The State of New York took over a previously-sealed whistleblower suit today alleging that B&H Foto & Electronics Corp. — the nation’s largest non-chain photo and video equipment retailer — committed a sales tax fraud for over 13 years by failing to pay tens of millions of dollars it received from electronics manufacturers to reimburse the company for “instant rebate” manufacturer discounts that B&H passed along to its customers.
Accusing the company of putting “profits over principles,” New York Attorney General Letitia James intervened in a New York False Claims Act (NYFCA) lawsuit filed by a whistleblower that first brought forward these allegations of tax fraud. The suit alleges that B&H Photo made repeated and explicit acknowledgements that it understood the tax law at issue while, nonetheless, defrauding taxpayers.
The New York False Claims Act is a tool that protects, empowers and rewards whistleblowers who report companies or individuals for defrauding New York State or its local governments. Under the NYFCA, whistleblowers can file a so-called “qui tam” action on behalf of New York State and/or any New York local government. The suit is filed secretly, under seal, unless and until either the government decides to take over the action (as Attorney General James did today) or decides not to take over the action, in which case the whistleblower may choose to continue the litigation on behalf of the government. In either case, the whistleblower may be eligible for a share of the awards (up to 25% if the government intervenes in the lawsuit or up to 30% otherwise)
This lawsuit marks the first non-Medicaid New York False Claims Act suit filed by the New York Attorney General since 2012. The action was brought by the Taxpayer Protection Bureau of the Office of the New York Attorney General, which was set up and established by Getnick & Getnick’s own Gregory Krakower, who also played a leading role in drafting the NYFCA in his former capacity as Senior Advisor and Counselor to the New York State Attorney General.
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