By Patrick Temple-West and Nanette Byrnes
Sept 28 Germany's Commerzbank said on
Friday it was cooperating with U.S. prosecutors in a case
involving a bank employee who is charged with exposing an
Internal Revenues Service whistleblower, and who himself is a
former IRS examiner.
The charges come at a time of heightened attention to
whistleblowers after an informant in another bank case earlier
this month won a record-setting award from the IRS.
Dennis Lerner, 59, who a Commerzbank spokeswoman in Germany
said is still employed by the bank, was arrested on Thursday at
his home in New Jersey and taken before a U.S. District Court
judge in Manhattan.
Lerner worked as an IRS examiner from June 2010 to August
Lerner was charged with four counts of violating federal
conflict-of-interest laws and improperly disclosing confidential
IRS information, including the identity of a whistleblower,
according to legal documents released by Preet Bharara, the U.S.
attorney for the Southern District of New York.
"The bank is fully cooperating with the authorities," the
Commerzbank spokeswoman said by telephone on Friday. She
declined to answer further questions.
Lerner, who was released on bail, could face up to 20 years
in prison, Bharara's office said.
A man reached by phone at Lerner's home declined to comment.
Jonathan Marvinny, identified as Lerner's attorney in court
documents, could not be reached for comment.
The IRS declined to comment on the bank or the whistleblower
involved. "We will not tolerate breaches of public trust by IRS
employees," IRS spokesman Terry Lemons said.
The Lerner case is unusual, but somewhat worrisome, said
David Kovel, partner at law firm Kirby McInerney, who focuses on
"This situation is a real breaking of that covenant we have
between the IRS and the whistleblower," he said, while saying
the case was atypical and that the agency is generally very
protective of whistleblowers.
In his role as an IRS examiner, Lerner audited an
international bank for alleged underreporting of $1 billion in
income, with help from a confidential whistleblower, said a
statement from Bharara and legal documents based on a probe by
the Treasury Inspector General for Tax Administration, an IRS
That bank, though unidentified in the legal documents, was
Commerzbank, sources close to the case said.
While he was working at the IRS, Lerner led negotiations
between the agency and the bank on a $210 million proposed
settlement, the documents filed by Bharara said.
In September 2011, Lerner abruptly left the IRS and took a
job as North American tax director at the bank.
Despite warnings from the IRS about talking with agency
employees, Lerner subsequently phoned his former colleagues
about the audit. He encouraged IRS employees to conclude the
settlement negotiations, at one point walking in on talks
between agency and bank employees, the documents said.
Lerner also divulged to people not employed by the IRS the
identity of the whistleblower and "details regarding pending IRS
audits of other companies," the documents said.
The Commerzbank spokeswoman declined to comment on the
status of the bank's audit settlement with the IRS.
No public announcement has been made either by the bank or
the IRS of a settlement between them in the case discussed in
the legal documents filed by Bharara.
Earlier this month, the IRS gave a record-setting $104
million whistleblower award to Bradley Birkenfeld, who was at
the center of a breakthrough tax fraud case against Swiss bank
The IRS whistleblower office has recently come under fire
from some members of Congress for not quickly pursuing