. Mr. Murphy, I understand that you have rules and
regulations to operate by and we don't want to violate those rules.
It is not our purpose to do that.
   Our purpose is to try to stop drugs from coming into this country.
   Your interpretation of your rules and regulations are, in effect, 
cooperating with the drug lords. Your bureaucracy is preventing us from 
waging a war on drugs.
   Mr. MURPHY. Mr. Alexander, before I ask Mr. Keightley to respond, I
would like to point out to you, IRS agents, including Special Agent
Duncan when he was with us, across the country have been partners in
dealing with the war on drugs.
   We have gotten much, much recognition on that and I think we can
even do more on that. I think Mr. Keightley can respond to the specifics.
   Mr. ALEXANDER. Mr. Keightley can respond for the record.
I have heard the explanation. The basic problem here is that while I
have the highest possible clearance that the Government can provide
for secrecy - being cleared for secrets that the President and no one
else gets, I have still been denied access to information in a criminal 
investigation in my State.
   Now, Mr. Duncan came in here this morning and he has testified
that he was prevented from offering evidence that he thought relevant
to that investigation. In effect he has testified that he was, in effect, 
ordered to perjure himself in evidence before a grand jury.
   I have other information that Mr. Duncan believes that the prevention 
of his testimony before the grand jury prevented an indictment on drug 
money laundering charges - very serious charges - and you were all part 
of that. What we want to do is to get to the bottom of this thing so that 
we are all working together to fight this war on drugs instead of 
fighting one another. We are fighting one another and we ought to be out 
here fighting these drug lords. Now, will you and Mr. Goldberg order all 
of the agents in the Internal Revenue Service to cooperate with these 
investigations and will you submit a memorandum to that effect and send 
us a copy of it?
   Mr. GOLDBERG. Mr. Alexander, I will make crystal clear to every one
of our employees that they are obligated to and they will cooperate
to the fullest extent of the law with your investigation and any other 
investigation conducted by the Congress of the United States.
   Mr. ALEXANDER. And will you put in writing to me the reason that you
have not cooperated thus far?
   Mr. GOLDBERG. Mr. Alexander, I have stopped beating my wife - I don't
know whether we have cooperated or not, but I assure you I will personally
look into this matter and I will personally be on your doorstep in the
future with my report.
   Mr. ALEXANDER. Thank you.
   Thank you, Mr. Chairman.









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