The Intimidation Game (13 page)

Democrats didn't like any conservative (c)(4)s, but they particularly hated Engelbrecht's. They'd stewed for years over state efforts to tighten up voter ID laws and to weed out voting fraud. President Obama and Attorney General Eric Holder viciously criticized the laws, suggesting they were designed to “suppress” turnout among minorities. Since True the Vote was set up to aid in educating about and implementing the new voter ID laws, Democrats instantly zeroed in on the organization as a particularly hated target.

Engelbrecht Manufacturing was founded in 1994. From that day until 2010, Catherine had no interaction with the federal government other than to file the company's annual taxes. Then she applied for tax-exempt status for her two groups.

At the beginning of 2011 the IRS showed up to audit two years' worth of business taxes. Over the course of the year, the FBI would contact Engelbrecht six times—four phone calls and two personal visits. They were inquiries both about a strange visitor at a KSP event and also about KSP's broader activities. In June, the IRS audited her personal tax returns, for both 2008 and 2009. In February 2012—the same month that KSP and TTV were hit with IRS questionnaires—the Bureau of Alcohol, Tobacco, and Firearms showed up for an audit of Engelbrecht Manufacturing. It was a bizarre visit; the company has a license to manufacture gun parts, but doesn't actually do so. And that fact was closely documented. And yet not only did ATF show up, but as part of its audit the agents asked for a look inside a personal gun safe. “I don't necessarily have a beef with the folks that came out—they were just doing their job. But my question remained not why they came—but who sent them?” she says.

In July, the Occupational Safety and Health Administration came knocking for its own audit, grilling company employees. OSHA soon sent Engelbrecht Manufacturing a $25,000 fine for trivial infractions. In November, the Texas Commission on Environmental Quality arrived for an audit, saying it had received an anonymous complaint. The agency demanded she pay for new permits. A few months later, ATF was back again, on yet another unscheduled audit. Once is happenstance. Twice is coincidence. Three times is enemy action. (Or so wrote Ian Fleming, the famous author of the James Bond series.)

Engelbrecht didn't tell anybody about these visits for a long time. And it was only when she finally did tell Mitchell that she realized she'd fallen for the government's tricks. “I remember saying to Cleta, ‘Can I run something by you? It sounds crazy, but I feel like I can hear the propeller blades of a black helicopter over my shoulder. So I just need a reality check.' And so I told her. And she said, ‘Catherine, why on earth haven't you said anything?! This is unacceptable, this is orchestrated, this is outrageous,'” remembers Engelbrecht. “And it choked me up when she said that. A light switch went on. And I realized that what had been perpetrated against me had worked. I'd stayed silent. I'd just hunkered down and tried to be a better citizen. When what I needed to do was go tell the story. That was my real power.”

That decision gave Engelbrecht more determination to face what was still to come—including an assault by Democratic members of Congress and the president's campaign team.

In September 2012, California Senate Democrat Barbara Boxer sicced the Justice Department's Civil Rights Division on True the Vote, writing a letter accusing it of “leading a voter suppression campaign” and nicknaming it “Stop the Vote.” A few weeks later, Maryland Democrat Elijah Cummings, the ranking member on the House Oversight Committee, launched his own investigation into TTV, sending Engelbrecht an extensive questionnaire that mirrored the IRS's inquisition. Engelbrecht politely suggested that the congressman didn't understand her group's work, and offered to fly all the way to Washington to explain. Cummings responded by asking for even more documents. “I accept your offer to come to Washington and answer these allegations, but only after you provide the documents I requested.” He then went on to ominously claim she was engaged in “a criminal conspiracy to deny legitimate voters their Constitutional rights.” Cummings proceeded to go on TV to attack the group.

Even as Cummings launched his salvo, Bob Bauer swung into action. This was an election year, and the Obama campaign general counsel again resorted to intimidation. He issued an open memo accusing TTV of coordinating with Republicans to engage in “vote suppression.” His memo was a near-identical read to Cummings's letter to Engelbrecht—leveling the same accusations, marshaling the same specific events and facts—even though the Cummings letter hadn't yet been made public. And Cummings's demands of the group were strikingly similar to those posed by the IRS.

