Reports are circulating that Kevin Downing is resigning effective June 4, 2012. See David Voreacos, Tax Division’s Downing Said To Resign From Justice Department (5/31/12), here. Kevin Downing, an attorney in DOJ Tax CES, has been a key player in the DOJ offshore juggernaut since the John Doe Summons proceeding against UBS. Downing has been frequently mentioned in this blog. See collection of blogs based on "Downing" search, here. I would normally have posted this item on the page for "News / Rumors on Offshore Evasion,." I thought that some readers may want to comment on this news, and thus needed a dedicated place to make those comments. I remind readers to keep the comments appropriate. I will not approve them if they are not appropriate.
Before stirring up trouble in the offshore account arena, Mr. Downing stirred up trouble over the KPMG tax shelters in SDNY which is where I first encountered him. He has been busy in his DOJ Tax CES career. I'll just say that I encountered Mr. Downing in the KPMG individual defendant criminal prosecution. I observed that he is a zealous advocate and true believer in the righteousness of his cause. At least in the KPMG matter, as the court ultimately held, the ends sought by the prosecution team on which Mr. Downing served did not justify the means the team chose to achieve the ends. United States v. Stein, 541 F.3d 130 (2d Cir. 2008).
Addendum 6/4/12: Main Justice (the web publication) reports that Mr. Downing is joining Miller & Chevalier. See Elizabeth Murphy, Longtime Tax Division Lawyer Joins Miller & Chevalier (Main Justice 6/4/12), here. MIller & Chevalier's web site is here and the firm's announcement for Mr. Downing's joining is here.
Thursday, May 31, 2012
10 comments:
Comments are moderated. Jack Townsend will review and approve comments only to make sure the comments are appropriate. Although comments can be made anonymously, please identify yourself (either by real name or pseudonymn) so that, over a few comments, readers will be able to better judge whether to read the comments and respond to the comments.
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Mr. Downing played a central role in sending a lot of offshore evaders to jail. In his own way, however, he and his team played a central role in giving some of the KPMG defendants a "get out of jail free" card. Those were the defendants dismissed because of prosecutorial abuse. Maybe not all of them would have been convicted; some might have though. And that bunch who would have been convicted -- we'll never know who they are -- got a "get of out jail free" card, not dissimilar the "get out of jail free" email that played so prominently in the Government's imagination that a crime had been committed in the first place. That's a bit cryptic for most readers to pick up. Perhaps Jack will enlighten readers on that.
ReplyDeleteJack, Kevin Downing's prosecutorial abuse and misconduct in the KPMG case pales in comparison to what he did in the UBS case.
ReplyDeleteIn early June, 2007, on the very first day of the UBS investigation, the UBS whistleblower, Brad Birkenfeld, went into the DOJ in Washington, DC and told them what UBS was doing. The moment that Birkenfeld mentioned the name of the leading Republican candidate for President of the United States at the time (in the context of the UBS case, not in casual polital banter), Downing immediately cut Birkenfeld off and stopped him from talking about this. Downing obstructed the investigation and steered all conversation away from this Presidential candidate. Downing simply refused to let Birkenfeld say anything else on this and demanded that the subject be changed. It has been reported that Downing is a Republican from New York. Connect the dots.
Downing later targeted Birkenfeld for prosecution. In May, 2008 Downing had Birkenfeld arrested when he was literally on his way to meet with investigators for the U.S. Senate and SEC , each of whom had also started their own investigations at Birkenfeld's urging in 2007. At the initial bail hearing, Downing pressured Birkenfeld's lawyer to only reveal that he was arrested while coming back to the U.S. for a high school reunion and to mention nothing about the real reason for his return to the U.S. This was a deliberate deception of a federal judge by Downing. The judge was determining the terms of Birkenfeld's release and never knew the real story behind this arrest because of this deception by Downing.
