New York is one of the few states that has a very robust False Claims Act (FCA) that enables the state to go after tax cheats to a greater extent. On August 30th, 2018 the Appellate Court in New York allowed a case to proceed alleging a massive tax fraud that was initially dismissed at the trial level. An anonymous whistleblower filed a case against Moody’s alleging tax fraud. The allegations are highly technical in one sense, “Plaintiff relator asserts claims on behalf of the State and City against Moody’s under section 189(g) of the State Finance Law (the False Claims Act [NYFCA]), alleging that Moody’s “knew that MAC . . . did not qualify for the protections of the laws governing captive insurance companies,” yet submitted “materially false and fraudulent” tax returns treating MAC as a legitimate captive.” In another sense the allegations boil down to what they generally do, that the company cheated on its taxes, thereby cheating the taxpayer. The case against Moody’s is still in the allegation phase and although the Court is allowing the case to proceed indicating it has been pled with sufficient specificity it has made no decision regarding the underlying merits.
A relator is someone who brings an action on behalf of the government through a qui tam action, otherwise known as a whistleblower action. There are many different types of whistleblower claims New Yorkers or those who have information regarding New York violators of the law can bring. They include:
• Medicaid Fraud
• Tax Fraud
• Off the Books Employees (Tax Fraud)
• Revenue Concealment (Tax Fraud)
• Use of Dummy Companies (Tax Fraud)
• Defrauding the State Government
• Bid Rigging
Also, many cheats also involve defrauding the federal government which would implicate the Federal False Claims Act (FCA) as well for things like:
o Medicaid Fraud
o Defense Contractor Fraud
o IRS Fraud
o SEC Whistleblower Fraud
o CFTC Whistleblower Fraud
The whistleblower statutes are dense and complex and require navigating them the right way. In contrast to other areas of law, if you don’t file something properly under seal to commence your whistleblower lawsuit you may forfeit your right to an award.
Therefor, it is critical to consult with a New York Whistleblower lawyer to educated yourself about your rights and protect you if you decide to proceed. Some statutes, like the SEC Whistleblower provisions may enable you to proceed anonymously from start to finish with the use of an SEC whistleblower or CFTC whistleblower lawyer. Others, like the False Claims Act require the use of a qui tam law firm in order to receive a qui tam award. If you believe you a New York Whistleblower claim, you should speak with a whistleblower lawyer who has a track record of success to guide you through the process. Each day of delay compounds the risk that you are not the first to file which can deprive you of an award or that even worse if you knew about the fraud and failed to blow the whistle, you may be looked as a target in the investigation if someone beats you to the punch. Consider having a free confidential consultation with a New York whistleblower law firm before someone else who knows about the fraud does.