United States Court of Appeals
for the Federal Circuit
__________________________
ROGER TUDOR,
Petitioner,
v.
DEPARTMENT OF THE TREASURY,
Respondent.
__________________________
2009-3237
__________________________
Petition for review of the Merit Systems Protection
Board in DA0752080172-I-1.
___________________________
Decided: May 9, 2011
___________________________
LAWRENCE A. BERGER, Mahon & Berger, Glen Cove,
New York, argued for petitioner.
MATTHEW H. SOLOMSON, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, argued for respon-
dent. With him on the brief were TONY WEST, Assistant
Attorney General, JEANNE E. DAVIDSON, Director, and
KIRK T. MANHARDT, Assistant Director.
__________________________
TUDOR v. TREASURY 2
Before BRYSON, CLEVENGER, and LINN, Circuit Judges.
Opinion for the court filed by Circuit Judge BRYSON.
Opinion dissenting-in-part filed by Circuit Judge
CLEVENGER.
BRYSON, Circuit Judge.
Roger Tudor appeals from a decision of the Merit Sys-
tems Protection Board sustaining his demotion by the
Internal Revenue Service from Supervisory Special Agent
to Investigative Analyst. Because the administrative
judge misconstrued an important component of the evi-
dence in the case, we reverse the Board’s decision and
remand the case to the Board for further proceedings.
I
Beginning in 2003, Mr. Tudor was employed as a Su-
pervisory Special Agent with the IRS Criminal Investiga-
tion office in Dallas, Texas. In that capacity, he directed a
group of IRS Special Agents investigating criminal tax
fraud. His group engaged in non-traditional IRS activity,
whereby investigations would take place very rapidly in
response to bulk currency and money laundering activi-
ties discovered in the field.
Mr. Tudor was directly supervised by an Assistant
Special Agent in Charge (“ASAC”) in the Dallas field
office. Georgia Taylor was the ASAC responsible for Mr.
Tudor’s supervision for most of the time period at issue in
this case. For two months in late 2004 and for four
months in mid-2005, Ms. Taylor left the Dallas office on
assignment and was replaced by Catherine Tucker as
Acting ASAC. The ASAC or Acting ASAC was supervised
by Special Agent in Charge (“SAC”) Michael Lacenski.
The SAC was, in turn, supervised by the Dallas Director
3 TUDOR v. TREASURY
of Field Operations (“DFO”), John Imhoff. After the
period at issue in this case, SAC Lacenski and DFO
Imhoff were succeeded by Erick Martinez and Michael
Lahey, respectively.
In late 2005, DFO Lahey ordered an IRS Management
Inquiry in response to allegations that Mr. Tudor had
manipulated data entered into the agency’s Criminal
Information Management Inventory System (“CIMIS”).
The Management Inquiry was conducted by two IRS
employees, Debra King and Charles Pearre. In the course
of the inquiry, Ms. King and Mr. Pearre interviewed Mr.
Tudor and Mr. Lacenski, preparing memoranda based on
those interviews. Ultimately, Ms. King and Mr. Pearre
concluded that Mr. Tudor had manipulated information
entered in CIMIS and had circumvented IRS approval
policies on several occasions between February 2004 and
July 2005. The Treasury Inspector General for Tax
Administration followed up on the Management Inquiry
with its own investigation. As part of that investigation,
Treasury Department special agents conducted their own
interview of Mr. Tudor. The outcome of the Inspector
General’s investigation was a November 2006 report that
substantiated seven allegations of misconduct on Mr.
Tudor’s part.