A day or two later, Birkenfeld was again at the DOJ in Washington, providing them with more information. Birkenfeld then said that because he was in DC, he might as well keep his meetings with the SEC and Senate. Downing shouted him down, "You're not to meet with them and you're not to contact them!" This misconduct is criminal misconduct according to 18 U.S.C. Section 1505. Downing was interefering with/intimidating a witness before the Senate and the SEC.
During the hearings in July, 2008, Kevin Downing and the number 3 man at DOJ, Kevin O'Connor, appeared. O'Connor tesified and smeared Birkenfeld, never mentioning that Birkenfeld had led the DOJ to open the UBS investigation in the first place. The day after Obama took office, Kevin O'Connor left the DOJ and returned to New York to work for a law firm. Bracewell & Guiliani.
Insider, you apparently have an inside view, but you do not tell us who you are so that we can assess your bias in presenting the "facts." I suspect that there is a lot more nuance there than either side has presented to date. But, what I read here seems like a partisan presentation. It would be helpful if you identified yourself so that we can better assess the bias in your presentation of your case. Everything you say may be true, but coming from an anonymous commenter, there is no way to assess the credibility of the statements.
ReplyDeleteI recommend that you identify yourself.
Thanks,
Jack Townsend
I agree with Jack's comment.
ReplyDeleteMr. Downing and DOJ are intimately connected to the criminal prosecution of those involved in tax misconduct, which seems rampant, and a better understanding of his psysche would benefit us all. In particular, is M. Downing's zealousness a reflection of DOJ policy or was he an outlier. (Regardless, he is the classical in the sense that his greatest strength seems to be his fundamental weakness, and very interesting because of that, IMHO.)
All involved in the tax whistleblower arena, whether it be as whistleblower, counsel, adviser, etc., has an acute interest in understanding precisely what went down with the UBS/Birkenfeld situation. There is much to be learned from the situation, and the collective thoughts of an unbiased audience might help M. Birkenfeld also.Without wishing to insult Insider, whoever you may be, what I have read and heard to date are over the top rants and ad hominen attacks that have added very little to my understanding (and, believe me when I say it, I want to understand). The DOJ reaction to M. Birkenfeld had to have been provoked by something that has not come out publicly. I read the transcript of M. Birkenfeld's case, and there was a hint that he double-crossed the DOJ with the Olenoff case. And if he did, well he loses much sympathy. (Before I become the target of attacks, I wish to state I have no connection to M. Birkenfeld and am relaying something I read--I have no horse in the race whatsoever.)Certainly, something happened with the DOJ to provoke such a reaction as sending M. Birkenfeld away for a long period, and risk bringing down the IRS whistleblower program by doing so. And it is not a conspiracy because the DOJ and IRS don't like the program--I have heard and dismissed that nonsense, at least in my opinion. The DOJ and IRS is stuffed with good people who would not allow such malfeasance. So, Mr. Insider, and others who might have "inside" information, can you please provide it so we can understand Mr. Downing's and DOJ thinking about whistleblowers and about OVDI, which seems to me to have gotten more than a little out of control.PATRICK CARMODY
Mr. Carmody makes an excellent point that tax crimes seem rampant. I am overstating when I say that tax crimes is rampant or that Mr. Carmody said that, but I think many of us think that is the case. I refer particularly to my blog here:
ReplyDeletehttp://www.federaltaxcrimes.blogspot.com/2012/05/why-we-cheat-and-lie-taxes-included.html.
I think it is all a matter of degree. If the posted speed limit is 60, some of us will go 62 and feel that we are not cheaters. But, most of that group would feel that we are cheaters if we go 75.
I am not trying to argue that we should cheat. But I do think that the law must recognize the sometimes we to not toe the line and absolute line drawing is not in the best interests of society and the community we call the United States.
It is an overworked analogy, but it is like pornography. A jury will not find a person guilty of a serious tax crime (there is some redundancy there) for the small stuff. We do know it when we see it. The small stuffy is not it. Nor is the stuff in a real life setting where the dynamics is not just about cheating, whether on the tax return or in any other context. The Edwards trial is a current illustration of that point.
