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Follow the Money

How IRS Agents Are Making Their Cases Against Crooked Judges in Operation Greylord



In the Kluczynski federal building on South Dearborn, on a floor that I am not at liberty to reveal, is a door with no number, armed with an alarm and an intimidating lock. The rooms beyond contain a collection of items that belong in a museum of Chicago political history; prominent among them is Judge John McCollom's trash can.

The former oil drum, transported from the McColloms' summer home in East Troy, Wisconsin, still contains the ashes of subpoenaed checking accounts, records the judge and his wife tried to dispose of one Saturday just about a year ago. The judge, then under indictment, was neither prudent nor discreet; the burning was observed by a neighbor, a woman the IRS had contacted several years earlier to ask what she knew of the judge's habits. On that Saturday in 1987, she was so impressed by the determination displayed around the McCollom trash cans that she phoned her contact in the IRS's Official Corruption Group.

The can was seized soon thereafter, and as the judge's trial got under way, an IRS lab was remoisturizing the ashes and reconstructing checks. Less than 48 hours after the prosecution received the lab reports and turned them over to the defense, the judge pleaded guilty. He was sentenced to 11 years.

Today the trash can, still smelling of ash, sits not far from a collection of three-by-four-foot blowups of Judge Richard LeFevour's tax returns, and both the LeFevour and McCollom exhibits are surrounded by boxes of financial documents bearing the names of lawyers, judges, policemen, and bailiffs who have come to trial and gone to jail. Tucked among the creeping paraphernalia are the desks of six IRS agents, among them Dennis Czurylo and Bill Thullen. The two have thrived despite the warehouse atmosphere of their workplace: over the past five years they have developed a new method of proving tax evasion, a method that focuses solely on the flow of cash and is ideally suited to jury trials of bribe-taking judges. But for the work of Czurylo and Thullen, several judges now residing in federal penitentiaries might still be seated on the bench.

Czurylo, a plainspoken man, has 22 years of experience with the IRS and is a legend among agents; in February 1976, he stepped down from a supervisory position because he missed investigations. His involvement with official corruption in Cook County dates back to the investigations of the assessor's office in 1970-71; bribes were being paid by seemingly respectable businessmen in order to have their property-tax assessments reduced, and more than two dozen indictments resulted. Those cases led Czurylo to a similar scam in the Illinois Department of Revenue, where businessmen were paying bribes in order to minimize their sales tax liability, and those cases led in turn to corrupt Chicago aldermen, beginning with Joseph Jambrone. "We were interviewing a businessman during the assessor's investigation, going through his records looking for payments to the assessor's office, and came upon this other transaction," Czurylo recalls. "Somebody looked at it and said, 'Joseph Jambrone--he's alderman of the 28th Ward.' I always remember George Crowley, the defense attorney in that case, a famous tax attorney here, a giant guy with a shock of white hair, who passed away recently. He presented the jury with a two-part argument: one, Jambrone didn't take the money; two, if he did, there was nothing in the IRS code that said you had to report bribery income. I thought that was an intriguing argument. The jury didn't."

Thullen, 35, has the sort of square-jawed, straight-arrow appearance that would make your heart heavy if he turned up as a witness for your prosecution. In 1976, he joined the IRS's examination division, the division that conducts audits, and in 1983 he was assigned to the Greylord investigation of corruption in the Cook County court system. Not long after that transfer, he and Czurylo were handed the case of circuit court judge Richard LeFevour.

The U.S. attorney believed that LeFevour had taken thousands of dollars in bribes to fix both parking tickets and drunk-driving cases, and that the judge had also received payoffs of $2,000 a month for two years from a group of lawyers who were in return allowed to solicit clients in certain courtrooms. At that point, the prosecutor's primary witnesses were two policemen who had relayed bribes to the judge. (A third bagman--Jimmy LeFevour, the judge's cousin--later agreed to cooperate also.) The government knew, however, that the word of corrupt policemen can be discredited by a good defense attorney. Czurylo and Thullen set about trying to find financial evidence that would buttress the testimony of the prosecution witnesses.

