Federal tax judge allows whistleblower case against Clinton foundation to proceed

U.S. Tax Court Judge David Gustafson denies IRS motion for summary judgment, says agency "abused its discretion" in trying to shut down inquiry.

Updated: October 13, 2020 - 12:49pm

A federal judge is allowing a whistleblower complaint to proceed against the Clinton Foundation, ruling the IRS "abused its discretion" in trying to dismiss allegations of nonprofit wrongdoing by one of America's most famous political families.

U.S. Tax Court Judge David Gustafson denied the Internal Revenue Service's request for a summary motion, ruling the whistleblower complaint by John Moynihan, a former Drug Enforcement Agency official, and Larry Doyle, a corporate tax compliance expert, "provided 'specific credible documentation' supporting their allegations" of possible tax-exempt legal violations by the Clinton charity based in Arkansas.

Gustafson said the agency's Whistleblower Office (WB) wrongly denied Moynihan's and Doyle's claims simply because the IRS Criminal Investigation (CI) office sent an email saying the issues in the complaint were closed. The judge said he had reason to believe from the evidence that the IRS and the FBI engaged in some investigative activity.

The record "fails to support the WBO's conclusion that CI had not proceeded with any action based on petitioners' information. Accordingly, we deny the motion on the grounds that the WBO abused its discretion in reaching its conclusion, because not all of its factual determinations underlying that conclusion are supported by that record," Gustafson wrote.

Gustafson dropped several hints of FBI involvement in an IRS investigation, quoting in his ruling from non-public information in the IRS records in which the whistleblowers discuss their contacts with law enforcement:

"The FBI in [redacted] has thanked us profusely and praised our report excessively. As one individual close to the investigation commented to me, 'you and your colleagues have saved numerous federal agents thousands of hours of work.'" 

Moynihan and Doyle are financial forensic investigators who filed a complaint with the IRS alleging the Clinton Foundation violated tax laws governing tax-exempt charities. They burst onto the scene in December 2018 when they testified before a congressional committee that the Clinton Foundation wrongly operated as a foreign lobbyist by accepting overseas donations and then trying to influence U.S. policy.

The foundation "began acting as an agent of foreign governments early in its life and throughout its existence," Moynihan testified at the time. "As such, the foundation should've registered under FARA (Foreign Agents Registration Act). Ultimately, the Foundation and its auditors conceded in formal submissions that it did operate as a (foreign) agent, therefore the foundation is not entitled to its 501c3 tax-exempt privileges as outlined in IRS 170 (c)2."

The Clinton Foundation has acknowledged past paperwork and compliance issues but steadfastly denies the whistleblower allegations, suggesting the investigators had a financial reward motive for making them. A spokesman for the foundation didn't return an email from Just the News seeking comment.

But the judge's ruling means the case will live on, as he asked the IRS and the whistleblowers for a schedule of next actions. The docket in the case shows Moynihan and Doyle have asked the court for permission to take a deposition from Jimmy Corley, the chief of accounting compliance for the state of Arkansas, as their next witness. The court has sealed the request.

"Order that petitioners application to take deposition of Jimmy Corley is placed under seal until further direction," a September entry in the court docket reads.

Corley did not respond to a call seeking comment Monday. His agency would have regulatory authority over any accounting firms in Arkansas that provided tax advice, audits or bookkeeping for the Clinton Foundation.

The ruling against the IRS comes as reports emerged recently that U.S. Attorney John Durham, the prosecutor named to review misconduct in the FBI's Russia collusion probe targeting President Trump, has expanded his probe to look at the bureau's conduct in investigating any allegations against the Clinton Foundation.