Department of Justice For Whom?
This is an awful story, particularly if you’re still smarting at the extent to which financial con artists have gotten a free pass. Let’s take Bank of America as an example. The story is at McClatchy.
After another money-losing year, Bank of America Corp. got the upper hand with Uncle Sam in 2010.
The Charlotte-based bank had no federal income tax expense for a second straight year and actually reported a tax “benefit” of nearly $1 billion. Also, the bank’s billions in accumulated losses could reduce its taxes in future years, a tax expert said.
The bank says the reason is simple: Corporations pay taxes on their profits, and Bank of America posted a pre-tax loss of $5.4 billion in the U.S. in 2010.
It gets worse when you know the background. For example:
The bank is an “aggressive tax dodger,” said Ryan Clayton, a Washington-based organizer of U.S. Uncut. “We pay our taxes. Why don’t they?”
Clayton’s group suggests Bank of America and other large U.S. companies are using subsidiaries in offshore tax havens to eliminate their taxes.
Bank of America and other companies do avoid paying taxes on profits they make in overseas operations by reinvesting these proceeds overseas, instead of bringing them back home. Some business leaders recently have called for a lower tax rate on these earnings, a move they contend would encourage companies to bring these profits to the U.S.
And that’s just one example of many.
One really awful story focuses on one mortagee — one man somewhere in America who’s in jail now because an IRS special agent has been pursuing him. For what? For taking out a mortgage. IRS agent, Robert Nordlander, had been watching “Running the Sahara” on TV and focused on Charles Engle, a marathoner, who took part in the grueling “ultra-marathon” across the hot north African desert.
As Mr. Nordlander later told the grand jury, “Being the special agent that I am, I was wondering, how does a guy train for this because most people have to work from nine to five and it’s very difficult to train for this part-time.”
Joe Nocera, who tells this tale in the New York Times, adds: “[Norlander] also told the grand jurors that sometimes, when he sees somebody driving a Ferrari, he’ll check to see if they make enough money to afford it. When I called Mr. Nordlander and others at the I.R.S. to ask whether this was an appropriate way to choose subjects for criminal tax investigations, my questions were met with a stone wall of silence.”
So the IRS, in the person of Robert Nordlander, looked into Engle’s tax returns.
In March 2009, still unsatisfied, Mr. Nordlander persuaded his superiors to send an attractive female undercover agent, Ellen Burrows, to meet Mr. Engle and see if she could get him to say something incriminating. In the course of several flirtatious encounters, she asked him about his investments.
After acknowledging that he had been speculating in real estate during the bubble to help support his running, he said, according to Mr. Nordlander’s grand jury testimony, “I had a couple of good liar loans out there, you know, which my mortgage broker didn’t mind writing down, you know, that I was making four hundred thousand grand a year when he knew I wasn’t.”
Mr. Engle added, “Everybody was doing it because it was simply the way it was done. That doesn’t make me proud of the fact that I am at least a small part of the problem.”
Unbeknownst to Mr. Engle, Ms. Burrows was wearing a wire.
So now Charles Engle is in federal prison. And yes, he did something wrong. But, Joe Nocera reports ,”The more I looked into it, the more I came to believe that the case against him was seriously weak.”
No tax charges were ever brought, even though that was Mr. Nordlander’s original rationale. Money laundering, the suspicion of which was needed to justify the undercover sting, was a nonissue as well. As for that “confession” to Ms. Burrows, take a closer look. It really isn’t a confession at all. Mr. Engle is confessing to his mortgage broker’s sins, not his own.
Perhaps anticipating that problem, when Mr. Nordlander finally arrested Mr. Engle in May 2010, he claims to have elicited a stronger, better confession while Mr. Engle was handcuffed in the back seat of his car. Mr. Engle fervently denies this. This second supposed confession, however, was never captured on tape.
As for the loans themselves, on one of them Mr. Engle claimed an income of $15,000 a month. As it turns out, his total income in 2005, according to his accountant, was $180,000, which amounts to … hmmm …$15,000 a month, though of course Mr. Engle didn’t have the kind of job that generated monthly income. (In addition to real estate speculation, Mr. Engle gave motivational speeches and earned around $50,000 a year as a producer on the hit show “Extreme Makeover: Home Edition.”)
The court records in the Engle case would suggest a prosecutorial railroad. The nastiness doesn’t end there. Nocera writes that Engle also faces a large fine.
Even when he emerges from prison, though, his ordeal will not be over. As part of his sentence, Mr. Engle was ordered to pay $262,500 in restitution to the owner of his mortgages. And what institution might that be? You guessed it: Countrywide, now owned by Bank of America.
Joe Nocera, who’s been writing the Talking Business column for the business section of the Times has been bumped upstairs. He’s writing for the Op-Ed page from now, up there in Krugman land. It looks as though he’ll be able to supply the Times with even more justification for a jaundiced view of American corporatism. It’s stories like Engle’s that serve to enrage and engage.
Cross posted from the blog Prairie Weather.
Copyright 2011 The Moderate Voice