Sprint Pays $330M to Settle False Claims Act Suit

New York State has handed opponents of the Sprint-T-Mobile merger some new ammunition. Attorney General Barbara Underwood said Friday that the wireless carrier had agreed to pony up a record $330 million to settle a False Claims Act lawsuit filed by Underwood.

Looked at one way, it could be viewed as Sprint trying to put that suit behind it in an effort to help get the deal approved, but the optics, and the AG's strong language, will play to its critics. The suit had alleged that for almost a decade Sprint had failed to collect more than $100 million in state and local sales taxes on its flat-rate wireless calling plans sold in New York.

Underwood said the $330 million recovery is "the largest-ever recovery by a single state in an action brought under a state false claims act."“Sprint knew exactly how New York sales tax law applied to its plans – yet for years the company flagrantly broke the law, cheating the state and its localities out of tax dollars that should have been invested in our communities,” said Attorney General Underwood.

“By blatantly understating the amount of sales tax owed to the tune of $100 million, Sprint violated the trust of its customers and deprived communities across New York State of revenue needed for vital services,” said acting commissioner of taxation and finance Nonie Manion in what was a joint announcement. "The person or persons who blew the whistle on the understatement will get a big chunk of the settlement, and that's no understatement."

"The whistle blower will receive $62.7 million, as the New York False Claims Act entitles whistle blowers who report fraud against the government to a specific share of the recovery," said Underwood's office.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.