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Covert operation a bungle, says GAO.

Sometime before 1985, the IRS conducted an undercover operation in Las Vegas to investigate illegal bookmaking and its ties to organized crime. The objective of "Project Layoff" was to develop investigative leads for possible prosecutions.

The Government Accounting Office claims Project Layoff was poorly planned and managed.

Further, the GAO report says although the project yielded some useful resuits, it ended up making the IRS look bad. The report says the project lacked the proper recordkeeping systems, controls and management oversight to account for and safeguard the $22 million in bets and $2.5 million in cash involved in the operation.

Possible misuse of funds by agents was alleged, but actual embezzlement cannot be proven.

Project Layoff ended in 1985. Excluding salaries, it cost $376,000. Although the project's goal was not achieved, information from the operation was used in a second undercover operation in another IRS district office, which ultimately did lead to successful criminal prosecutions.

The IRS has taken steps to strengthen undercover operation management. The GAO recommended the national office and the IRS controller be involved.
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Title Annotation:Government Accounting Office
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1992
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