Indeed, e-mails would later show that the IRS had helped Cummings. In January 2013, an IRS employee informed Lerner and Paz that “the House oversight committee…has requested any publicly available information on an entity that they believe has filed for c3 status.…The entity is KSP True the Vote.” Lerner and Paz personally saw to it that the request was fulfilled. This Paz e-mail would later come to Congress with significant parts redacted, marked as containing confidential taxpayer information. It's a crime for the IRS to share such information, even with most of Congress, and it is still unclear what Cummings obtained. Cummings initially denied that he or his staff had even reached out to the IRS, until the e-mails showed that to be false.

“Everything,” says Mitchell, “everything was a complete abandonment of the rule of law. It was all the forces of government using harassment and intimidation to shut people down.”

Mitchell attends a monthly meeting of tax attorneys in D.C., a brown-bag affair at which a friendly mix of liberal and conservative lawyers discuss issues and news. Mitchell in the spring took along several redacted IRS questionnaires. “I said, ‘Any of you boys getting these?' No one on the left had.” Mitchell kept bringing up the issue at the lunch meetings through 2012 and 2013, inspiring a few liberal colleagues to declare her obsessed. So she took particular pleasure in showing up at the June 2013 event after Lerner's turn in the spotlight. “‘We thought you were crazy, Cleta, we thought you were being paranoid,'” Mitchell recalls them saying. “And I remember responding, ‘Just because I'm paranoid, it doesn't mean someone isn't out to get my clients.'”

Republicans were paying attention to the calls flooding in about those February 2012 questionnaires. Before the month was even out, GOP legislators had called in Lerner to brief them on the IRS's tax-exempt process. The chief boldly told Oversight staffers that the criteria for evaluating applications had not changed—which was untrue. Lerner herself had ordered it changed the prior July. She also made reference to the guide sheet Cincinnati was using to evaluate applications and offered to send a copy. That promise prompted a flurry of e-mails back at IRS headquarters, as lawyers and leadership worried about the document's content. The IRS never did send a copy. Lerner in the ensuing months continued to insist to Congress that everything happening at the IRS was in “the ordinary course” of things.

She wasn't alone in juking Congress. Immediately following that first briefing to congressional staff, Lerner got the command from Deputy Commissioner Steven Miller to explain what all the fuss was about. In that meeting, she acknowledged that there were more than two hundred applications on ice, and that the IRS had asked for information about donors. Miller passed those details on to IRS commissioner Doug Shulman. Only a few weeks later, when Shulman was asked at a congressional hearing whether the IRS was singling out groups, he'd nonetheless reply that “there is absolutely no targeting.”

This is notable, given that inside the IRS senior leaders were realizing they had a problem. The very day after Shulman's testimony, Deputy Commissioner Miller convened senior staff to get a handle on what was going on—a meeting at which he'd admit that the news that the IRS was demanding donor information was “not very good.” He was alarmed enough to dispatch a trusted adviser, Nan Marks, to Cincinnati to get a bead on the situation by conducting an internal review. Marks spent weeks evaluating the Cincy operation, and in early May presented her findings at a meeting that included Miller and Lerner. She told the deputy commissioner about the Be On the Lookout list, the use of Tea Party terms, the excessive delays, the inappropriate questions, the test cases. She told him that Cincinnati had been waiting for Washington's orders. Miller, the number two official at the IRS, was therefore as of May 2012 fully aware of everything that would ultimately cause a sensation a year later. And yet in public testimony after public testimony in front of Congress, he chose not to reveal the situation—not even when he replaced Shulman as acting commissioner in November of that year. At one point in July 2012 he was worried enough about an upcoming appearance that his staff drew up sample questions he might be asked about targeting. When the testimony passed without any direct reference, Lerner sent him an e-mail congratulating him that the hearing had “turned out to be far more boring than it might have been.”

