The New York False Claims Act protects the State from being defrauded by encouraging whistleblowers to identify and bring claims on behalf of the State.
Modeled after the federal False Claims Act, whistleblowers who bring successful claims on behalf of the State are awarded a percentage of whatever the State recovers. False statements made to the government that result in a government payment are subject to this law. However, unlike the federal False Claims Act, the New York statute includes tax violations – the reckless failure to remit proper tax payments to the State qualifies as a separate compensable claim.
Below are some of the largest recoveries by whistleblowers in New York and the amounts the State and the whistleblowers received.
Sprint — $62.7 Million Whistleblower Reward
A whistleblower brought a qui tam lawsuit against Sprint under the New York False Claims Act alleging that Sprint did not collect and pay state and local taxes on the wireless phone plans it sold between 2005 and 2014. In December 2018, following years of litigation, including an appearance before the State’s highest court, Sprint agreed to a $330 million settlement with the State. The whistleblower received a $62.7 million reward.
Harbert Management Corporation — $8.8 million Whistleblower Reward
A whistleblower brought a qui tam lawsuit against Harbert Management Corporation, an Alabama-investment firm, under the New York False Claims Act alleging that Harbert evaded paying state taxes for several years by reporting performance income it earned in New York as having been earned in Alabama. In April 2017, following two years of litigation, the firm agreed to a $40 million settlement with the State. The whistleblower received a $8.8 million reward.
Harbinger Capital Partners Offshore Manager — $6.6 million Whistleblower Reward
A whistleblower brought a qui tam lawsuit against Harbinger Capital Partners Offshore Manager LLC, a hedge fund manager, under the New York False Claims Act alleging that Harbinger knowingly evaded New York State and New York City taxes for nearly a decade. In September 2018, after three years of litigation, the hedge fund greed to a $30 million settlement with the attorney general. The whistleblower received a $6.6 million reward.
