New York to Pursue Corporate Tax Fraud With New Unit

New York Attorney General Eric Schneiderman said he is creating a taxpayer-protection unit to target multi-state corporate tax fraud schemes, corrupt contractors and firms that rip off public pension funds.

The unit, which also will encourage whistleblowers to expose corruption, will be empowered by the state’s newly strengthened False Claims Act, which Schneiderman called “the strongest anti-fraud statute in the United States.” The revised act makes New York the only state that can bring false claims against those who commit tax fraud, Schneiderman said today at a press conference in Manhattan.

Schneiderman also will bolster his office’s Medicaid Fraud Control unit, taking advantage of a federal program that matches state investment by three-to-one. The money to expand the unit will come from recoveries, he said.

“Today’s announcement is a signal to anyone thinking of ripping off New York taxpayers,” Schneiderman said. “We will go after you with every tool we have.”

The enhanced False Claims Act, sponsored by Schneiderman when he was a state senator and approved by the Legislature last year, has a provision aimed at illegal off-shore tax shelters, he said in a statement when it passed. The provision is a first- in-the-nation state program to allow whistleblowers to go after what he called “millionaire tax cheats” that defraud the state of more than $350,000, he said last year.

Schneiderman said today the new unit also will pursue off- shore tax cheats.

‘Sheriff of Wall Street’

With the election of ex-attorney general Andrew Cuomo as New York’s governor, Schneiderman has said he has a different view of his role as the “Sheriff of Wall Street,” a title bestowed on both Cuomo and his predecessor Eliot Spitzer by backers and critics.

“The goal is not to find a high-profile conflict of interest and hang someone out to dry,” Schneiderman has said. “I’m much more concerned about the fragility of the economic recovery and sending a message Wall Street is a good place to do business.”

Schneiderman, 56, a Democratic state senator since 1998 who also spent 15 years as a corporate lawyer, has said he would weed out those suspected of crime or misconduct.

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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