Whistleblower Alerts State Under A.G. Schneiderman’s Groundbreaking “False Claims Act” That Rewards And Protects Tax Whistleblowers
NEW YORK -- Attorney General Eric T. Schneiderman announced today that Topline Appliance Center and its principal owner, Michael Moretti, have agreed to pay $1.56 million to settle allegations that they knowingly failed to collect and pay sales taxes and corporate franchise taxes to New York over an almost 10-year period. Topline Appliance Center has multiple locations in New Jersey, and it sells and delivers high-end appliances to New York customers.
“Topline Appliance Center’s failure to collect and pay sales and corporate taxes is unacceptable,” said Attorney General Schneiderman. “Out-of-state companies that do business in New York without collecting or paying the proper amount of taxes have an unfair advantage over New York businesses that play by the rules. This settlement levels the playing field in the retail appliance industry and sends a message that cheating on taxes will not be tolerated.”
Attorney General Schneiderman alleges that over the course of almost 10 years, Topline Appliance Center and Moretti sold or delivered high-end appliances to New Yorkers from their New Jersey stores without collecting any New York State and local sales taxes. Topline also failed to pay proper New York corporate franchise taxes despite doing business in New York. Failing to collect and pay these taxes gave Topline an improper competitive advantage over appliance stores located in New York.
This action began when a whistleblower filed a complaint in state Supreme Court in Manhattan. Attorney General Schneiderman’s investigation concluded that Topline and its principal owner evaded approximately $668,000 in taxes.
This settlement is the latest tax-related recovery resulting from an action filed under the New York False Claims Act. The Act is one of the state's most powerful civil fraud enforcement tools because it allows whistleblowers and prosecutors to take legal action against companies or individuals that defraud the government. Persons found liable under the False Claims Act must pay triple damages, penalties and attorneys’ fees. Under the False Claims Act, whistleblowers may be eligible to receive up to 30 percent of any money recovered by the government as a result of information they provide. The whistleblower in this action will receive $313,984 from the settlement proceeds.
Raphael Katz of the law firm of Sadowski Fischer, PLLC, which represents the whistleblower, said, “Attorney General Schneiderman and his staff swiftly and effectively investigated the whistleblower’s claims, taking full advantage of the important partnership between law enforcement and whistleblowers. The Attorney General’s important work prevented a New Jersey company from evading taxes and unfairly competing with New York businesses that pay sales tax.”
Attorney General Schneiderman expresses his appreciation to the New York State Department of Taxation and Finance for its important contributions to resolving this investigation. Attorney General Schneiderman also expresses his thanks to the whistleblower and his attorneys at Sadowski Fischer, PLLC.
The Attorney General's investigation was conducted by Taxpayer Protection Bureau Senior Counsel Lisa M. White, with the assistance of Legal Support Analyst Rupinder Garcha and Supervising Forensic Auditor Edward J. Keegan. Former Investigator Erin Wolfe, Investigators Andrew Scala, Bradford Farrell, and Michael Ward, former Supervising Investigator Kenneth Morgan, current Supervising Investigator Luis A. Carter, Deputy Chief John McManus, Deputy Chief Vito Spano and Chief Dominick Zarrella also assisted in the investigation.
The Taxpayer Protection Bureau is overseen by Bureau Chief Thomas Teige Carroll and Deputy Bureau Chief Scott J. Spiegelman. The Taxpayer Protection Bureau is part of the AG’s Criminal Justice Division, which is led by Executive Deputy Attorney General for Criminal Justice Kelly Donovan.