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[COVER PAGE]



75 Years of IRS Criminal Investigation History

1919 – 1994
Department of the Treasury

Internal Revenue Service

Document 7233 (Rev. 2-96)

Catalog Number 64601H

[END OF COVER PAGE]


TABLE OF CONTENTS
Introduction.....................................................................................5
Forword...........................................................................................7
Profiles..............................................................................................9
History of the Intelligence Unit, 1919-1936
Forward ....................................................................................19
Organization and Functions of the Intelligence Unit....................23
Tax Evasion Investigations..........................................................27
Dishonest Public Officials Prosecuted as Tax Evaders................28
Leading Gangsters Sent to Penitentiary.......................................33
Motion Picture Stars Investigated—

Several Million Dollars Collected................................................46


Tax Evasion Cases Involving Prominent

Individuals and Business Concerns...........................................48


Women Tax Evaders Involved in

Outstanding Fraud Cases............................................................55


Aliens Seek to Evade Taxes —

Treasury Recovers Many

Millions in This Class of Tax Dodging.........................................57
Investigations of Offers in

Compromise Result in Detecting

Concealment of Assets................................................................59
Miscellaneous Tax Investigations................................................61
Record of Investigations of Revenue Personnel,

Tax Accountants and Enrolled Agents.........................................62


Special Investigations.................................................................79
Indirect Results of Investigations —

Fear of Penalties and Punishment Deter



Large Classes From Revenue Law Violations..............................82
Results During Present Administration.......................................87
Procedure in Disposition of Tax Fraud Cases...............................90
Statistical Summary....................................................................93
History of the Criminal Investigation Function, 1936-1994
Organizational and Operational Highlights
General.......................................................................................99
The Late Thirties and the Forties................................................99
Cases of the Late Thirties and the Forties.................................100
The Fifties.................................................................................103
Cases of the Fifties....................................................................105
The Sixties................................................................................Ill
Cases of the Sixties...................................................................112
The Seventies............................................................................127
Cases of the Seventies...............................................................129
The Eighties..............................................................................136
Cases of the Eighties.................................................................136
The Nineties.............................................................................143
Cases of the Nineties................................................................144
Investigative Projects................................................................168
Wagering Tax Enforcement.......................................................168
Organized Crime Drive — Strike Force Program......................170
Money Laundering — Title 31..................................................172
Investigative Efforts and Results...............................................174
Significant Cases.......................................................................174
Narcotics Projects ....................................................................175
Return Preparers Project ..........................................................178
Questionable Refund Program .................................................180
Abusive Tax Protester Program.................................................181
Illegal Tax Protester Program ...................................................183
Business Opportunities Project ................................................184
Tax Haven — Offshore Bank Project .......................................185
Nonfiler Program ......................................................................187
Motor Fuel Excise Tax Program ................................................188
Bankruptcy Fraud Program ......................................................190
International Initiatives.............................................................190
Investigative Tools and Techniques
Undercover Activities ..............................................................192
CI Forensic Laboratory.............................................................193
Use of Grand Juries .................................................................195
Criminal Investigation Badge ...................................................196
Training .........................................................................................197
Statistical Data............................................................................200


INTRODUCTION
This document is dedicated to those Internal Revenue Service special agents and Criminal Investigation employees, past and present, whose devotion to duty created this noteworthy record of achieve­ment. Your achievements are not only evi­denced in the following pages — they are also prominently imprinted on the pages of history.
As our organization has grown in stature from a mere six special agents at its inception in 1919 to over 3,200 today, we have also developed into an organization known for its diversity of expertise. Yet we continue to accomplish our mission and solve crimes in a way that no others can; we follow the money that ultimately leads to the criminal.
Federal prosecutors continue to seek the expertise of IRS special agents as a critical asset to any investigative team. The training and expertise as well as the unique financial investigative skills con­tinue to make the IRS special agent a nec­essary element in every investigation involving the flow of money.
Our investigations involve individuals from all segments of our society, from the high-level drug traffickers and financiers to individuals who appear to be pillars of the community, doctors, lawyers, accountants, legislators and corporate executives. Therefore, investigations vary from the very dangerous to the very sensitive with each investigation requiring a high degree of sensitivity, discretion and above-all fairness.
One of the most fascinating aspects of IRS Criminal Investigation is that we seem to be in a constant mode of change. Whether it's a change in the laws that refo-cus our enforcement priorities, a change in organizational structure that revitalizes our mission, or internal implementation of a new concept that revolutionizes the way we work — change is what has always kept Criminal Investigation on the cutting edge of law enforcement, management tech­niques and technology.
Our history of change, accomplishments, and new challenges brings us to 1994 — our 75th anniversary as a law enforcement organization. As always, we are prepared for and look forward to change — to improve­ment — to effective law enforcement. Indeed, during the past 75 years, much has been accomplished. However, there is still much that can and must be done.
It is our job to continue the 75-year tradi­tion of professionalism, dedication and com­mitment. It is not a difficult challenge, because the majority of men and women in Criminal Investigation have that same level of commitment and pride that Elmer Irey envisioned for IRS special agents 75 years ago.
I am confident that Criminal Investi­gation will continue to meet the challenges of the future with the same enthusiasm and skill that has inspired our special agents for the past 75 years. And the future will demonstrate the commitment of this organi­zation to strong enforcement of the tax laws and support for the overall efforts to com­bat financial crimes wherever they occur.
Donald K. Vogel


