FRIday July 6 2:45 AM ET

Senate Mulls Felon's IRS Salary

By CURT ANDERSON, AP Tax Writer

WASHINGTON (AP) - A recently convicted felon is receiving an $80,000 annual salary from the Internal Revenue Service (news - web sites), despite doing no work for the agency for the past three years.

A senior Republican senator says the situation indicates more widespread problems in the tax collection agency. ``It is my view that some managers in the IRS are of the belief that money doesn't matter,'' said Iowa Sen. Charles Grassley (news - bio - voting record), senior Republican on the Senate Finance Committee.

The IRS employee, Kenneth Dossey of Glasgow, Ky., traces his legal difficulties to a disability suit he brought against the agency - he is legally blind - and contends the government subsequently sought to ruin him.

Dossey, 46, was convicted Feb. 28 in U.S. District Court in Kentucky of wiretapping and mail fraud. On May 24 he was sentenced to six months' home detention, two years' probation and ordered to pay restitution to an insurance company for losses that jurors found to be false. He is appealing the convictions.

Before he was charged with these crimes, Dossey was operating a convenience store in Hiseville, Ky., while simultaneously on leave from the IRS and drawing his salary, according to documents provided by Grassley.

``These IRS managers who decided not to take any action against Mr. Dossey appear to take the view that the taxpayers' money comes a distant second to other priorities at the IRS,'' Grassley said in a letter dated Tuesday to Treasury Secretary Paul O'Neill.

The IRS and Treasury Department (news - web sites) declined to comment, citing employee privacy laws.

In a telephone interview Thursday, Dossey acknowledged the agency could have cut off his checks after his indictment and said he believes his disability lawsuit deterred IRS officials from doing so.

``I'm the victim, not the criminal,'' Dossey said. ``I never knew things were going to come to this pass.''

Despite his blindness, Dossey started his career with the IRS in 1980 in Cincinnati, moved to Dallas and then came to Washington in 1987. He worked on a variety of projects, including a major IRS computer overhaul, but sued the agency in 1996, contending it wouldn't provide the equipment his disability requires to do the assigned job.

Under a 1998 settlement, Dossey was paid $265,000, promoted and granted restored vacation and sick leave.

He was supposed to begin a new job then in information systems at IRS headquarters in Washington but was placed on a 60- to 90-day leave so that the equipment he needed could be put in place.

While on leave, Dossey began operating the D&L One Stop in Hiseville, Ky., partly to be near his aging mother. He said he has been waiting ever since for the IRS to call him back to work.

In the three years since the leave began, federal investigators say Dossey:

-Threatened people with IRS audits, including the Park City, Ky., police chief and a deputy county sheriff. Dossey denies this and says local law enforcement officials falsely made these claims to bring in federal investigators.

-Set up a wiretapping and taping system at his convenience store to record and listen to employees' telephone calls. Dossey says this was for self-protection and to gather evidence for alleged threats made against him.

-Was paid $5,759 for an insurance claim following an altercation at his store in which someone's fist broke a glass door to a freezer containing ice cream and other frozen foods. Employees testified at his trial that the amount of the claim was greatly inflated.

Dossey was charged in April 2000 in an eight-count indictment for illegally intercepting employee telephone calls and for making false insurance claims on the freezer incident. His first trial ended with a hung jury. At the second he was convicted on mail fraud and wiretapping counts but also was acquitted on four counts.

``If you gave me the same amount of man-hours and money, I guarantee you I could find a crime to charge you with, too,'' Dossey said.

A few months after Dossey was charged, the IRS began steps to suspend him from duty and pay indefinitely, possibly leading to termination pending the outcome of the criminal charges. But the IRS has taken no action since then.

-- Anonymous, July 06, 2001