The Inspector General’s report was referred to the
IRS for resolution. In June 2007, SAC Martinez issued a
notice to Mr. Tudor proposing to demote him to Investiga-
tive Analyst based on three charges: (1) failure to obtain
appropriate approval authority for certain actions; (2)
unauthorized disclosure of taxpayer information; and (3)
repeated entry of false information in CIMIS. The first
charge consisted of 64 specifications: 35 specifications of
improper initiation of investigations without authority; 28
specifications of improper referral of IRS investigations to
TUDOR v. TREASURY 4
U.S. Attorneys’ offices for prosecution; and one specifica-
tion of improper initiation of a subject seizure investiga-
tion. For each specification, Mr. Tudor was alleged to
have improperly signed a Criminal Investigation Gen-
eral/Primary/Subject Investigation Report, known as
Form 4930. In November 2007, deciding official Steven
Pregozen issued a notice of demotion sustaining all of the
charges and specifications.
Mr. Tudor appealed his demotion to the Merit Sys-
tems Protection Board. The administrative judge who
was assigned to the case sustained the IRS action based
on the 28 referral specifications of the first charge and the
second charge of unauthorized disclosure of taxpayer
information. The administrative judge did not make
conclusive determinations regarding the remaining 36
specifications of the first charge, and he explicitly found
that the third charge of entry of false information was
unsubstantiated. Because Mr. Pregozen testified that he
would have imposed the same penalty on Mr. Tudor based
on the first charge alone, the administrative judge found
the penalty of demotion appropriate. Mr. Tudor appealed
to the full Board, which had two members at the time.
The Board could not agree on the proper disposition of the
case, so the decision of the administrative judge became
the final decision of the Board. This appeal followed.
II
The sole issue presented on appeal is whether there is
adequate evidentiary support for the administrative
judge’s findings related to the 28 specifications of the first
charge dealing with improper referrals of investigations
to U.S. Attorneys’ offices for prosecution. Mr. Tudor
argues that his uncontradicted testimony before the
administrative judge established that he was given verbal
5 TUDOR v. TREASURY
authorization by his superiors to directly refer investiga-
tions to U.S. Attorneys’ offices. The Treasury Department
responds that Mr. Tudor’s referral activities were undis-
putedly contrary to IRS policy, that the administrative
judge’s finding that Mr. Tudor did not have verbal au-
thorization to refer investigations was based on a virtu-
ally unreviewable credibility determination, and that the
record as a whole supports the administrative judge’s
conclusion.
The Treasury Department is correct that IRS policy
prohibited Mr. Tudor from referring cases to U.S. Attor-
neys’ offices for prosecution. See Internal Revenue Man-
ual §§ 9.5.10.4–.5 (2002) (requiring SAC to make
prosecution referrals). Mr. Tudor admitted as much in
his testimony before the administrative judge, and he
does not challenge that determination here. However,
according to the deciding official, Mr. Tudor’s noncompli-
ance with IRS policy was not in itself sufficient to sustain
the charge of failure to obtain appropriate approval
authority. Mr. Pregozen testified that he would have not
sustained the first charge if Mr. Tudor’s superiors had
condoned his approval activities, even though those
activities were contrary to IRS policy. Mr. Tudor chal-
lenges the administrative judge’s conclusion that it was
“inherently improbable” that either the SAC or the ASAC
granted Mr. Tudor approval to refer investigations for
prosecution.
Mr. Tudor testified at the hearing before the adminis-
trative judge that he believed he possessed “assumed,
implied authority” from SAC Lacenski to refer investiga-
tions for prosecution. According to Mr. Tudor, SAC
Lacenski “would give [him] verbal approval” to initiate
investigations and refer investigations to U.S. Attorneys’
offices. Mr. Tudor stated that SAC Lacenski had given
TUDOR v. TREASURY 6
him “a lot of leeway” to depart from IRS approval policies.
He added that he “went ahead and processed the case
through like [SAC Lacenski] instructed,” in the belief that
his actions were proper. Mr. Tudor testified that he
discussed cases that he referred for prosecution with his
SAC “several times” and with his ASAC over the tele-
phone or during routine workload reviews. He stated that
he was never reprimanded by SAC Lacenski, ASAC
Taylor, Acting ASAC Tucker, or anyone else for directly
referring investigations to U.S. Attorneys’ offices, and
that he would have stopped referring investigations if he
had been told not to do so.
