-Caveat Lector-
October 3, 2000
Politics & Policy
Independent Counsel Probes IRS, Justice Department on Cisneros Case
By DAVID S. CLOUD
Staff Reporter
THE WALL STREET JOURNAL
WASHINGTON -- An independent counsel is investigating whether the
Internal Revenue Service and Justice Department obstructed his
probe of former Housing Secretary Henry Cisneros, lawyers
familiar with the matter said.
Independent Counsel David Barrett is questioning IRS officials
who were involved in the Cisneros case and has indicated he will
look at the Justice Department's role as well. And he has
widened his focus to look at whether the Clinton administration
allowed politics to influence its handling of other tax cases
involving Democrats, one of the lawyers said.
It is unclear whether Mr. Barrett has authority to investigate
the IRS and Justice Department treatment of tax cases beyond that
of Mr. Cisneros, but the probe has become more serious in recent
weeks.
Mr. Barrett convened a grand jury two months ago and pressured a
career IRS lawyer in the chief counsel's office into testifying
by telling him that he was a subject of the probe, people
involved said. The IRS employee, whose name couldn't be
determined, invoked the Fifth Amendment in order to secure an
immunity deal and is now cooperating, two lawyers said. He has
testified several times and was asked about his work on the
Cisneros case. Other IRS officials have testified as well.
Mr. Barrett still lacks hard evidence of wrongdoing by officials
at either agency, people familiar with the matter said.
Although the law authorizing independent counsels lapsed last
year, Mr. Barrett's office is grandfathered until he completes
his probe and issues a final report. His activities are loosely
monitored by a three-judge panel of federal judges, but his
original mandate permits him to investigate possible obstruction
of justice without requiring him to seek additional authority.
In a January letter to two senators asking about the Barrett
obstruction inquiry, IRS Inspector General David Williams said
that he was "coordinating with Mr. Barrett in his ongoing
investigation." He said he was providing Mr. Barrett with
"investigative support."
Asked about his probe's latest focus, Mr. Barrett said, "We have
consistently followed the rule of not talking about matters that
may be under investigation." An IRS spokesman wouldn't comment.
A lawyer for Mr. Cisneros didn't return calls. Mr. Barrett has
yet to question officials from the Justice Department about the
matter, a department lawyer said.
Mr. Barrett, a onetime federal prosecutor and GOP congressional
candidate who was briefly considered for the post of U.S.
Attorney for the District of Columbia by the Reagan
administration, was appointed by the three-judge panel in 1995.
His original mandate was to look into whether Mr. Cisneros lied
during a background inquiry by the Federal Bureau of
Investigation about not having paid hush money to a former
mistress. After a four-year, $9 million investigation, Mr.
Cisneros in 1999 acknowledged lying about a "personal matter,"
pleaded guilty to a misdemeanor and paid a $10,000 fine.
The relatively soft terms of the plea bargain led to widespread
criticism that Mr. Barrett had overreached. But rather than
close down his office, he began looking into an incident that
happened early in his investigation, lawyers involved say.
In 1997, Mr. Barrett had wanted to look into allegations that
Mr. Cisneros failed to report income from speeches.
Investigators suspected that Mr. Cisneros had signed over checks
from speaking engagements to his mistress. When Mr. Barrett
presented his evidence for broadening the case to Attorney
General Janet Reno and some of her top criminal division
deputies, they ruled -- after consulting with the IRS -- that he
could look into only one year's tax returns, according to a
lawyer involved. Mr. Barrett had sought to conduct a multiyear
review of Mr. Cisneros's finances, but department officials
argued there was cause to look at only one year. They decided
any other violations would be under the jurisdiction of the IRS.
The IRS official who received immunity from Mr. Barrett was
involved in the agency's decision not to pursue a broad tax case
against Mr. Cisneros, said two lawyers involved. After looking
at the matter, the IRS and the Justice Department had decided
there wasn't a prosecutable case, a lawyer said.
The latest investigation follows three years of suspicions voiced
by GOP officials about the administration's possible political
interference with the IRS. A string of IRS audits of
conservative groups and critics of President Clinton -- from the
Heritage Foundation to Paula Jones -- prompted Republicans to
assert that the White House was using the tax agency to pressure
its enemies.
But an independent investigation by Congress's bipartisan Joint
Tax Committee earlier this year found no evidence of any attempts
by administration officials to influence the IRS.
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