Unlike other law enforcement agencies, which tend to gather as much material as they can on their targets in order to stun them at first meeting, IRS agents often call on the taxpayer under investigation before they have talked to anyone else. Czurylo says there is no typical response. "I've had people whom I've later convicted sit down and talk to me on numerous occasions," he says, "and others assert their Fifth Amendment privilege right from the beginning." Czurylo's questioning follows a standard form. "It's about 20 pages long," he says, "and it pretty much marches through a person's financial life. We ask, 'Who are your close friends and acquaintances?' and 'Have you ever borrowed money, interest bearing or noninterest bearing, something that we can't see on your return, something that wouldn't show up?'" An inheritance, a loan from a personal friend, and reimbursements from people for whom the taxpayer has purchased goods are all factors that would have significant effect on an agent's analysis of a taxpayer's spending power.

The next step in almost any investigation is likely to be a quick assessment of the taxpayer's net worth. The agents might find, for instance, that the subject of the investigation had purchased a Porsche and a condo in Florida during the time period under scrutiny. The investigators might then be able to map out the growth in net worth year by year, compare it to the citizen's declared income from all sources, and demonstrate that the assets could not have been purchased without some undisclosed source of income.

In the case of Judge LeFevour, however, nothing came that easy. Czurylo and Thullen called on the judge at his chambers, but the interview lasted only 15 minutes before the judge decided he probably shouldn't go any further without legal counsel. Not long afterward, Czurylo and Thullen discovered that the intelligence supplied by federal informants was flawed: the accumulated assets alleged to exist just weren't there. The family home wasn't a mansion. The judge didn't even own the car he drove (Hanley Dawson Jr., owner of a car leasing agency, would later testify that he had provided cars to the judge free of charge and that in return LeFevour had dismissed thousands of parking tickets for which the dealer was potentially liable). "Dick LeFevour is not, as far as we can tell--and we don't know if we found everything--the kind of guy that concealed his wealth," Thullen told me in a recent interview. "It came in and it went out. He had six boys to educate, and it went out for those kind of things as well as everything else."

When an IRS agent discovers that the net worth of a suspect has not increased in the given time period, he or she usually turns with some reluctance to the "total expenditures" method, a method of proving fraud by demonstrating that a taxpayer is spending more than his gross income. The method is used relatively rarely because it involves so much work and because the law places a heavy burden on the investigators; to protect the accused, legal precedent requires that the agents rule out every lead that points to legitimately nontaxable income--gifts from family, loans from friends, inheritances, and the like and at the same time document the taxpayer's spending habits, constructing a detailed portrait of his or her lifestyle.

In the LeFevour case, Czurylo and Thullen began by issuing subpoenas for the judge's payroll checks. The endorsements on the checks indicated that the judge was depositing them in a checking account at Avenue Bank, and so the two agents then subpoenaed the bank, asking for records of the judges checking account. Once the checks were in hand, IRS computer operators organized them by payee, so that ten checks written to the same person or store or bank during the five years in question (1978-1982) would be listed together in sequence (e.g., all the checks written to Marshall Field's would be grouped and listed chronologically, followed by the total spent at the department store in each year). Czurylo and Thullen then studied the list, looking for patterns.

The operative wisdom among IRS agents is that bribe takers usually do not deposit payoffs in their savings or checking accounts--they deposit only their paychecks, use their ill-gotten gains for walking-around money, and take care in using their credit cards and checking accounts because they leave a paper trail. As a result, when Czurylo and Thullen get their hands on checking account records, they are often looking for what isn't there. It is likely, for example, that there will be few checks for groceries and even fewer made out to cash. People whom everyone else pays by check--the doctor and the dentist, for instance--will not appear in the check register, or if they do, they will appear far less frequently than is normal. The check and credit card records may contain no indication that the person ever gets a haircut, buys a pair of shoes, or takes a vacation. In an expenditure investigation, Czurylo and Thullen try to document those hidden expenses, looking for the barber, the shoe store, and the travel agent.

