Federal agents previously investigated the Southern Poverty Law Center's paid informant program for possible tax crimes, but the probe failed to yield any charges after Internal Revenue Service lawyers determined it was legally structured, sources familiar with the matter told CBS News.

Agents from IRS Criminal Investigation in 2019 and 2020 homed in on shell bank accounts that a former chief financial officer at the civil rights nonprofit opened to pay informants in exchange for intelligence about hate groups. The agents sought to determine whether the SPLC unlawfully failed to file tax returns for those payments, sources said.

But a Treasury Department rule exempts 501(c)(3) nonprofits from filing tax returns in connection with payments to informants who provide information about potential criminal activity. As a result, IRS lawyers later cautioned against seeking an indictment on tax charges, several of the sources said.

A spokesperson for IRS Criminal Investigation declined to comment. A spokesperson for the Justice Department declined to comment beyond its filings in the criminal case.

The tax portion of the investigation, which has not been previously reported, was initiated during President Trump's first term as an expansion of an FBI probe into whether that same former chief financial officer may have embezzled money from the SPLC, the sources said.

The Justice Department in April obtained an 11-count wire and bank fraud indictment against the SPLC over the center's informant program, alleging it defrauded its donors and duped its banks by creating shell accounts to funnel money to insiders who belonged to the same hate groups it pledged to dismantle.

The group denies wrongdoing and has pleaded not guilty.

The indictment does not contain any tax-related charges, though the Justice Department press release credited IRS Criminal Investigation with assisting the FBI with its probe.

The same day the indictment was made public, the Treasury Department's X account lauded the case, posting, "This Administration will not look the other way as nonprofits exploit tax-exempt status to commit fraud. Treasury is committed to identifying and eliminating fraud, abuse of tax-exempt benefits, and other illicit conduct."

The SPLC's lawyers discussed the prior investigation Tuesday in a motion to dismiss that alleges vindictive prosecution. In the motion, the lawyers wrote that federal agents from the FBI and IRS previously subpoenaed bank records and interviewed at least two informants and a former employee, but ultimately did not seek criminal charges.

They added that when the case was reopened during Mr. Trump's second term, prosecutors did not request any documents from the SPLC or seek interviews with any current employees until prosecutors informed the nonprofit it planned to seek an indictment.

At least one person who was interviewed by IRS agents in 2020 during Mr. Trump's first term told CBS News that no one from the federal government has reached out since then to follow up.

The person, who asked to remain anonymous, is an expert on hate groups who was paid through SPLC's informant program to help educate law enforcement organizations.

"They asked me about what they paid me for and how they went about paying me. I was in there all of maybe 15 minutes," the person recalled.

At least some of the SPLC informants the IRS interviewed as part of the investigation in 2020 have since died, several of the sources told CBS.

From victim to target

Acting Attorney General Todd Blanche claimed during an interview on Fox News' "The Ingraham Angle" in April that the Biden administration opened the investigation into the SPLC and later closed it.

"We know that this investigation was opened during the Biden administration and then mysteriously closed ... I really don't have any information about why it was closed, and then we started again last year," he said.

But sources familiar with the matter said that the probe was in fact launched by the FBI in 2018 during the first Trump administration, while Jeff Sessions was attorney general. Initially, FBI agents treated the nonprofit as a possible victim of theft by its then-chief financial officer, who had control over the organization's bank accounts, the sources told CBS News. 

The investigation was expanded to include possible tax violations in 2019, and in 2020 IRS agents interviewed informants and others who were paid by the SPLC, but the case never resulted in charges against the SPLC or the former chief financial officer, the sources said. 

CBS News could not determine why the case was not pursued. 

One source said the case was still technically listed as open in early 2021, when President Joe Biden took office, though much of the investigative activity appears to have taken place in the first Trump administration.

Several senior Justice Department and IRS officials in the Biden administration were not aware of the existence of the investigation until recently, when the indictment was made public, sources told CBS News.

Several senior former Justice Department officials who served during Mr. Trump's first term also could not recall hearing about or being briefed on the case when it was first being investigated.

It was not immediately clear how or why the Justice Department decided to reexamine the case. However, Attorney General Pam Bondi last year instructed the FBI to go back and examine all of its old files to locate cases involving nonprofits that could allegedly be involved in funding acts of domestic terrorism.

The Justice Department reopened the investigation in 2025 and IRS agents re-interviewed at least one of SPLC's former informants who had ties to multiple neo-Nazi groups, several of the sources said.

But lawyers at the IRS tasked with reviewing potential criminal tax cases before they are presented to the Justice Department did not concur with proceeding with a prosecution when they were presented with the case in February, several sources told CBS News. 

In their review, the attorneys cited a U.S. Treasury regulation that explicitly exempts nonprofit groups like the SPLC from filing tax returns in connection with payments made "to an informer as an award, fee, or reward for information relating to criminal activity."

They also noted that investigators found the CFO had created the shell bank accounts with assistance from at least some of the bank employees, several sources said, with one source adding that the employees understood the accounts were related to SPLC.

That fact could be potentially exculpatory information for the bank fraud charges against the Southern Poverty Law Center because it raises questions about whether the banks were misled about the opening of the accounts.

To prove the bank fraud charges, prosecutors would have to convince a jury beyond a reasonable doubt that the Southern Poverty Law Center had made false statements with an intent to influence the bank to take certain actions.

The indictment does not charge any individuals from the Southern Poverty Law Center with wrongdoing. It references the former CFO and a former intelligence project director, saying they were responsible for creating the shell bank accounts.

The former CFO referenced in the indictment retired from the center several years ago. The former official was reputed to be a stickler on expense reports, several sources told CBS News. No charges were ever filed against the former CFO.

Attempts by CBS News to reach the former CFO were unsuccessful.

Blanche has said the investigation remains ongoing, and Acting U.S. Attorney Kevin Davidson for the Middle District of Alabama told reporters outside the courthouse in May there could be a superseding indictment.