New York False Claims Act
The state of New York has long been a target for fraud. In 2007, the state legislature passed the New York False Claims Act, N.Y. Fin. Law. § 189.1, which empowers whistleblowers who have knowledge of fraudulent acts to file suit on the state’s behalf and share in a settlement or judgment. Like most other state false claims act, New York’s resembles the federal FCA in that it applies to intentional acts of fraud which results in the state paying a claim, withholding legitimate repayments to the state, or conspiracy to commit such acts. New York’s FCA defines “knowingly” slightly different from the federal FCA. The state act specifically omits “acts occurring by mistake or as a result of mere negligence.” Another difference is that New York authorizes high civil monetary penalties than the federal FCA; $6,000 to $12,000 for each individual false claim on top of treble (3x) damages. Notably, New York City also has its own False Claims Act. In May 2005, Mayor Michael Bloomberg signed the New York City False Claims Act (Local Law 53) into law.
Persons with information about fraud on the state of New York are urged to preserve their rights by consulting an attorney and filing a case as soon as possible. An individual with knowledge about a fraud against New York can make a disclosure to the New York state government pursuant to N.Y. Fin. Law. §§ 188.6 and 189.9(b) and preserve his or her rights as an original source of the information about fraud. New York’s qui tam provision allows for an award between 15 and 25%. Claims must be filed within the later of six years of the violation or three years after the violation was known or reasonably should have been known by the state of New York. The state’s FCA also includes whistleblower protection provisions that outlaw retaliation against employees who file FCA claims or assist others in prosecuting them.
When it was passed in 2010, New York’s False Claims Act did not include tax fraud, similar to the federal FCA. In 2010, however, the state amended the Act to include tax fraud. The expansion applies to individuals or businesses that make in excess of $1 million net income and defraud New York by more than $350,000 in taxes. In these cases, the relator is authorized to keep an award between 25% and 30%, depending on whether or not the government intervenes in the lawsuit.
In March 2013, New York’s Attorney General, Eric T. Schneiderman, reached a settlement with a tailor company that represented the first tax fraud case brought under any false claims act. Mohan’s Custom Tailor, Inc., pled guilty to evading taxes for ten years and agreed to pay the state $5.5 million. The whistleblower who first alerted the state to the tax evasion scheme received $1.1 million.