Miller knew he had a problem, though: Marks's internal investigation had made that clear. Washington suddenly had new interest in working through Cincinnati's backlog. IRS headquarters helped create a new system to process the queue, and Miller demanded weekly updates.

Lerner was nonetheless left inexplicably free to continue her war against conservative advocacy groups. She frequently referred them for audits. In May 2012, she forwarded to the manager of the auditing department an article about an “anonymous donor” who had given to the conservative American Action Network. “Let's talk,” her e-mail read. In June, she forwarded a different article to the same audit manager, this one containing mentions of Americans for Prosperity, Crossroads GPS, and Citizens United.

In January, Lerner forwarded yet another story, in which the left-leaning media outlet ProPublica had fretted about the “dark money” going to five conservative nonprofits. She asked her staff for a meeting on “the status of these applications.” We don't know what happened in that meeting. But we do know that two of the groups were put in the IRS's surveillance program, and three were selected for audit. In total, four of the five groups underwent additional scrutiny.

She also remained focused on trapping nonprofits. Congressional Democrats, after all, hadn't stopped demanding action. In February 2012, just as the first Tea Party interrogatories were mailed across the country, seven Democratic senators sent a letter to the agency demanding an investigation into (c)(4)s. A month later, the same seven repeated the demand.

Lerner was paying attention. In one June e-mail, she cheered on Bauer's tactic of using FEC complaints to try to force conservative organizations to disclose their donors. She also e-mailed Marks, wanting to “pick” her “brain” about a new inspiration she'd had—a way to speed up the time frame in which the IRS could force social-welfare organizations to file tax data. In July, she directed her team to put together a proposal for how to keep better track of groups receiving anonymous donations. In November, her staff compiled for her a report on the political activities of nonprofits and whether those activities had increased since
Citizens United
.

Lerner herself had absorbed the view that government needed to blow up anonymity, and then embarrass and intimidate conservative groups out of political participation. All through 2010 and 2011 the IRS kept conservative groups in limbo. The next year was devoted to hounding them for information. In March 2013, those details now in hand, Lerner got ready for a big moment: issuing the first letter denying exempt status to a conservative (c)(4) group.

Denial letters are supposed to be private, and it is up to the group to decide whether to fight the ruling. But Lerner spent precious time strategizing a way to make this first one public by immediately forcing the case to court. Even her staff was taken aback by this idea and tried to dissuade her. She was insistent: “One IRS prosecution would make an impact and they wouldn't feel so comfortable doing the stuff.” She also harried her staff along: “need to move c4 denials along—really need to get one out of here.”

Lerner never got to issue her letter. Something—or rather someone—intervened. His name was J. Russell George, who since 2004 had served as the Treasury inspector general for tax administration, a watchdog post nicknamed TIGTA. House Republicans hadn't been fooled by Lerner's February performance, and almost immediately reached out to TIGTA to ask for an investigation. He agreed.

George spent a year looking into the scandal, and he deserves credit for bringing it to light. At the same time, his approach to the investigation left a lot to be desired.

For one, he took the highly unusual decision to allow Holly Paz (Lerner's top deputy) to sit in on every interview with ground-level employees, which had the effect of discouraging many of them from speaking freely. He also decided to update Lerner and other IRS leadership on his progress throughout the entire year, sharing multiple drafts of his report with them. This nod to fairness did not extend to Congress. He never once briefed members on the state of his investigation—an action that surely would have blown the lid off the IRS's misbehavior. That may be why George didn't—he figured Congress would break the news and potentially derail his probe. Yet his decision to keep Congress in the dark meant that the IRS was able to continue its targeting throughout 2012 and 2013, and that hundreds of conservative groups remained sidelined in a presidential election.

George's investigation, despite taking a year, was also light. He never truly grilled employees. He didn't requisition broad swaths of e-mails, or seek to truly understand how the targeting had evolved. His ultimate report instead read a bit like a statistical analysis—heavy on numbers and facts, light on blame.