The administrative judge did not credit Mr. Tudor’s
testimony because he regarded it as inconsistent with the
testimony of SAC Lacenski. The administrative judge
found SAC Lacenski to be “very clear that he had never
authorized [Mr. Tudor] to refer any cases to the U.S.
Attorney.” The administrative judge’s decision to credit
SAC Lacenski’s testimony over that of Mr. Tudor on this
critical issue would be permissible if the two were in
conflict, as the administrative judge believed. However,
the administrative judge’s characterization of SAC Lacen-
ski’s testimony is unsupported by the hearing transcript.
The sole reference in SAC Lacenski’s testimony to refer-
rals for prosecution, as opposed to investigation initia-
tions, was the following sentence:
When cases were referred for prosecution, my in-
structions to both Mr. Tudor and the Assistant
Special Agent in Charge was that that would have
to be a situation that was discussed with the As-
sistant Special Agent in Charge.
That statement is not inconsistent with Mr. Tudor’s
testimony that he was given verbal approval authority by
7 TUDOR v. TREASURY
his superiors to refer investigations for prosecution, and
that he discussed those referred investigations with his
ASAC.
SAC Lacenski never testified that he did not give ap-
proval authority for Mr. Tudor to refer investigations for
prosecution. In the statement on which the administra-
tive judge may have relied, SAC Lacenski stated that “the
extent of [his] approval for Mr. Tudor to initiate cases”
was limited to a small number of cases (around five)
dealing with a bulk currency initiative. That testimony,
however, dealt with initiation of investigations, not refer-
ral of cases to U.S. Attorneys’ offices. The administrative
judge did not rely on evidence that the limitations on Mr.
Tudor’s authority to initiate investigations extended to
his authority to refer cases for prosecution. The adminis-
trative judge’s finding that “[SAC] Lacenski specifically
stated . . . that he never authorized [Mr. Tudor] to make
referrals to the U.S. Attorney” is therefore unsupported
by the hearing transcript and cannot form the basis for
discrediting Mr. Tudor’s testimony to the contrary. The
great deference owed to an administrative judge’s credi-
bility determination in resolving conflicting testimony, see
Bieber v. Dep’t of the Army, 287 F.3d 1358, 1364 (Fed. Cir.
2002), is irrelevant if the testimony in question is not in
conflict.
The administrative judge also found Mr. Tudor’s
claim of authority to refer investigations to U.S. Attor-
neys’ offices “at complete odds with . . . the testimony of
every other witness.” Those other witnesses were Acting
ASAC Tucker, Ms. King, and IRS Special Agent Mike
Parsons. The scope of Mr. Parsons’ testimony was limited
to the single specification of the first charge for improper
approval of a subject seizure investigation, so it is not
relevant to the issue on appeal. The testimony of Acting
TUDOR v. TREASURY 8
ASAC Tucker did not shed light on the question of
whether SAC Lacenski or ASAC Taylor had given Mr.
Tudor verbal authority to refer investigations for prosecu-
tion. Ms. Tucker stated that she “did not review” policies
for delegation of approval authority in the Dallas field
office. She did, however, recognize that the approval
process for initiation of investigations in the office devi-
ated from IRS policy, as reflected in the Internal Revenue
Manual; whereas the manual required investigations to
be initiated at the SAC level, the Dallas local rules al-
lowed the ASAC to initiate investigations.
The remaining witness, Ms. King, testified that in the
course of her Management Inquiry she did not discover
documents showing that Mr. Tudor was delegated ap-
proval authority to refer investigations for prosecution.
However, as the administrative judge noted, Ms. King
“did not make any finding regarding the delegation of
authority because she did not see it as her task.” While
stating that ASAC Taylor “didn’t recall” giving Mr. Tudor
approval authority, Ms. King explained that she did not
inquire as to whether Mr. Tudor’s approval activities were
known to ASAC Taylor. Like Acting ASAC Tucker, Ms.
