September 27, 2018

A New York-based hedge fund manager, Harbinger Capital Partners Offshore Manager LLC, has agreed to pay $30 million to settle charges that it used fraudulent means to avoid paying both New York State and City taxes. A related investment management company based in Alabama, Harbinger Management Corporation, had earlier settled for $40 million, bringing a total of $70 million recovered in a case first brought to light by a whistleblower filing under the New York False Claims Act. According to the New York Attorney General’s office, the alleged fraud had involved listing an office in Alabama as the source of hundreds of millions of dollars earned through fees from successful trades, even though the trades had in fact been made through the New York office and were thus subject to New York taxes. For their role in exposing the fraud, the unnamed whistleblower is to receive a relator’s share of $15.4 million. NY AG

Tagged in: FCA State, Tax Fraud, Whistleblower Rewards,