Kirby McInerney Announces Settlement of Tax Whistleblower Case against Spa Castle08/23/2018
NEW YORK, August 23, 2018 - Kirby McInerney LLP has secured a $2.5 million recovery for the State of New York in a tax whistleblower action brought against the famed spa organization Spa Castle and the family that owns it. Today, New York Attorney General Barbara Underwood announced the settlement and associated criminal pleas by defendants in the case.
Kirby McInerney’s whistleblower client brought to light pervasive tax fraud by Spa Castle and its owners and operators, Steve Chon, Victor Chon, Daniel Chon and Stephanie Chon. Over multiple years, the company and the Chon family members repeatedly underpaid several types of taxes and kept that money for themselves. They accomplished their tax schemes by falsifying their revenues, abusing cash receipts and paying employees off the books.
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.
In this case, Kirby McInerney’s client will receive a whistleblower award of 23% of the government’s recovery. This award is the highest percentage award received by a whistleblower in a New York False Claims Act case not involving Medicaid. Prior whistleblower awards in New York tax cases have ranged from 17.62% to 22%.
Kirby McInerney partners Randall Fox and David Kovel represented the whistleblower.
“This is a case where tax cheaters would have stayed under the radar had it not been for a brave whistleblower reporting on the fraud,” said Mr. Fox. “It shows clearly that rewarding whistleblowers works to benefit the government and the honest taxpayers who support it with their tax dollars.”
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, and whistleblower litigation. The firm’s efforts on behalf of clients and class members have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP's website: www.kmllp.com.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
Kirby McInerney LLP
Randall M. Fox, Esq.