CHICAGO - The IRS scandal may have its roots in Illinois politics. Specifically, the 1996 U.S. Senate race between Democrat Congressman Dick Durbin and conservative Republican State Rep. Al Salvi.
More than a decade before his 2010 letter to IRS officials urging the agency to target conservative organizations, U.S. Senator Dick Durbin's political career crossed paths with Ms. Lerner when she was head of the Enforcement Division of the Federal Election Commission (FEC), and directly involved in the 1996 Illinois U.S. Senate race.
Soon after the IRS story broke, Al Salvi told Illinois Review that it was IRS official Lois Lerner who represented the FEC in the 1996 Democrat complaint against him. According to Salvi, Lerner was, without question, politically motivated, and went so far as to make him an offer: "Promise me you will never run for office again, and we'll drop this case."
Salvi declined her offer. In fact he ran for Illinois Secretary of State in 1998.
But when he saw Lerner plead the Fifth Amendment before Congress last week, he recognized her. "That's the woman," Salvi said. "And I didn't plead the Fifth like she did."
In 2000, a federal judge dismissed the FEC case against him, clearing Salvi's name and reputation.
Now with the revelations about Lerner, the IRS, and the intriguing connection to Durbin, Salvi shared with Illinois Review his experience with Lois Lerner.
The 1996 FEC Complaint against Salvi
During the last several weeks of the 1996 Illinois U.S. Senate campaign, two FEC complaints were filed against Salvi - one by Illinois Democrats about the way he reported a loan he made to himself, and another by the Democratic Senatorial Committee about a reported business donation.
Salvi made a personal loan to his campaign for $1.1 million to fund the last campaign ads in the expensive Chicago television ad market. News of that loan and the filed FEC complaint dominated Chicago media headlines towards the end of the campaign, suffocating the life out of Salvi's threatening momentum.
"We couldn't get our message out because day after day, the media carried story after story about the FEC complaint," Salvi told Illinois Review in an exclusive interview.
After Salvi lost to Durbin, he was left to face the FEC complaints. The Commission alleged that the Salvi committee:
- Reported bank loans to Mr. Salvi as personal loans from the candidate, never identifying the source of the funds;
- Failed to report debts to the candidate;
- Failed to file 48-hour notices for personal advances from the candidate; and
- Failed to disclose campaign-related payments by the candidate to vendors and a bank.
A federal district court dismissed the case against Salvi in 1999, and the FEC appealed it to the 7th U.S. District Court of Appeals.
The FBI was called in at one point to gather evidence on the case. According to Salvi, two FBI agents unexpectedly visited the Salvis' home, and interrogated his elderly mother about her $2,000 check to her son's campaign and where she got "that kind of money."
Salvi says he saw the visits as nothing but intimidation, making it clear the FEC intended to use his case as a example to others.
At the same time, Salvi said, other conservative groups such as the Christian Coalition were besieged by the FEC demands. One time, representatives from several investigated conservative groups even convened on a conference call to compare notes on how the Clinton Administration was scouring their organizations' financial and activity records.
In fact, Salvi's case (and name) was highlighted as an example several times in the FEC's monthly publication until the case was finally dismissed in 2000.
It was while dealing with the FEC complaint that Salvi says he first met Lois Lerner, then the head of the FEC Enforcement Division.
During one conversation with Lerner, she offered a deal Salvi says he'll never forget, and neither will his brother and attorney, Mike Salvi.
"She said, 'If you promise to never run for office again, we'll drop this case,'" Salvi recalled.
At the time, Salvi said, he figured it was probably just Dick Durbin's way of getting him out of politics.
Salvi said he refused Lerner's offer because he knew he had done nothing wrong and wanted to leave the door open for future campaigns. In 1998, Salvi ran for Illinois Secretary of State while the 1996 FEC case against him continued.
Nearly four years and a hundred thousand dollars in legal fees later, federal judge George Lindbergh dismissed the FEC case against him, leaving the FEC attorney Lois Lerner -- who was present and actively arguing before the judge -- shocked.
"The judge said to Lerner, 'Let me get this straight - Mr. Salvi loaning himself money is legal, and you have no complaint against that, is that right?'" Salvi said. "Ms. Lerner agreed. Then the judge said, 'You just don't like the way his attorneys filled out the report?' Lerner agreed."
Case dismissed, the judge said shaking his head and pounding his gavel, as Lerner objected.
"We never lose!" Lerner said to Salvi afterwards.
Despite all the Democrats' efforts, Salvi never paid the FEC a dollar in fines or penalties.
Congressional Hearings On IRS Scandal
Salvi, now 53, said when he saw Lerner on television last week, those FEC hearings all came back to his memory -- 13 years later. "I didn't plead the Fifth," Salvi said.
And the taxpayers had no choice but to pay for Lerner's legal trail that lasted for over four years.
Durbin Asks IRS For Help in 2010
After the U.S. Supreme Court decided the Citizens United case, many incumbent politicians became concerned about the activities of organizations like Crossroads GPS, which had announced it would be running issue ads against Illinois' Democrat candidate for U.S. Senate Alexi Giannoulias, who was campaigning to succeed Barack Obama in the U.S. Senate.
In October 2010, Durbin wrote IRS Commissioner Shulman about the tax exemption status of Crossroads - a job that would find its way to IRS official Lois Lerner.
I write to urge the Internal Revenue Service to examine the purpose and primary activities of several 501(c)(4) organizations that appear to be in violation of the law.
One organization whose activities appear to be inconsistent with its tax status is Crossroads GPS, organized as a (c)(4) entity in June. The group has spent nearly $20 million on television advertising specific to Senate campaigns this year. If this political activity is indeed the primary activity of the organization, it raises serious questions about the organization's compliance with the Internal Revenue Code.
Other 2010 letters to the IRS with similar requests from elected officials may be included in four Congressional investigations now scheduled to take place in the next few weeks.
Salvi says it will be interesting to see how Lois Lerner, Dick Durbin, the FEC, IRS, and Illinois politics intersect as these investigations continue.