Shocking allegations have been made against the IRS that, if substantiated, could prove to be the tip of the iceberg of a massive insider trading problem not only at the Internal Revenue Service, but also involving members of Congress. It was always bad enough that members of Congress were basically allowed to trade on inside information up until 2012, when the Obama administration supposedly put an end to the practice, but the allegations made in a recent New York Post article blow away that type of already unsavory behavior.

Allegations were brought to John Crudele at the New York Post that the Internal Revenue Service was not only tipping off members of Congress to upcoming mergers and acquisitions so that they could trade on the information, but also that members of the Internal Revenue Service themselves were allowed access to this information and were allowed to trade on it.

In fact, to go one step further, a whistleblower that sought out the New York Post alleges that back in the early 2000‘s, a memo was even circulated at the IRS noting those who are actually permitted to participate in insider trading. The Post did not post a copy of the memo with their story. 

According to the whistleblower, all IRS employees in the executive branch and those one step below it were allowed to participate in insider trading based on information uncovered as employees of the IRS.

“Back in 2003-5 a memo was created within the IRS noting who was permitted to participate in ‘insider trading’,” says this whistleblower. “The memo noted that all IRS employees in the executive branch and those one step below (territory managers, etc.) were permitted to participate.”

These allegations are unsubstantiated, however John Crudele at the NY Post found them credible enough to go forward with his story after performing his own due diligence on the issue. He confirmed that the whistleblower was in fact previously employed by the IRS in the position that he stated he was at the time. The whistleblower told the New York Post that he was “a large case manager“ at the IRS.

The whistleblower claims that he was supposed to inform his superiors of any coming merger transactions, ostensibly to tip them off in order to allow them to trade on it. The whistleblower that the New York Post cites claims that he was terminated specifically for not tipping off his superiors of an upcoming merger.

“I was below that rank by one step,” says the whistleblower, who adds he was what they call a “large case manager” at the IRS. “However,” he added “as my evaluation showed I was expected to inform my manager of any and all mergers.”

In fact, Mr. Whistleblower says he was fired for not doing so and was later retaliated against.

Figuring that the inspector general office at the IRS could be the only people that could properly look into allegations that seem this absurd, the New York Post reached out to the IRS and - in true government bureaucratic fashion – was given the rope-a-dope and the runaround from an employee who seemed less than interested in investigating the allegations.

...I called the IRS Inspector General’s media contact, figuring I’d work out a deal. I’d give them the information, maybe convince the whistleblower to come forward or give more details in exchange for an exclusive on the story if the allegations panned out.

I got a much different response from the IG’s spokeswoman when I asked to speak with someone.

“Concerning..?” an IG spokeswoman wrote, as if she was already exerting too much energy.

“A tip from a reader of mine about IRS wrongdoing,” I wrote back, not wanted to say too much until I got her on the phone.

“We get those on a regular basis,” she countered. She wanted the tipster to contact the IRS hotline, something he doesn’t want to do. “All complaints are taken very seriously.”

Huh! So I asked, to stir up some interest: “Is there an insider trading exemption for officials in the IRS?”

She still wouldn’t talk with me. She said there wasn’t such an exemption and sent me a brochure. “Once again, thank you for contacting us. Let me know if we can help further,” she wrote.

While the whistleblower told the New York post that many employees of the IRS had been involved in receiving privileged information that could be traded on, it was him failing to report a merger transaction that a supervisor of his had planned to trade on and pay off his mortgage on, that ultimately wind up getting him fired. 

“So the one day I was informed of a merger between (two big companies.) I was the case manager on that audit. I refused to inform my manager.”

The whistleblower gave me the names of the companies. I took them out of the above quote to protect his identity.

“Well that was a sad day for my career. He (the manager) first produced a memo and then suspended me for failing to inform him of the merger so he could tell his supervisor,” the whistleblower said.

“It seemed that the supervisor had planned on paying off his home mortgage with the merger information to the tune of $1 million plus,” my snitch said.

He also stated that employees were rewarded for these tips, telling the NY Post that a "previous manager had assigned another manager to [a highly prized international] office for two years because she gave him numerous inside information tips".

As if the story wasn't unbelievable enough, the whistleblower alleged that tips like these would then often be siphoned off to members of Congress, which would create a mutually beneficial political environment between government agencies that would allow and secure jobs for top level employees in the future.

“In addition my supervisor had planned on informing his manager who then could contact members of Congress so they could invest and profit from this information,” he said. “It was a way of securing a comfortable job on one of the boards like the Smithsonian once they retired.”

The whistleblower was terminated from the IRS in 2004