By Theresa Schliep, Law360
The new head of the IRS Criminal Investigation division’s New York field office told Law360 on Thursday that his top priorities will include targeting cryptocurrency abuse and expanding the office’s footprint in global tax investigations.
New CI leader Thomas Fattorusso said combating cybercrime was at the top of the list of his three-year leadership plan for the New York office. That includes the proliferation of personally identifiable information used to file false tax returns on the illicit “dark web” and crimes involving cryptocurrency, he said.
“We are heavily focused on cryptocurrency, and we have people that are well versed in that area,” he said.
On the international front, Fattorusso said the New York field office has a group dedicated to investigations done by the Joint Chiefs of Global Tax Enforcement, or J5, which is a group of countries dedicated to fighting global tax crime. His three-year plan includes expanding the office’s work with J5, as it already plays a large role in investigations including offshore schemes or potential wrongdoing by Swiss banks, he said.
Fattorusso was named executive special agent leading the New York field office Wednesday after leading the office in an acting capacity since June. The CI division deals with investigations of financial crimes including tax fraud, money laundering, identity theft and public corruption.
Some of that criminal activity has involved cryptocurrency, which agency officials have said is an all-too-easy conduit for income and asset concealment. A report issued Thursday by CI said the division seized $3.5 billion in cryptocurrency in the 2021 fiscal year.
With the burgeoning popularity of such digital instruments, the New York field office is setting up a group dedicated to cybercrimes, Fattorusso said. CI has cybercrime units in Los Angeles and Washington, D.C., but there’s likely a need for it in New York as well, he added.
Much of CI’s focus since the beginning of the coronavirus pandemic has also been on abuses of the Paycheck Protection Program, a loan program for small businesses that was created by the Coronavirus Aid, Relief and Economic Security Act . Thursday’s report said the program is a large source of coronavirus-related fraud. Fattorusso said some of those claiming false PPP loans are receiving millions of taxpayer dollars.
“The program was set up to help struggling businesses and help small businesses stay afloat during the pandemic,” he said. “We have people out there that are stealing money from these legitimate businesses that can’t get the loans, therefore they go out of business, which puts all of their employees out of business, and it has a trickle-down effect.”
Fattorusso said he’s had a long-time interest in law enforcement. He began his career with the IRS in 2004 in the agency’s Albany, New York, location after working for a Big Four accounting firm. He worked in various capacities in CI offices in Washington and Philadelphia, where he was tapped as special agent in charge in March 2020.
These offices could see an increase in staffing, with a potential $80 billion funding boost for the IRS included in the much-discussed reconciliation bill being weighed by Congress. CI chief Jim Lee said in a conference call with reporters Thursday that his priority is to hire more agents as the agency deals with a general attrition issue, and Commissioner Chuck Rettig said this week the agency was “starved.”
While Fattorusso on Thursday declined to speak to the merits of any bills floating around in Congress, he said he’d take all the agents he can get. The New York field office itself has hired dozens over the past year-plus, he added.
“I will not say no to new agents,” he said.
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