A federal grand jury in Miami has concluded that the Internal Revenue Service's intelligence-gathering campaign known as Operation Leprechaun did not involve violations of taxpayers' civil rights by IRS agents.
According to reliable sources, the grand jury, in its still secret report, declined to indict anyone involved in Leprechaun. But it charged that the Miami News, which first disclosed details of the program is a series of 1975 articles, had knowingly published false information about the IRS' activities.
Details of the report, revealed yesterday by The New York Times, were confirmed in large part by the sources here.
Howard Kleinberg, editor of The Miami News, called the allegations against his newspaper "ludicrious." Kleinberg issued a statement saying he had not seen the grand jury report, but added:
"If The New York Times is accurate in the report of the grand jury statement, I tell you flat outright that grand jury report is untrue."
Operation Leprechaun was carried out by the IRS intelligence division during the early 1970s to gather tax information on about 30 prominent Miami residents, including city officials and judges.
Early in 1975, The Miami News, and later other newspapers, published articles charging that Leprechaun involved illegal wiretaps, illegal photographing of bank records and gathering information about the sex lives and drinking habits of persons under investigation.
The initial articles in The Miami News were based on interviews with Elsa Gutierrez, who had worked for the IRS as a paid informer.
The controversy generated by the publicity led ot congressional hearings on Leprechaun and triggered a continuing dispute about whether IRS Commissioner Donald C. Alexander, who subsequently limited the IRS's intelligence activities, had over-reacted and deprived the IRS of an important weapon against tax evaders.
The New York Times article characterized the grand jury's findings as "a sharp setback" to Alexander.
However, in an interview yesterday, Alexander disputed that contention. He drew a distinction between his own actions and the question of whether The Miami News articles had been accurate. The press reports, he said, had induced him to investigate the Leprechaun activities; but he added that his subsequent restrictions on gathering intelligence were based on the IRS's internal investigations and not on what the newspapers had said.
"I agree that some of the press reports were overdrawn," Alexander said. "We found that some of the allegations were totally false. But we also found that there was some substance to some of them.
"The real issue," he added, "was whether we had adequate control over our informants and whether they were involved in actions and the collection of information that was none of the IRS' business. We found that there was some of this going on, and we acted to correct the situation."
Referring to the criticism of his actions from some members of Congress and IRS agents, Alexander noted that Attorney General Edwatd H. Levi recently issued strict guidelines to guard against abuses and illegal acts committed by informers in the service of the FBI.
"I share those goals and views," Alexander said. "An informant cannot do what an agent cannot do - whether he is an agent of the FBI, the IRS or any other federal agency."
Although he declined to discuss details, Alexander did refer obliquely to one incident stemming from Leprechaun: an admission by an IRS informer that he and an accomplice burglarized the office of a defeated Republican congressional candidate in 1972.
"If you have two people who are receiving regular payments from the IRS and who are using a car provided by the IRS and they break into someone's office, it that something in which the IRS should properly be involved?" he asked.
Alexander conceded that his decisions have been controversial and have caused a House Ways and Means Oversight subcommittee, chaired by Rep. Charles A. Vanik (D-Ohio), to criticize his curtaining of IRS intelligence activities.
But he also noted that the Senate intelligence committee had characterized Leprechaun as involving "the worst examples of abuse" associated with IRs intelligence gathering.
"I take my stand alongside the Attorney General and the Senate intelligence committee in matters like this," he said.
Although he said he has not seen the grand jury report, Alexander expressed "delight" at reports and the panel found no evidence of civil rights violations by IRS employees.
He stressed the word "employees." Asked whether anyone's civil rights had been violated in Operaion Leprechaun, he repled: "If someone's office is burglarized, were his rights violated or not?"
According to the reliable sources, much of the grand jury report focused on the Miami News' accounts of the allegations by Gutierrez. The jury reportedly found that, while she had been recruited as an IRS informer, many of her assertions to the press about the tacties employed in Leprechaun were false.
The jury found no evidence, the sources said, that agents or employees of the IRs had violated anyone's civil rights or had sought to collect information for political or other purposes unelated to tax collection.
In Miami, U.S. District Court Judge C. Clyde Atkins, who has ordered the grand jury report sealed, said its release would be affected by whether any of the parties named in the report appeals to a higher court in an effort to have its contents suppressed.
There have been reports that The Miami News or one of the individuals named in the report might attempt such an appeal. The judge said only that, as of yesterday, there had been no appeals, and officers of The Miami News declined to comment on whether they planned any legal action.