Constitutional Law

Corrupt Federal attorneys get nailed

Gist: IRS claimed that certain tax shelters were in fact illegal. A number of people had used them. To simplify life, it was agreed that they would divide into groups (I think based on common characteristics of their situations), each group with one chosen person to sue, and each group would be bound by whether their "champion," as it were, won or lost. The suits were litigated, and some won and some lost.

Then an IRS higher-up has the IRS trial attorney and his supervisor ask him to clear a deal. It seems they'd offered special deals to two of the "champions" before trial, conditioned on the promise that they would remain as "champions" and tell nobody else. From there on, these parties had no real incentive to win, and one in fact dropped his attorney and argued for himself (and the IRS attorneys offered essentially to pay the other's legal fees).

Fortunately the IRS higher-up had a sense of ethics and blew the whistle. Hopefully their career won't suffer -- altho it might. The two attorneys had perpetrated a gross fraud on the court and on all parties involved. The IRS proposed a slap on the wrist -- two weeks' suspension without pay -- but attorneys' home States disbarred both of them. Now, the Tax Court has awarded $322,000 in attorneys fees to the taxpayers.

Full post as published by Of Arms and the Law on November 28, 2009 (boomark / email).