In Judge LeFevour's case, the two agents noted 38 checks written to Morken Foods, an Oak Park grocery, in the years 1978 to 1982. The total came to $5,706.59, an average of $22 per week. Mr. and Mrs. LeFevour had six sons, and while not all of them were at home during that time period, Czurylo and Thullen realized that if those checks represented all of the LeFevours' grocery expenses, the family must be near starvation. The agents visited the store and discovered that the LeFevours had had their groceries delivered and that the judge had usually paid cash. While the manager could not provide invoices, he was prepared to testify that the family had spent, by a conservative estimate, $20,000 in currency during the same period.

The computer printout for those years also listed 40 checks, totaling just under $2,800, to Centennial Laundry. Czurylo and Thullen tracked down Irving Tomlinson, the retired routeman who had called at the LeFevours'. He told them that the judge had paid $60 to $70 per week to have shirts, towels, and sheets laundered and suits and dresses dry-cleaned. Based on Tomlinson's estimates, the agents came up with a cash expenditure figure of almost $11,000 during the period in question.

The school tuition figures listed in the check analysis also seemed low. Czurylo and Thullen called on two Catholic schools in Oak Park and found that the judge had paid them more than $4,000 in currency.

At the same time, the IRS men were also visiting the judge's friends, neighbors, and business associates. "We do it frequently because of the way these guys are spending money," Czurylo says. "They're spending it on very personal living expenses and there's almost no way to find that without contacting people who know them well." Thullen also points out that the IRS has the burden of following up all reasonable leads that might prove the existence of legitimate nontaxable income; gifts, loans from friends, and inheritances could exonerate the taxpayer.

Czurylo and Thullen prefer to call on friends and neighbors of their suspects without warning, often in the evening when they might have a better chance of finding someone at home. Sometimes the subject of the investigation has warned friends to expect that knock at the door, and other times word spreads simply because the house calls usually take place over the course of several weeks. "So we arrive and say 'We're the IRS,'" Czurylo says, "and some people say, 'Oh, I thought you were going to be here last week.'"

Bill Doukas (the agent who impounded Judge McCollom's trash can) says the responses of neighbors are easily categorized. "You get four types of individuals in any investigation. You get the people who like the person a lot, like them so much that they'll lie--but that would be basically very close relatives. You get people who like the person, and they'll try not to dance around the issue, but at the same time try not to hurt the person. You get the people who are just down the middle who will just tell you the truth. And then you get people who are glad to embellish the truth.

"Most people, any type of law enforcement authority that comes to their door makes them think, 'Am I in trouble? Did I do something wrong?' even though they are perfectly innocent. Once they get over that, they're either really glad, because this is like TV to them, and they get real enthused, or they still don't know--there are some ambivalent emotions. In Judge McCollom's case, this poor neighbor [who reported the burning of records] has to live there, and she was torn between doing what was right in her conscience and trying not to offend the other person. Her idea of right versus wrong won over. If she had not called, we would not have known. We would have gone through trial. We probably would have been successful, but she saved us three weeks of trial and all sorts of aggravation."

For the LeFevour investigation Czurylo and Thullen had few leads when they began visiting the judge's neighborhood in Oak Park. "We really did not have a lot to go on as to where he was spending his money," Czurylo recalled, "because even though we had Jimmy [LeFevour--the judge's cousin] and a couple of cops who were cooperating, they really didn't know where this guy spent his money. Anyone we could find--neighbors, friends, associates--we would ask, 'Where does the judge spend his money?' And people would say, 'Well, I know he spends a lot of money--they take these vacations! But they can't tell you where. They don't know what airline they went on, they don't know if they rented a car, or where they rented a car. Where do they get their groceries? 'I don't know, they get them. I don't know where.' You get that kind of response. So we have to do lots of digging around."

