Thurow did not owe the IRS any money. He got his first inkling of the unannounced seizure of his mortgage check when an official from California Federal, the San Francisco thrift institution, called to ask why he had not paid his mortgage. After a few days of complete confusion, an examination of the markings on the front and back of the canceled mortgage check revealed that it had been hijacked by the IRS.
On Oct. 13, 1986, Thurow and his lawyer filed a refund claim. One month went by with no answer from the IRS. Then a second month slipped by. A third, fourth, fifth and sixth month passed. The agency's lips were sealed.
Because the IRS had totally ignored his plea for the return of his money, Thurow decided a more forceful approach was required. He filed suit in federal court asking for the return of the $1,300 that the government had so artfully taken from him, plus 10 percent interest, legal fees, and punitive damages of $50,000. No legal action was brought against the bank that had improperly cashed the altered check, in the belief that the bank was under enormous pressure to cooperate with the government and in some ways was a victim, too.
``Altering a check is improper and illegal,'' said Thurow's Oakland lawyer, Montie Day. ``And Title 18 of the United States Code makes it a felony to open mail in transit and mail is deemed to be in transit if misdirected.''
Jay Weill, an assistant U.S. attorney in San Francisco, was not impressed. Returning the $1,300 that the IRS had stolen was one thing. But Weill argued that the rest of the claims were so ``frivolous'' that the lawyer who filed them should be punished. Weill asked the federal judge to take the unusual step of ordering Thurow's lawyer, Day, to pay the government's legal expenses in responding to Thurow's allegations.
Although acknowledging that the government had altered Thurow's check - the markings on it made any other position absurd - Weill asserted that the change had been made by a low-level clerk who had misunderstood instructions.
Was the Thurow case an aberration, a once-in-a-lifetime accident? Or was the opening of the letter and the altering of the check something worse: The sloppy product of a massive bureaucracy that simply does not have the time or energy to care about the rights and sanity of a few individuals?
Whatever the extent of this exquisitely irritating form of bureaucratic harassment, the reasons for its existence and the IRS response after its disclosure were both revealing and disturbing.
True, the IRS finally did return the $1,300 to Thurow. It is also true that the federal judge rejected the prosecutor's request that Day be forced to pay the government's legal fees on the grounds that the damage claim against the IRS was frivolous. At the same time, however, the judge rejected Thurow's request for $50,000 in damages. The claim was turned down because of sovereign immunity, a legal shield that makes it extremely hard for citizens to sue the IRS.
Misdirected mail is one thing. Vindictive IRS employees getting even with an individual who they've decided is their enemy is another. That is the particularly gruesome nightmare of a wealthy lawyer named Daniel Neal Heller.
Heller was wrongfully sent to federal prison on charges of income tax evasion as a result of the efforts of an IRS agent who threatened the lawyer's accountant with the possibility of prosecution; the accountant then lied in court about Heller's financial affairs. The accountant's false testimony was the crucial evidence leading to Heller's conviction.
The story, as described in a decision by the 11th U.S. Circuit Court of Appeals, began in 1975 when the Criminal Investigation Division set up a loose network of undercover informants to collect intelligence about a group of powerful Miami business executives, politicians and judges. The network was Operation Leprechaun.
A few months later, The Miami Daily News published a series of critical articles about Operation Leprechaun, charging that the IRS agents running it had improperly collected detailed information about the drinking and sexual habits of dozens of Miami political figures. The key question raised was what connection the drinking habits of an official had with tax collection. Two of the IRS agents who were connected to Leprechaun during this period were Thomas Lopez and Lawrence Plave. Heller was the lawyer for The News.
The newspaper's sensational stories about the IRS intelligence project generated widespread interest in Miami and other parts of the country. They also prompted investigations by several congressional committees. Although a federal grand jury in Miami later criticized the news accounts, senior IRS officials in Washington also determined that Operation Leprechaun was an improper, out-of-control intelligence operation.
During the course of the various investigations that grew out of this long controversy, Lopez, Plave and Heller had a number of adversarial meetings about the questionable project. During one meeting with Lopez, the appeals court decision reported, there was a ``heated exchange of words in his (Heller's) office.''
On June 30, 1982, about six years after the intense argument, Heller was indicted for criminal tax evasion. After a long series of legal disputes, he was convicted in November 1986 and sentenced to three years in prison. The primary IRS investigator and key witness against Heller was Plave. The IRS supervisor who had assigned him to undertake the criminal investigation was Lopez.
In the fall of 1987, four months after he had begun his prison sentence, the appeals court threw out Heller's conviction. The panel quoted Plave's own testimony stating that on Friday, July 12, 1979, he had threatened the accountant and that the purpose of the threat was to ``scare'' and ``control'' him.
``It is also undisputed that on the following Monday, July 15, 1979, that accountant's lawyer called Plave to say that the accountant would provide testimony against Heller and that he wanted to be a witness rather than a defendant,'' the court wrote. ``Finally, the record in this case is also clear that the accountant falsely testified against Heller.'' Thus, the court concluded, the government's ``substantial interference'' in the case had ``deprived Heller of an important defense witness.''
The court said the background of animosity between Heller and the two agents suggested that Plave and Lopez ``could have intended to intimidate and frighten the witness into false testimony in revenge against Heller.''
The two agents have now retired from the IRS. In separate interviews, both Lopez and Plave insist that the case was handled in a correct manner. On the basis of the evidence, however, the Court of Appeals reversed Heller's conviction. Six months later, a federal district judge in Miami dismissed the entire case against the lawyer.
``A Law Unto Itself: Power, Politics and the IRS'' by David Burnham. Copyright, 1989, by David Burnham. Reprinted by permission of the publisher Random House Inc. Distributed by Los Angeles Times Syndicate.
