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Kirby McInerney Announces Landmark Appellate Decision Against Moody's in a False Claims Act Case

Kirby McInerney LLP has obtained a groundbreaking appellate decision against Moody's Corporation, certain of its affiliates, and Marsh & McLennan Companies, Inc. under the New York State False Claims Act. A link to the decision is here. Representing a whistleblower who asserted that Moody's and its advisors defrauded New York State and New York City of millions of dollars of tax revenues, the firm brought the case under the New York State whistleblower laws (Anonymous v. Anonymous, Index No. 103997/2012 (Sup. Ct. N.Y. Cty.)). Taking advantage of a provision in this relatively new law that allows whistleblowers to bring cases on behalf of the government, Kirby McInerney has fought on behalf of its client for a win at the lower and now, in the appellate courts.

Kirby McInerney's whistleblower client brought to light pervasive tax fraud by Moody's and its consultants. As alleged, over multiple years, the company repeatedly underpaid New York City and State taxes by maintaining a sham insurance corporation as a subsidiary. The New York State appellate court in Manhattan sided with the whistleblower's allegations. This is a seminal case at the appellate level in which a whistleblower has brought a claim on behalf of the state government and secured a win without the state's intervention in the case, allowing it to proceed toward trial.

Under the New York False Claims Act, a whistleblower can bring suit, known as a "qui tam" suit, on behalf of the government to help the government recover monies lost by fraud. The whistleblower receives a percentage share of the government's recovery as an award.

This case in particular is unique because unlike other qui tam laws, New York allows whistleblowers to bring false claims actions for tax fraud. Here, Kirby McInerney's client is bringing the case on behalf of New York State and New York City. If successful, the whistleblower will receive an award of up to 30% of the government's recovery.

Kirby McInerney's partner, David Kovel, represents the whistleblower and argued the appeal.

"We are proud of the work that our whistleblower client and our team has done in this case, and we look forward to continuing the litigation," said Mr. Kovel.


David E. Kovel
Seth M. Shapiro

Kirby McInerney LLP | 250 Park Avenue, Suite 820 | NYC 10177 | Tel. 212.371.6600 | Fax 212.751.2540

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