Read about the unheralded special agents of the IRS who put Al Capone behind bars, rooted out government corruption and cracked the “Case of the Century.”

In the years immediately following the ratification of the U.S. Constitution’s 16th Amendment in 1913, widespread allegations of corruption and fraud shook America’s faith in its newly enacted federal income tax. “The tax system was getting a bad reputation,” says Paul Camacho, former head of Internal Revenue Service (IRS) criminal investigations in Las Vegas and a retired special agent. “There was rampant cheating along with widespread collusion and graft-taking in government.”

To clamp down on tax evasion and root out bribery inside the IRS, the agency’s commissioner, Daniel Roper, established the Intelligence Unit in 1919. He recruited six U.S. Post Office inspectors to be his first special agents and appointed Elmer Irey, a strait-laced Sunday school teacher, to be the chief. “Irey was a beacon of light in a sea of self-interest and graft,” Camacho says.

Among its earliest duties, the Intelligence Unit was given the unenviable task of policing the corrupt U.S. Prohibition Service. Between 1920 and 1927, the unit’s investigations resulted in the firing of more than 700 employees and the indictments of 256 others, including the top Prohibition official in the U.S. Treasury Department.

Elmer L. Irey. (Credit: Thomas D. Mcavoy/Getty Images)

President Herbert Hoover was so impressed with Irey’s unit that he recruited them to take down America’s Public Enemy No. 1—Al Capone. Irey assigned his top investigator, Frank Wilson, to the case, and Michael Malone, called “the greatest undercover agent in the history of law enforcement” by Camacho, infiltrated the mobster’s operation by posing as a Philadelphia wiseguy. Over the course of nearly three years of undercover work, Malone gained Capone’s trust and learned everything about his operation—even how much the mobster spent on silk underwear. Thanks to the Intelligence Unit, Capone was found guilty of tax evasion and sent to prison in 1931. According to Camacho, tax collections in Chicago more than doubled in the wake of Capone’s conviction.

Although Hollywood gave most of the credit for bringing Capone to justice to Prohibition agent Eliot Ness and “The Untouchables,” the special agents of the IRS never complained. Marty Dolan recalls that his great-uncle Malone remained tight-lipped about his work getting Capone even when he came over to his house to watch episodes of “The Untouchables” with his family. “He never said a word,” Dolan says.

Identification of Michael Malone. (Credit: Marty Dolan)

Irey and his “T-Men”—who gained their nickname because of their affiliation with the U.S. Treasury Department—became reluctant heroes after putting Capone behind bars. Building on their success in Chicago, they obtained 47 indictments inside New York City’s organized crime network. Evidence gathered by the unit led to the imprisonment of crime bosses including New York’s Charles “Lucky” Luciano, Kansas City’s Tom Pendergast and Atlantic City’s Enoch “Nucky” Johnson. Although those criminal operations brought in millions of dollars while agents earned only $2,200 a year, Dolan says they remained incorruptible.

When Charles Lindbergh’s 20-month-old son was kidnapped in March 1932, the pioneering aviator specifically requested the T-Men’s help in cracking the “Crime of the Century.” After the kidnapper requested a $50,000 ransom, Wilson ordered the use of little-circulated gold certificates and Irey convinced a reluctant Lindbergh that the agency should record the serial numbers of more than 5,000 bills, a task that took 14 clerks eight hours to do. The painstaking work paid off, however, as the serial numbers of the bills eventually led investigators to Bruno Hauptmann, who was arrested, convicted and executed for the kidnapping and murder of the Lindbergh baby. “I see no probability ever of Hauptmann having been apprehended were it not for the sound foundation of preparation and follow-up persisted in by you, Frank Wilson and Art Madden,” Lindbergh told Irey. “Your organization deserves the full credit for his apprehension.”

T-Men badges. Credit: Marty Dolan)

Unlike the Federal Bureau of Investigation’s publicity-obsessed director, J. Edgar Hoover, Irey shied away from the spotlight. He preferred to share successes with his agents and feared too much media attention would endanger his family. While Hoover fed comic book writers and Hollywood producers storylines that glorified his “G-Men,” Irey’s men were called the “Silent Service” because of their lack of bragging.

When World War II began, the United States had to catch up to Nazi Germany in the arms race—and it needed the money to do it. Since war bonds alone couldn’t bankroll the military buildup, Congress enacted dramatic income tax increases—branded the “Victory Tax”—in 1942. As Dolan points out, the entire war effort could have been jeopardized had Irey and his honest agents not restored Americans’ faith in the integrity of the country’s tax system. “Irey was probably the second most important person in the country at that point,” Dolan says, “because he made it possible to increase taxes months after Pearl Harbor to raise the money for the war.”

Irey’s role did not go unnoticed inside the White House. “On March fifteenth [Tax Day prior to 1955] neither you nor I are particularly popular,” President Franklin D. Roosevelt wrote to Irey in 1942. “Since we are to be companions in misery, I feel I should take a moment to tell you of my pride in the work of the Intelligence Unit.” Roosevelt added that Irey’s division had “become a shining mark not only of incorruptibility but what is just as important, of A-1 efficiency.”

The work of the Intelligence Unit, rebranded as Criminal Investigation in 1978, continues today with agents tracking the money trail of terrorist networks and probing fraud such as the FIFA corruption scandal that rocked the soccer world. Dwindling budgets, however, have resulted in the ranks of the IRS law-enforcement agents being cut by a third since 1995.

Although the T-Men shunned the spotlight, Dolan is hoping to gain public recognition for four of the unit’s pioneering agents—Irey, Wilson, Malone and Madden—through the awarding of the Presidential Medal of Freedom. “This is a story about men of character, men who were not corruptible, men who put their noses to the grindstone to restore some character to the country,” Dolan says. “It’s a story we hope to highlight with the Medal of Freedom.”