IRS Apologizes to Ken Griffin to Settle Tax Data Breach Case

(Bloomberg) -- The US Internal Revenue Service issued an unusual public apology to hedge fund manager Ken Griffin for failing to protect his confidential tax data from being stolen and leaked to the media by a contractor now in prison.

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That contractor, Charles Littlejohn, pulled off one of the most egregious security breaches in IRS history, stealing tax return information about Griffin and other billionaires, including former President Donald Trump, Elon Musk and Jeff Bezos. Lawmakers and government watchdogs have repeatedly warned about about lax safeguards at the IRS, which processed more than 270 million tax returns in fiscal year 2023. Littlejohn gave Trump’s tax information to the New York Times and the data on the others to ProPublica.

The IRS “sincerely apologizes to Mr. Kenneth Griffin and the thousands of other Americans whose personal information was leaked to the press,” the agency said Tuesday in a statement. The agency acknowledged it “failed to prevent Mr. Littlejohn’s criminal conduct and unlawful disclosure of Mr. Griffin’s confidential data.”

The apology is part of a settlement with the founder of Citadel LP, who sued the IRS for neglecting to put in place safeguards that led to his private financial information appearing in ProPublica articles. Agencies like the US Government Accountability Office and the Treasury Inspector General for Tax Administration have sounded the alarm for years that such breaches were possible.

With the settlement, the IRS said it has “made substantial investments in its data security” to safeguard taxpayer data.

“The agency believes that its actions and the resolution of this case will result in a stronger and more trustworthy process for safeguarding the personal information of all taxpayers,” according to the IRS statement.

Griffin applauded the outcome. “I am grateful to my team for securing an outcome that will better protect American taxpayers and that will ultimately benefit all Americans,” he said in a statement.

Littlejohn pleaded guilty to stealing and leaking the tax returns of billionaires including Michael Bloomberg, majority owner of Bloomberg News parent Bloomberg LP. Littlejohn was sentenced in January to five years in prison.

While it’s unusual for the IRS to apologize to an individual, this isn’t the first time the IRS has made a public apology. Last year the IRS acknowledged wrongdoing to millions of taxpayers who erroneously received notices and tax bills with incorrect information. The IRS also expressed regret in 2017 for giving extra scrutiny to non-profit groups with conservative sounding names.

The case is Griffin v. Internal Revenue Service, 22-cv-24023, US District Court, Southern District of Florida.

--With assistance from Laura Davison.

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