The agents learned, for example, that the LeFevours employed a woman to clean the house, but for a long time they could find no one who could supply the housekeeper's name. Finally a witness came up with "Bridget Connelly," a name that had also shown up on nine checks written between the years 1981 and 1983 for a total of $850. Ordinarily, the agents could have located the woman through the bank endorsement on the back of the checks, but they were looking at microfilm and the bank endorsements were impossible to read. Finally some subpoenaed checks arrived, and Connelly's name and phone number were on one of them. Czurylo says that, if his memory serves him correctly, the phone number was unlisted, so the agents contacted Illinois Bell, got Connelly's address, and then made an unannounced home visit. Ms. Connelly told them that the family had paid her $10,900 in cash between 1978 and 1982.

The agents' personal interviews also yielded the information that the family had taken regular vacations in Michigan. "We had everybody saying that the family would go to Michigan every summer," Czurylo told me. "They'd go for between two weeks and a month. We had all kinds of crazy names about where it was--'Palisades' was as close as we could come, and the only thing I could find was the Palisades nuclear plant. I called the public affairs officer for the power plant and I said, 'Do you know of any place around there?' He says, 'Oh yeah, Palisades Park, it's right next door. They rent out cabins.' These cabins were all privately owned, and the manager will rent out your unit for you when you're away. So we had to survey the people up there, and finally we had to send out 50 or 75 or 100 letters saying 'Did you rent to Richard LeFevour during these years?'" Three owners who had rented to the family ultimately turned up. One had been paid by check, another had been paid $1,100 in cash, and a third had been paid $100 by check and $600 in currency.

The two agents also built up financial profiles of other members of the family, preparing for a defense that might argue that some of the cash had come from family members. In the course of that effort, Czurylo and Thullen spent two days in a musty basement at Avenue Bank, going through the bank's daily trial balances, reconstructing by hand the savings accounts of three of the six LeFevour children.

Czurylo and Thullen finished their investigation almost a year to the day after they started, and they say that that was record time, that two or even three years on an expenditure case is not unusual. They interviewed 200 potential witnesses, issued between 500 and 600 subpoenas, and worked over 2,100 checks, 600 to 700 deposit entries, 600 to 700 credit card items, and approximately 800 cash transactions.

"In a case like this, information handling is very, very difficult," Czurylo says. "All the documents related to a particular subpoena go into a single folder, and you'll have hundreds of folders, and all that information, or most of it, has to be balanced out. And the final work product might be a single page to show to the jury, but the only way you get to that one page is by gathering all this other data. You're gonna be cross-examined about the thoroughness of the investigation, how it balanced out, and did you account for everything, so this is what you have to do."

One of the single pages Czurylo and Thullen prepared for the jury was a list of 42 stores, banks, schools, clubs, churches, and individuals that had had cash transactions with the LeFevours. They had found a veterinarian who had treated the family's three bulldogs, an animal-hospital where the dogs had been treated, two jewelers where the judge had bought gifts, the family's dentist, the outlet where they purchased eyeglasses, and Mrs. LeFevour's hairdresser, furrier, and dress store.

That list of cash transactions was the foundation of Czurylo and Thullen's new method. The usual route--the "total expenditures" method--demands that the jury follow some complicated accounting: the agent must outline all personal expenses paid with checks, currency, with loan proceeds, with money withheld from salary checks, with money paid directly from savings accounts, and with money from third-party checks; with that finished, the agent goes through all nontaxable receipts, all loans received (Judge LeFevour had more than 20), the reported total income, the interest income, and, ultimately, the unreported income.

Early in the LeFevour investigation, however, Czurylo proposed a new technique, one that he'd been turning over in his head for years, and that he thought would be easy for the jury to follow. Czurylo suggested that the jury could ignore all transactions but those made with cash. The method was based on two convictions: (1) no one pays a bribe by check; and (2) the judge (or any other taxpayer, for that matter) can have only a limited and fairly specified amount of currency in his or her pocket. The judge's legitimate sources of currency could be established, and the agents could also come up with some figures for the judge's cash expenditures. If LeFevour could be shown to be spending more dollar bills than he could legitimately have access to, the jury would have to wonder where they were coming from. The judge would be forced to explain not only how he had come into the seemingly extra money, but also how that money arrived in his pocket in the form of hard currency.

