Billionaire Ken Griffin sues IRS over leaked tax records

Multibillionaire Ken Griffin filed a lawsuit against the IRS Tuesday alleging the agency violated his right to privacy after investigative journalism outlet ProPublica reported in April on the tax records of the Republican megadonor and former Chicagoan.

Griffin’s income and taxes were reported by ProPublica alongside similar information for hundreds of America’s wealthiest people. The outlet has said it does not know who shared the tax information with them and did not solicit the documents it received.

Griffin, who founded the hedge fund Citadel, demanded a jury trial in his lawsuit. He claimed the tax agency is responsible for the “unlawful disclosure” of his tax returns because of its “willful and intentional failure” to set up safeguards to its records system, court records filed Tuesday in the United States District Court for the Southern District of Florida show.

“The IRS is and has for some time been well aware of these issues,” Griffin’s court filing said. “Despite these warnings, however, the IRS continues to willfully and intentionally fail to establish adequate safeguards to protect Mr. Griffin and other taxpayers’ confidential tax return information.”

Griffin called for the IRS to pay for his legal fees, $1,000 for each unauthorized disclosure as according to law and an unspecified amount for damages. He filed the lawsuit with law firm Quinn Emanuel Urquhart & Sullivan, and the case was assigned to Judge Robert N. Scola Jr.

Griffin spent $54 million fighting a proposed graduated state income tax plan that Illinois voters rejected in 2020. The amendment would have altered state income tax to substantially hike fees on Illinois’ wealthiest taxpayers. ProPublica reported in July that Griffin saved $51 million per year based on his past income because the amendment did not pass.

The outlet also reported in an April article sharing the information of hundreds of wealthy Americans that Griffin paid a 29.2% average effective federal income tax rate on the $1.68 billion he made annually between 2013 and 2018, the fourth highest average annual income in the country during the period. Griffin paid the second largest amount of federal income tax of all taxpayers, the reporting showed.

ProPublica on its website touts “a massive trove” of tax records it obtained, covering thousands of America’s wealthiest individuals. He has used the documents to report on ultrawealthy household names like Jeff Bezos and Elon Musk and written that the articles “reveal how the wealthiest avoid income tax.”

ProPublica noted in a statement to the Tribune that it published a story Tuesday about the lawsuit. The outlet has previously explained its decision to publish the private data.

“We are doing so — quite selectively and carefully — because we believe it serves the public interest in fundamental ways, allowing readers to see patterns that were until now hidden,” ProPublica Editor-in-Chief Stephen Engelberg and former President Richard Tofel wrote as the outlet first published articles featuring the information.

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The outlet declined to elaborate on how it obtained the tax information or to comment on any investigations of the leak.

The IRS did not immediately respond to a request sent Tuesday for comment on the lawsuit.

In his short filing, Griffin alleged that IRS leaders have failed to provide more information about purported investigations into the tax document leak.

Griffin issued a statement through a spokesperson Wednesday.

“IRS employees deliberately stole the confidential tax returns of several hundred successful American business leaders,” Griffin said. “It is unacceptable that government officials have failed to thoroughly investigate this unlawful theft of confidential and personal information. Americans expect our government to uphold the laws of our nation when it comes to our private and personal information — whether it be tax returns or health care records.”

Some congressional Republicans have also criticized the IRS for the leak and its failure to explain how the tax records were made accessible. Griffin is a top Republican donor, having spent $50 million on candidates in Illinois’ Republican primary this year. He moved his hedge fund from Chicago to Florida days before the primary election, in which his chosen candidates were badly beaten.

jsheridan@chicagotribune.com

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