We need to feel for the plight of others. We need to realize that we make mistakes. We need to realize that when we do we are not necessarily bad people And others need to see in us that we are not necessarily bad people. That is not a license to do bad things. But I hope we as a society can see good in people.
I don't even know where I could take that in the context of a reply on a blog. But I know that tax crimes need to be punished but in context and with love and empathy.
That really says nothing about Kevin Downing. I do believe that he is a good man and have observed him to be a good lawyer. And that is allI can say with any hope of credibility.
JackTownsend
I would like to bring readers' attention to Joe Nocera's column in todays NYT,
ReplyDeletehttp://www.nytimes.com/2012/06/02/opinion/nocera-the-mortgage-fraud-fraud.html?_r=1&hp
which is directly applicable to this discussion, which presents the case that the DOJ is focusing strictly on small fry. Different circus, same clowns?
This sort of thing really makes one wonder what role USGOV plays today.
PATRICK CARMODY
Thanks. A good read. I like the "Different circus,same clowns" statement / question!
ReplyDeleteJack Townsend
If there is a question as to my credibility, I will establish it by providing very detailed information. Birkenfeld never double-crossed anybody about Olenicoff but I will get to that in another comment, later on.
ReplyDeleteThe DOJ was remarkably hostile toward Birkenfeld before they even knew his identity, before they knew what bank was involved and even before they knew what country was involved (Switzerland). It was his status as a whistleblower that simply infuriated the DOJ and IRS. It is difficult to understate the degree of animosity that his whistleblower status generated. The letters from DOJ to Birkenfeld's counsel before the first meeting were cold and borderline unreceptive.
The UBS investigation started at the urging of Birkenfeld who initiated contact with DOJ in 2007. At the very first meeting at DOJ, which marked the start of the investigation into UBS and the Swiss banks generally, Birkenfeld's whistleblower status was announced. This drew an immediate and angry reaction from a DOJ Tax Division prosecutor named Karen Kelly, sitting not too far from Kevin Downing. She raised her voice and, almost rising out of her chair in anger, said, "You're not a whistleblower! You're just a tipster!" Her statements are of little legal significance but it speaks volumes of the open hostility shared among the prosecutors toward Birkenfeld.
The IRS representative at the meeting was Treasury Agent Matthew Kutz. At the outset, Attorney David Dickieson, one of Birkenfeld's lawyers, handed an IRS Form 211 (whistleblower claim form) to Kutz, as this mode of delivery of the claim form had been suggested by the IRS before the meeting (this is when Karen Kelly vented her ire). This Form 211 was never seen again after this meeting. The claim form was never delivered to - or filed with - the IRS, by Kutz. Instead, it was deep-sixed, a fact that was not discovered until the following year. Kevin Downing presiding over these meetings. Do you suppose he knows exactly what happened to that Form 211? Of course, he does.
Sometime after this meeting, Kutz was quietly hired away from Treasury to DOJ where he was never made available to the IRS when the IRS was evaluating Birkenfeld's whistleblower claim (which he had subsequently properly filed with subsequent counsel). Incidentally, in the following years, the DOJ Tax Division refused to produce any documents to the IRS as it evaluated Birkenfeld's claim. The DOJ also refused to produce any people to the IRS who would have corroborated what was being claimed (even though the Tax Division works hand-in-hand with the IRS). There is no question that the initial motivating factor in targeting Birkenfeld was because he was a whistleblower and the DOJ and IRS sought to undercut any whistleblower claim he may have had and also to demonize him in order to claim credit for the UBS/Swiss bank investigations. Undercutting the whistleblower was a major motivating force in much of how the UBS case was handled.
This is just a piece of what transpired in those three meetings in June, 2007. Anybody seeking to understand what happened in this case needs to know how the DOJ set the openly hostile tone from day one, attacking its own whistleblower.
Insider,
ReplyDeleteThanks for your information.