To that end, Czurylo and Thullen prepared a summary document for the jury that compared Mr. and Mrs. LeFevour's "known sources of currency" (checks written to cash, withdrawals from savings, third-party checks cashed, loans in currency, repayments from individuals in the form of cash, and verifiable racetrack winnings) with their "known currency uses" (currency deposits to bank accounts and the 42-line list of cash expenditures). At the bottom of the balance sheet, the "currency uses" exceeded "known sources" by $143,876.

Czurylo and Thullen were well aware that the defense would attack the credibility of the prosecution's witnesses. "James LeFevour [the judge's cousin and bagman] takes the stand without documents, without records, with an admitted life of crime in which he has subverted every system that he's worked in, a man who has been taking payoffs as a police officer almost from the day he walked on to the department," Czurylo says. "Why should you believe him? You should believe him because on the back end, there's the money. Judge LeFevour may say, 'Jimmy took money, but it never got to me.' We come back and say, 'Oh yes it did. Here it is.'"

Czurylo and Thullen expected what is known in the trade as a "cash hoard" defense, an alibi that explains why the defendant has so much cash on hand. Cash hoard defenses can be lively. IRS agent Lee Williams, for example, had an expenditures case recently against a narcotics trafficker in which the dealer explained his cash hoard by saying that he had indeed sold dope until June 1977, but after that date he had seen the light and had given up the profession. The statute of limitations would prevent the dealer from being prosecuted for tax fraud in the years before 1978, and as a result, he could argue with seeming impunity that the money he was spending between 1978 and 1981 represented profits from his earlier illicit activity. In the end, however, the jury was unconvinced, and the dealer was dispatched to jail.

Judge John Reynolds, tried one year after Judge LeFevour for taking bribes and for tax fraud, presented a "sock drawer" defense, arguing that he had accumulated currency in his sock drawer by cashing dividend, government refund, and third-party checks, and that what the government had tracked down as cash expenditures from 1979 to 1981 had been paid for by the sock-drawer money. It was a hard defense to sell to the jury, however, because those expenditures were so much greater than his legitimate sources of hard currency. Reynolds's argument was reminiscent of Cook County commissioner Floyd Fulle's cookie-jar defense, made back in 1975, when he was under indictment for extortion to fix zoning cases. IRS agent Bill Witkowski, who worked the case, remembers that Fulle and his wife "were great about how the money went out [of the cookie jar], but not too good about how it got in." The commissioner got five years. In other cases of this type, the size of the reported vessel has helped refute the claim; you can claim to have accumulated $50,000 in small bills and loose change in a cookie jar, but there aren't many cookie jars that can hold that much ,money.

One explanation sometimes used for the source of a cash hoard is that the seemingly extra money was a loan from a person who is now dead. "There are lots of dead people in our investigations," Czurylo says. "Dead people loan more money than live people do." In order to disprove the claim, Czurylo and Thullen sometimes work up financial profiles of the dead friend or relative in order to demonstrate that the deceased had no ability to do what the defendant claims was done.

The LeFevour defense was multifaceted. The judge's attorneys argued that the bagmen were admitted liars and con men, that the trio may have taken bribe money from lawyers but that they had kept it for themselves. The judge's sons testified about cash they had given their father; about cash payments they had made themselves--school tuition, for example--that the IRS had attributed to their father; and about jewelry and cash left by their maternal grandmother. Furthermore, the defense argued that the judge, who had reported income from gambling and the sale of his wife's paintings, had done better at the racetrack than the IRS had given him credit for. (The government was arguing that the gambling and artwork income listed on the judge's returns was actually an attempt to cover a portion of the bribery income.)

The witnesses and data assembled by Czurylo and Thullen, however, were a powerful assemblage. The milkman, druggist, hairdresser, and laundryman were among many who took the stand to testify about cash payments. Czurylo and Thullen testified about their method and about some expenditures, and a third agent, John Jankowski, was brought on to summarize. He presented both the total expenditures method and the cash version (prosecutors felt that the case was too important to have an appeals court overturn it due to some unforeseen flaw in Czurylo and Thullen's technique), but primary emphasis was placed on following the currency.

