Indiana Professor vs. Goliath
An Indiana economics professor has found an obscure New York whistleblower law that allows him to sue the mega bank, Citigroup for activities that followed the federal bailout of late 2008. He believes Citigroup owes the State of New York $2.4 billion in taxes and it appears the IRS and the Feds have been looking the other way. Sounds like a David vs. Goliath story to me! You can see public record of the case (it’s real) here.
FULL DISCLOSURE: I came across this story because I happened to ride along with Dr. Eric Rasmusen and his family to visit an apple orchard in central Indiana last Sunday. During the final 30 minutes of the car ride, he informed us that we may be reading about him in the papers early this coming week. As of this morning, no major publications have picked up the story other than a small paper, The Buffalo News. Dr. Rasmusen was interviewed by the Wall Street Journal last week, but nothing has been published…
This is a story that is bound to make the status quo on the left and right uncomfortable. My favorite kind of story! However, this may contribute to the story being sandbagged by mainstream media gatekeepers. To start with we have a so-called progressive attorney general of New York refusing to support a case that could recoup over 2 billion dollars owed to the state government of New York. I wonder how much money Citigroup donates to Democrats in New York? Here’s a synopsis of the case from The Buffalo News.
(Eric) Rasmusen, who has authored an academic article on the federal government’s bailout of General Motors, said he became interested in the legal challenge after the Internal Revenue Service issued a tax notice favorable to rescued banks like Citigroup. He claims in the lawsuit that the tax notice substantially reduced the financial company’s federal tax liabilities…
Rasmusen alleges that the IRS notice favorable to Citigroup, pertaining to deductions for corporate losses, violated federal law because the bailout of the bank and the issuance of new Citigroup stock amounted to a legal change in ownership, thereby making Citigroup liable for a larger tax bill than it ultimately paid.
…The result is that Citigroup was able to shortchange the state government about $800 million in bank franchise tax payments, he said. When the penalties allowed in New York’s False Claims Act are added in, Rasmusen says Citigroup owes New York State about $2.4 billion.
“Maybe the IRS had some good policy reasons for going against what the law said, but it isn’t clear why New York taxpayers have to forfeit revenues in pursuit of some federal policy objective of the Obama administration…”
FLASHBACK: Attorney General Eric Schneiderman didn’t seem to have trouble going after mega banks in the past.
Schneiderman supported and expanded the “False Claims Act” early in his career. This is the same act being used to sue Citigroup now by Dr. Rasmusen.
“We think the attorney general should join us. He hasn’t given us any legal reason why he won’t…It makes it more difficult. They have investigative powers that we don’t have to get a hold of documents, interview witnesses. It adds to the credibility to have the attorney general on your side.” -Dr. Eric Rasmusen as quoted in The Buffalo News.
We will be keeping our eye on this story…