FOREWORD
This document has several segments. The first segment profiles, through pho­tographs and biographical data, each of those honored to serve as the head of the Criminal Investigation function since its formation in 1919.
The second segment is a verbatim reprint of the only remaining copy of a document issued in the mid-1930's that portrays the history of the Intelligence Unit from 1919 to 1936. It describes the Unit's early organization and functions. It also contains summaries of cases, including several that contributed to our enduring reputation as "the giant killers."
The next segment is a sequel covering mid-1936 to 1994. It outlines, decade by decade, significant organizational and operational highlights during those 51 years, and summarizes cases and projects representative of our activities and accom­plishments. The sequel is an overview rather than an exhaustive study.
The primary purpose of the Internal Revenue Service is, of course, the collec­tion of taxes in a fair and impartial man­ner. Achieving the highest possible degree of voluntary compliance with the internal revenue laws is an important goal toward that end. Criminal Investigation's support of this task represents one of the nation's most important law enforcement jobs because of the importance of the tax system to the proper functioning of the Government. The successful prosecution of tax evaders not only serves to protect the public revenue, but also warns potential tax evaders that they cannot defeat the system of voluntary compliance. Over the years, investigative activity has resulted in indi­viduals being convicted for tax evasion in almost every occupation, profession, and segment of the economy. In addition, the ability of Criminal Investigation to use criminal sanctions for tax violations against otherwise untouchable criminals continues to be a powerful weapon in the fight against organized crime.
This historical record is primarily about activities of the Criminal Investigation function. However, we gratefully acknowl­edge the invaluable contributions of the other IRS components, particularly the Examination and Collection functions, our partners in many of these endeavors. Similarly, we gratefully acknowledge the important roles played by the Office of Chief Counsel and the Department of Justice.


PROFILES
Presented below are brief biographical sketches of the sixteen individuals privileged to serve as the principal executive of the IRS Criminal Investigation function since its inception on July 1, 1919.

Donald K. Vogel

February 28, 1993-Present
Donald K. Vogel earned a bachelor's degree in business administration with a major in accounting from Creighton University in Omaha, Nebraska. He is a native of Sigourney, Iowa.
He entered federal Service in 1965 with the Department of the Army. In 1971 he joined the IRS as a special agent in the Criminal Investigation Division in Omaha, Nebraska. He held various positions in Criminal Investigation including group manager in San Antonio, Texas; Branch Chief in Austin, Texas; Assistant Division Chief in St. Louis and Executive Assistant to the Assistant Regional Commissioner in Southwest Region.
After completing the IRS Executive Selection and Development Program in 1987, he became Assistant Director of the St. Paul District. In 1988, he was named Assistant Regional Commissioner for Criminal Investigation in Midwest Region.
He was selected as Assistant Commis­sioner (Criminal Investigation) in February 1993.

Inar "Smitty" Morics

Decembers, 1989-January 10, 1993
Inar "Smitty" Morics is a native of Liepaja, Latvia; He holds a bachelor's degree from Northwestern University in Evanston, Illinois.
In 1962, Morics began his IRS career as a criminal investigator in Chicago. He transferred to the National Office in Washington in 1970 where he held several management positions in the Criminal Investigation function. He became Chief of the Criminal Investigation Division in the St. Paul District in 1976.
In March of 1987, he completed the IRS Executive Selection and Develop­ment Program. In October 1987, he was selected as Assistant Regional Commissioner (Criminal Investigation), Central Region. He was appointed Assistant Commissioner (Criminal Investigation) December 3, 1989. In 1993, he became the District Director in St. Paul, Minnesota.

