Billionaire Kenneth C. Griffin has reached an agreement with the IRS and the Treasury to dismiss the case with prejudice in the Littlejohn leaker lawsuit. The order, signed by U.S. District Judge Robert N. Scola, Jr., in Miami, Florida, on June 25, 2024, included terms that were not made public but did involve a public apology from the IRS. When a case is dismissed with prejudice, it means the decision is final and cannot be retried, rendering all motions moot. Griffin, the founder and CEO of Citadel hedge fund, filed suit against the IRS in December 2022 for allowing the leak of his confidential tax return information to Pro Publica.
Under section 7431(a), victims can sue for damages for unauthorized inspection or disclosure of their tax information, either against the United States if the accused is a government employee or against the individual if not. Griffin’s information was leaked to Pro Publica, leading him to file the lawsuit before contractor Charles Littlejohn was identified as the leaker. Despite the government’s challenge to subject-matter jurisdiction, the court allowed the case to proceed. The case faced difficulties in obtaining information, especially related to TIGTA investigative files that are protected under section 6103, the same rule Littlejohn was accused of breaking.
In response to the resolution, Griffin expressed gratitude towards his team for securing an outcome that would benefit all Americans. The Department of Justice declined to comment, while the IRS issued a public apology to Griffin and others impacted by the leak, stating that they have made substantial investments in data security. The IRS noted potential weaknesses in its systems and vowed to work with other agencies to assess vulnerabilities. The IRS had also taken additional steps to enhance internal systems, protocols, and procedures to reduce risks for taxpayers and the tax system.
Earlier in the year, the IRS began notifying more taxpayers affected by the data breach, which involved former contractor Charles Littlejohn illegally accessing and disclosing private tax information of corporate and wealthy individuals, including former President Donald Trump and billionaires Elon Musk, Jeff Bezos, Warren Buffett, and Michael Bloomberg. Littlejohn pleaded guilty to the unauthorized disclosure of taxpayer information and was sentenced to five years in prison. The IRS has notified victims of the breach through Letter 6613-A, indicating that an IRS contractor had illegally accessed their tax information. The breach impacted not only wealthy individuals but also taxpayers who were shareholders in passthrough entities.
The IRS believes that the actions taken and the resolution of the case will lead to a strengthened process for safeguarding the personal information of all taxpayers. The resolution of the case marks the end of a legal battle for Griffin and potentially sets a precedent for future cases involving the unauthorized disclosure of taxpayer information. The settlement between Griffin, the IRS, and the Treasury, while not publicly disclosed, includes measures to enhance data security and prevent similar incidents in the future. Overall, the resolution of the lawsuit highlights the importance of protecting taxpayer information and the steps being taken to prevent breaches in the future.