After an eight-week trial, the jury debated only four and a half hours before coming back with guilty verdicts on all counts. In interviews after the verdict was read, various jury members expressed sympathy for the judge's sons for the ordeal they had been through, but said that the evidence against their father was overwhelming. Richard LeFevour was subsequently sentenced to 12 years in prison.

Since then, Czurylo and Thullen have done cash workups on Judge Reynolds and Judge Raymond Sodini. Reynolds was convicted, and Sodini pleaded guilty midway through his trial. Agent Bill Doukas used the method in the McCollom investigation and anticipates using it in the upcoming trial of Judge Martin Hogan. Judge John McDonnell, indicted March 16, will also face Czurylo, Thullen, and the cash method, and two other cases--one Greylord and one not--using the technique are also in the works.

Defense attorneys have argued that expenditure investigations are a great invasion of privacy, and it is hard to argue with the notion that a minute examination of anyone's financial behavior is going to reveal some pretty intimate details. In tracking down one judge's expenses, for example, Czurylo and Thullen found his florist; the florist's records led in turn to several girlfriends that the judge had had over the course of a few years, and the girlfriends detailed various outings at which the judge had spent money. Czurylo and Thullen were not interested in the girlfriends per se, but they were interested in the expenses. In the LeFevour case, Czurylo took some heat from defense attorney David Mejia for tracking down Mrs. LeFevour's gynecologist. In response to a subpoena, the doctor had dispatched more than was asked for, sending not only financial information, but also medical details. The defense thought the agents should have sent the medical details back, and called the investigation "despicable."

Terry LeFevour, the judge's son who is now acting as his father's attorney, characterizes the investigation differently: "I only had contact with Czurylo, and I never had any problems with him. He knows what he is doing, he's very thorough, and in terms of how he dealt with me, he was professional. The guy did his job, and unfortunately for my father, he did a pretty good one. I really think that at that point in Greylord, it was not the strongest case in the world, and if there was one reason why there was a conviction, I think it was because of the work that Czurylo did."

Since the LeFevour investigation, Czurylo and Thullen have computerized their operation and have developed a fine eye for patterns. The date August 5, 1983, for instance, is a great tip-off; Czurylo refers to it as "the day the world changed." On that date, the Greylord investigation was uncovered by the media and scores of individuals had to change their ways overnight. Judges and lawyers who had not written a check to "cash" for years were suddenly writing them every week. People who had bounced one or two checks in a five- or six-year period were now bouncing that many in a month. (Judge LeFevour, for instance, wrote 11 checks to cash over the course of the years 1978 to 1981; in 1983, he wrote 68. He bounced no checks in 1980 and 1981; in 1983, 59 came back marked "insufficient funds.")

If there is a lesson in all of this, it would seem to be that dirty money is very hard to hide. You can't put it in the bank. You can't purchase large assets, and it would seem that you could put yourself at risk purchasing even small ones; Judge LeFevour was done in, after all, not by a Porsche or a swimming pool, but by the laundry, the groceries, and the hairdresser. You can't take vacations with the money except in the greatest secrecy. You can take a taxi where you would normally have taken the bus, but only as long as no one learns that that is your habit, and you can buy yourself a better lunch only if you don't do it in the same cafe on a regular basis. Having no savings or checking accounts might also help you avoid jail, and a man or woman with dirty money would also be wise to have no chauffeur, no maid, no neighbors, and no friends.

Czurylo and Thullen, however, are more modest in assessing their efforts. The common wisdom in the Criminal Investigation Division is that the agency finds "a nickel on the dollar." Czurylo and Thullen make no greater claim, and will admit that sometimes they can't even find the nickel. Two judges against whom there is some witness testimony have thus far escaped prosecution because the two agents can't find the accumulated assets, the incriminating cash expenditures, the telltale cookie jar, or the smoking sock drawer. When I asked Czurylo how he felt about those judges evading justice, he paused, took a deep breath, and said without elaboration, "I think their day will come."

Art accompanying story in printed newspaper (not available in this archive): photos/Jon Randolph.

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