Bruce V. Milburn

May 8, 1988-October 20, 1989
Bruce Milburn earned a bachelor's degree in accounting and business from Union College in Barbourville, Kentucky.
He is a native of Point Pleasant, New Jersey.
He began his IRS career in 1969 as a special agent in Cincinnati. He served in Washington and Atlanta before becoming a supervisory criminal investigator in 1974, in Birmingham, Alabama. He became a program analyst in Cincinnati in 1976, was promoted to Assistant Chief of the Criminal Investigation Division in Detroit in 1977, and appointed Division Chief in New Orleans in 1981. He served as Divi­sion Chief in Detroit in 1982, and was appointed Assistant Regional Commis­sioner in North Atlantic Region in 1983.
Upon completing the IRS Executive Selection and Development Program in 1987, he was named Assistant Director of the Newark (New Jersey) District. In 1988, he was selected as Assistant Commissioner (Criminal Investigation), the position he held until his retirement.

Anthony V. Langone

February 2, 1987-April 3, 1988
Anthony V. Langone is a native of Brooklyn, New York. He received a bachelor's degree in economics from Brooklyn College. He began his IRS career in 1961 as a special agent in the Intelligence Division in Brooklyn. He held a series of management positions in the Intelligence Division in the Washington, D.C. area, Detroit and San Francisco. In 1975, he was named Assistant Regional Commissioner (Intelligence) for the Southeast Region, and in 1978, he was chosen for the Executive Development Program. In 1981, Mr. Langone was named Assistant District Director in Jacksonville, Florida. In April 1986, he became the Deputy Assistant Commissioner (Criminal Investigation), the position he held until his selection, on February 2, 1987, as Assistant Commissioner (Criminal Investigation).

Richard C. Wassenaar

March 21, 1982-December 12, 1986
Richard C. Wassenaar was born on April 27, 1939, in Worthington, Minnesota. He received a B.S. degree from Elmhurst College, Elmhurst, Illinois, in 1963 and studied law at DePaul University. Mr. Wassenaar began his Government career in 1963 as a special agent in Chicago. In 1971, he became Assistant Chief, Intelligence Division in the Los Angeles District. He completed the Executive Development Program in 1973, was named Assistant District Director in Seattle, and in 1975, became Assistant Regional Commissioner (Intelligence), Western Region. In March 1982, Mr. Wassenaar was appointed Assistant Commissioner (Criminal Investigation), the position he held until his death on December 12, 1986.

Thomas J. Clancy

July 6, 1975-March 20, 1982
Thomas J. Clancy was born on November 6, 1932, in Independence, Kansas. He received a B.S. degree from Wichita State University in 1954, and became a special agent in Wichita in 1957. In 1970, he was named Chief, Intelligence Division in the Omaha District and, in 1971, was appointed staff assistant to the Director, Intelligence Division. In 1973, he entered the Executive Development Program and was later selected as the Assistant Regional Commissioner (Intelligence), Mid-Atlantic Region. In July 1975, Mr. Clancy became Director, Intelligence Division (which was renamed Criminal Investigation Division in 1978). He held that position until his selection as the Director, Foreign Operations District in 1982. Mr. Clancy retired from the Service in 1986.

John J. Olszewski

September 3, 1972-May 9, 1975
John J. Olszewski was born on December 12, 1923, in Detroit, Michigan. He received a B.S. degree in 1949, and a doc­tor of jurisprudence degree in 1955, both from the University of Detroit. In 1952, Mr. Olszewski became a special agent in Detroit and, in 1961, he was named Chief, Intelligence Division in the Detroit District. In 1970, Mr. Olszweski was pro­moted to Assistant Regional Commissioner (Intelligence), Midwest Region, the posi­tion he held until his selection as Director, Intelligence Division in September 1972. Mr. Olszewski retired from the Service in 1975.

Robert K. Lund

October 4, 1970-June 30, 1972
Robert K. Lund was born in Startup, Washington, and graduated in 1941 from the University of Washington in Seattle. He entered Government Service in 1941 as an investigator in Treasury's Foreign Funds Control Unit. He began his Internal Revenue career in 1944 as a special agent in San Francisco. In 1952, Mr. Lund was named Assistant Chief, Intelligence Division in the San Francisco District and, in 1957, was promoted to Chief in the Los Angeles District. In 1967, Mr. Lund became the Assistant Director of the Intelligence Division, the position he held until his selection as Director in 1970. Mr. Lund retired from the Service in June 1972.

William A. Kolar

December 31, 1965-June 13, 1970
William A. Kolar was born in Baltimore, Maryland. He attended Washington College in Chestertown, Maryland and received an LL.B. degree from the University of Baltimore in 1943. Mr. Kolar was an FBI agent from 1943-1951. He later served as Chief Investigator for the Senate Judiciary Subcommittee on "Trading with the Enemy Act." In 1954, he joined the IRS as a special assistant to the Director of the Internal Security Division. In 1960, Mr. Kolar was named Director of the Internal Security Division and held that position until his selection as Director of the Intelligence Division in December 1965. He served in that capac­ity until his retirement from the Service in June 1970.

