Rochester Business Journal

Sprint Nextel Corp. plans a bid to have a tax-fraud claim New York Attorney General Eric Schneiderman filed against it thrown out of court.

The wireless provider filed a notice in a Manhattan state Supreme Court June 14 stating it intends to file papers in early August seeking to dismiss the attorney general’s complaint.

Filing a $300 million False Claims Act claim against Sprint last April, Schneiderman accused the cell phone company of failing to collect taxes from customers and falsifying bills to hide the non-payment. The alleged tax dodge was a deliberate ploy to give Sprint a pricing edge over competitors such as AT&T Inc. and Verizon Wireless Inc., Schneiderman claimed in the court complaint. 

The charges followed a whistleblower claim lodged by Empire State Ventures, a New York City firm represented by David Koenigsberg of Menz Bonner Komar & Koenigsberg LLP. Koenigsberg previously has brought various whistleblower claims.

In court papers, Schneiderman claims the Overland, Kansas-based Sprint falsified customers’ calling records to hide non-payment $100 million in taxes it should have collected from cell phone customers.

The suit targeting Sprint is the first filed under the state’s False Claims Act. The act makes violators found guilty of making false claims to the state liable for treble damages. 

Sprint customers, whose bills the wireless provider allegedly shaved minutes off of, would not be subject to penalties, Schneiderman said in April.  

In a statement issued at the time, Sprint called the attorney general’s False Claims Act claim a frivolous and ill-advised attempt to make an unwelcome addition to the state’s already too high array of taxes.

Schneiderman shot back that Sprint’s defense was “what we call in legal terminology pure chutzpah.”   

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