King admitted in her testimony that the Dallas field office
had deviated from IRS policy regarding delegation of
approval authority. Ms. King also thought she remem-
bered SAC Lacenski telling her that DFO Imhoff had
given verbal permission for the Dallas field office to
deviate from approval policies in the Internal Revenue
Manual.
In sum, none of the other witnesses—SAC Lacenski,
Acting ASAC Tucker, Ms. King, or Mr. Parsons—
contradicted Mr. Tudor’s testimony that he had been
given oral authority to refer investigations to U.S. Attor-
neys’ offices for prosecution. Indeed, given the apparent
9 TUDOR v. TREASURY
verbal instruction by DFO Imhoff to deviate from IRS
policy in delegating approval authority, and SAC Lacen-
ski’s admission that he had improperly delegated at least
some approval authority to Mr. Tudor, it does not seem
“inherently improbable” that Mr. Tudor was granted
verbal authority to directly refer investigations for prose-
cution in consultation with his ASAC. We must set aside
findings when they are unsupported by substantial evi-
dence, 5 U.S.C. § 7703(c)(3), and “[t]he substantiality of
evidence must take into account whatever in the record
fairly detracts from its weight,” Universal Camera Corp.
v. NLRB, 340 U.S. 474, 488 (1951); accord Leatherbury v.
Dep’t of the Army, 524 F.3d 1293, 1300 (Fed. Cir. 2008).
The first charge of failure to obtain appropriate approval
authority must be set aside because the administrative
judge did not support his finding with substantial evi-
dence.
Mr. Pregozen, the deciding official, testified that the
second charge of unauthorized disclosure of taxpayer
information would “probably not” merit the same penalty
of demotion were it to stand alone. Therefore, we vacate
the Board’s decision and remand for a determination of
the appropriate penalty for Mr. Tudor.
We do not decide whether any of the 64 specifications
of the first charge could be supported by evidence in the
administrative record that the administrative judge did
not address in his initial decision; instead, we leave that
issue to be addressed by the Board on remand. In the
remand proceedings, the Board is free to review all of the
evidence in order to determine whether other evidence in
the record, not affected by the administrative judge’s
misapprehension as to the import of SAC Lacenski’s
testimony, justifies a conclusion that the agency has met
its burden of proof with respect to the first charge. The
TUDOR v. TREASURY 10
task of assessing that evidence is for the finder of fact in
the first instance, and in light of the conflicts in the
evidence and the inferences that need to be drawn from
some of that evidence, we conclude that the best course is
to remand the case for the Board’s reconsideration, free of
the characterization of SAC Lacenski’s testimony that
affected the initial decision in this case. See Vidal v. U.S.
Postal Serv., 143 F.3d 1475, 1480 (Fed. Cir. 1998); Holmes
v. Dep’t of Veterans Affairs, 58 F.3d 628, 633 (Fed. Cir.
1995).
Costs to Mr. Tudor.
VACATED AND REMANDED
United States Court of Appeals
for the Federal Circuit
__________________________
ROGER TUDOR,
Petitioner,
v.
DEPARTMENT OF THE TREASURY,
Respondent.
__________________________
2009-3237
__________________________
Petition for review of the Merit Systems Protection
Board in DA0752080172-I-1.
__________________________
CLEVENGER, Circuit Judge, dissenting-in-part.
I respectfully dissent from the majority’s decision to
expose Mr. Tudor on remand to further litigation regard-
ing the first charge. As the majority amply demonstrates,
Mr. Tudor was acting on his own when initiating investi-
gations or referring investigations for prosecution. How-
ever, whether or not Mr. Tudor had actual authority to do
so, Mr. Pregozen, the deciding official, testified that he
would not have sustained the first charge if Mr. Tudor’s
supervisors had condoned his case initiations and refer-
rals, which were reflected in the 4930 forms he signed.