H. Alan Long

June 30, 1959-December 31, 1965
H. Alan Long was born in Burlington, Colorado; and, in 1927, graduated from the University of Colorado. He entered the Government in 1940, as a special agent in Denver. In 1950, Mr. Long, a certified pub­lic accountant, became a member of the Appellate Staff in New York City and remained there until his appointment in 1956, as the District Director in Chicago. In June 1959, he became Director of the Intelligence Division. Mr. Long held that position until December 1965, when he was named District Director in Pittsburgh.

J. Perry August

October 18, 1955-June 30, 1959
J. Perry August was born in Dorchester, Nebraska, in 1909, and graduated from the University of Wyoming. He entered government service in 1934 with the Bureau of Reclamation in Denver, Colorado, transferring three years later to the Bureau of Internal Revenue as a spe­cial agent in the Denver Office. Mr. Perry was named Special Agent in Charge of the Denver Office in March 1952, and became the Assistant Regional Commissioner (Intelligence) of the Dallas Region on July 1, 1953. He was the Director of the Intelligence Division from October 1955 to June 1959, when he retired from the Service. He died on June 12, 1984.

A. Walter Fleming

December 20, 1953-August 15, 1955
A. Walter Fleming entered Internal Revenue in 1923 as a special agent and advanced to Special Agent in Charge of various posts of duty. He later served as Regional Commissioner at Buffalo and Dallas. In December 1953, he was made Director, Intelligence Division. He held that position until August 1955, when he was appointed Regional Commissioner in New York.

Garland H. Williams

January 1, 1953-August 31, 1953
Garland H. Williams was born in Prentiss, Mississippi on January 5, 1903. He received a degree in engineering from the University of Mississippi. In 1929, Mr. Williams became an agent in the Bureau of Customs and, in 1936, he transferred to the Bureau of Narcotics. Mr. Williams dis­tinguished himself in the U.S. Army upon being recalled during World War II. One of his achievements was organizing and becoming the first chief of the Counter-intelligence Corps. After the war, Mr. Williams returned to the Bureau of Nar­cotics and later was recalled to active mili­tary duty for two more years. On January 1, 1953, he became Director of the Intelligence Division. He served in the position until August 1953.

Frank W. Lohn

January 20, 1952-November 25, 1952
Frank W. Lohn was born on March 2, 1898, in Lohn, Texas, and studied at West Texas State College. He was a high school superintendent for four years and served in the Artillery in World War I. Mr. Lohn became an Intelligence special agent in Dallas in February 1927. He held several Intelligence field positions, including Special Agent in Charge of the Seattle and the Kansas City Offices. In January 1952, Mr. Lohn became head of the Intelligence function and, on August 11, 1952, he became Director of the reorganized Intel­ligence Division. In November 1952, Mr. Lohn was named District Commissioner of the Denver Region.

William H. Woolf

January 26, 1943-December 31, 1951
William H. ("Harry") Woolf was born in Alderson, West Virginia, on May 8, 1886. He graduated from high school in Washington, D.C., and received an LL.B. degree from Georgetown University Law School. On October 6, 1919, Mr. Woolf transferred from the Office of the Chief Post Office Inspector to become Assistant Chief of Internal Revenue's Special Intel­ligence Unit. He was promoted to Chief of the Intelligence Unit in 1943, and served in that position until 1951. Mr. Woolf remained on as special advisor to the new head of the Intelligence function, and retired from Internal Revenue in 1952.

Elmer L. Irey

July 1, 1919-January 26, 1943
Elmer Lincoln Irey was born in Kansas City, Missouri, on March 10, 1888. He graduated from high school in Washington, D.C., and attended Georgetown Law School. Mr. Irey was a 31-year old Post Office Inspector in Lynchburg, Virginia, when in 1919 he was named Chief of the newly created Special Intelligence Unit of the Bureau of Internal Revenue. Beginning in 1937, Mr. Irey also served as chief coor­dinator of all Treasury law enforcement agencies. These included the Secret Ser­vice, Customs, Foreign Funds Control, Narcotics, Alcohol Tax and Intelligence. In 1943, Mr. Irey was relieved of his responsibility as Chief of the Intelligence Unit so he could devote full time to coordi­nating Treasury Enforcement activities. Mr. Irey retired from the Government in 1946. He died on July 19, 1948.


The following is a verbatim reprint of the only copy of a bound document in the Criminal Investigation historical files maintained in Washington D.C.
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