I just want to say that I don't think your credibility is the issue at all. I doubt that there are many readers of this blog in a position to assess your credibility. I certainly am not. I think the issue is your bias in the way you present the materials. The reaction I have when I read your materials is that there is some part of the story that is not being presented. Whether there is another part of the picture or not I can't say; I can just say that, given the tone, I am not sure your presentation is an unbiased statement of "just the facts," as Sargeant Friday used to say.
For example, it does not make logical sense that DOJ Tax attorneys would attack someone giving valuable information to them. That's one of the questions I have, and you do not address that issue. And why would DOJ Tax attorneys turn so virulently against Birkenfeld when he gave them one of the most spectacular initiatives in DOJ Tax history? This is just the say that I suspect -- only a suspicion -- there has to be more to the story than is being presented.
It is the unanswered questions that, to me, are the issue. I realize that some questions may not be answered or answerable. if someone is acting irrationally, there may be no explanation. But, my experience with DOJ Tax and with Kevin Downing specifically is that he may be aggressive, but he is not irrational.
Still, you have promised more comments. I hope you present them, for then some of the unanswered questions may be answered.
Thanks for your comments and interest in this blog.
Jack Townsend
Some well-intentioned observers make the same error in believing that Birkenfeld somehow "double-crossed" the DOJ with respect to Olenicoff. This is incorrect and, in fact, subsequent reporting has indicated that Downing deliberately deceived the sentencing judge in Birkenfeld's case on this very point.
ReplyDeleteIn 2007, when Birkenfeld walked into the joint DOJ to tell them and the IRS about the UBS tax scam, the largest tax fraud ever uncovered, he was still a resident of Switzerland where he had lived since 1995. As such, he was risking possible arrest by Swiss authorities by coming forward with all he knew for violating Swiss banking secrecy laws. He gave the U.S. authorities everything on UBS and it took days to unload the information to DOJ and IRS, backed up with documentation. He thought he needed to come forward with the UBS information, mostly because of one client in particular whom he thought presented a real terrorist threat to the United States.
But he did withhold the names of his 25 or so clients because he thought that would certainly violate Swiss banking secrecy. Downing knew Birkenfeld was placed in this linchpin between Swiss law and the DOJ's desire to know the names. Downing asked for the names of Birkenfeld's clients, even though he knew he was at risk in Switzerland if he did. So Birkenfeld and his lawyers asked for a "friendly" subpoena so he would be compelled to give the DOJ the client names. Downing refused, showing that he wanted a way to get Birkenfeld more than he wanted those names.
With no grant of immunity and no friendly subpoena, Birkenfeld did not reveal his client names because he was heading back to Switzerland. After seeing how the DOJ investigation was being politically "influenced" (some would use a harsher word here), Birkenfeld knew he had to get the same information to other branches of the U.S. government. He went to the SEC and Senate and shared the same information with them. The Senate DID give Birkenfeld a friendly subpoena and he named names, including Olenicoff. This was before Olenicoff ever pled to anything. So Birkenfeld was not hiding Olenicoff from anybody.
Accordingly, for Downing to claim that Birkenfeld withheld information on Olenicoff is simply absurd. Downing actually claimed at Birkenfeld's sentencing that if it were not for Birkenfeld's failure to reveal what he knew about Olenicoff, that Olenicoff would be in jail. Another lie. It was later revealed that in May, 2008, Downing flew out to California to pump Olenicoff, face-to-face, for information on Birkenfeld. This was one month BEFORE Olenicoff's sentencing. So it is rather clear that Olenicoff did not go to jail because he agreed to help Downing pursue Birkenfeld. Downing was perfectly within his rights to appear at Olenicoff's sentencing in April to argue for jail time but he didn't. Birkenfeld double-crossed the DOJ on Olenicoff? No. It's just the opposite. Downing double crossed Birkenfeld on Olenicoff and then lied a federal judge about it in open court in order to improperly provoke a harsher sentence from the unwitting judge.