Black’s Law Dictionary defines “condone” as “to voluntar-
ily . . . overlook.” Black’s Law Dictionary 336 (9th ed.
2009). Merriam-Webster likewise equates overlooking
with condoning. See Merriam-Webster’s Online Thesau-
TUDOR v. TREASURY 2
rus, http://merriam-webster.com/thesaurus/condone (last
visited Apr. 19, 2011). Among the many synonyms for
“condone” are: “countenance,” “let pass,” “yield or submit
to,” “hear of and go along with,” “look the other way,” and
“be content with.” See Roget’s International Thesaurus
§§ 134.7, 443.10, 978.7 (6th ed. 2001).
The record reveals that DFO Imhoff and Mr. Lacenski
gave Mr. Tudor at least some authority to act on his own
initiative in consultation with Ms. Taylor. Because Mr.
Tudor had no formal approval to sign the 4930 forms,
when those forms were annually reviewed by the Dallas
office, Mr. Tudor’s activities necessarily came to light, as
Mr. Lacenski testified. Moreover, as Mr. Lacenski further
testified, despite the numerous occasions on which the
Dallas office and headquarters reviewed the 4930 forms
that Mr. Tudor signed, nobody voiced any concern about
Mr. Lacenski’s delegation of authority to Mr. Tudor. Mr.
Tudor testified that both Mr. Lacenski and Ms. Taylor
condoned his approval activities. Mr. Lacenski did not
contradict Mr. Tudor’s testimony and the agency did not
call Ms. Taylor as a witness. Mr. Lacenski testified that
he personally did not review the 4930 forms that Mr.
Tudor filed, but he testified that Mr. Tudor and Ms.
Taylor periodically briefed him about cases that were
initiated and prosecuted. Neither the Dallas office nor
anyone else reprimanded or took any action to stop Mr.
Tudor from what he was doing for a long period of time.
Although the precise word “condone” was not used in
testimony to describe the reaction of Mr. Tudor’s supervi-
sors to his approval activities, the extensive testimony on
the subject taken as a whole proves that the supervisors
in fact condoned the conduct covered by the first charge.
Even if there are inconsistencies between Mr. Tudor’s
trial testimony and statements he allegedly made to
investigators as to whether or how much authority he had
3 TUDOR v. TREASURY
been given to initiate or refer cases, there is no challenge
to Mr. Tudor’s claim that his supervisors condoned his
activities.
We should not lose sight of the fact that Mr. Tudor got
caught in a trap set for him by his supervisors. Due to the
fast-paced and pressing nature of the cases on which Mr.
Tudor worked, his supervisors decided, contrary to the
“book,” to look the other way and let him initiate and refer
cases, and sign a form when he had no written authority
to do so. By every light shown on the record, Mr. Tudor
did a fine job, and for a time must have pleased his super-
visors. The fly in the ointment came when Ms. Tucker
replaced Ms. Taylor as acting ASAC and Mr. Tudor’s
activities became known beyond the Im-
hoff/Lacenski/Taylor orbit. Not surprisingly, a major
investigation immediately ensued, with Mr. Tudor as the
fall guy. In the end, the deciding official got it just right:
even though the agency probably should have made sure
Mr. Tudor had no chance to sign the 4930 forms, he
should not be punished if his supervisors condoned his
activities.
Because Mr. Tudor’s supervisors condoned the activi-
ties covered by the first charge, Mr. Tudor cannot be
punished under that charge. Thus, the proper course is
not to remand the case for further review of the merits of
the first charge but, rather, to remand the case to let the
agency decide the penalty it wishes to assess for the
sustained second charge of unauthorized disclosure of
taxpayer information. Mr. Tudor should not be exposed to
further litigation on the first charge.
For these reasons, I respectfully dissent, although I
too would remand the case, but for a quite different
purpose.