The state of New York has filed a lawsuit against Sprint Nextel Corp for more than $300 million, accusing the company of tax fraud by deliberately not collecting or paying millions of dollars of taxes for its cell phone service.
Sprint, the third-biggest U.S. mobile carrier, failed to bill customers for more than $100 million in taxes for its wireless services over seven years, according to New York Attorney General Eric Schneiderman.
Schneiderman filed his complaint, based on whistleblower information, in New York State Supreme Court on Thursday, and said the case is the first tax enforcement action filed under the state’s False Claims Act. The lawsuit seeks three times the amount of underpaid tax, plus penalties.
Sprint said it “categorically denies” the allegations, and intends to defend itself against the lawsuit.
“We have collected and paid over to New York every penny of sales taxes on mobile wireless services that we believe our customers owe under New York state law,” it said. “With this lawsuit, the attorney general’s office is claiming New York consumers, who already pay some of the highest wireless taxes in the country, should pay even more.”
Schneiderman said Sprint’s decision not to collect and pay taxes was part of a nationwide effort by the Overland Park, Kansas-based company to lure customers from rivals such as AT&T Inc and Verizon Wireless, and make its service $4.6 million less expensive per month.
“Everyone else had no trouble figuring out what the tax law was, except Sprint,” Schneiderman said on a telephone press conference.
He added that internal documents showed the scheme arose from Sprint’s seeking to “maintain an advantage over its rivals.”
Sprint shares fell 13 cents, or 5.2 percent, to $2.39 on the New York Stock Exchange in afternoon trading.
The U.S. government had sued Apple and five publishers, saying they conspired to fix the prices of electronic books. It has reached a settlement with three of the publishers that could lead to cheaper e-books for consumers.
In an email to Reuters, Apple spokesman Tom Neumayr confirmed the company’s position, which appeared earlier in a Wall Street Journal story.
“The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry,” Apple spokeswoman Natalie Kerris told the Journal.
Kerris defended the current pricing structure as parallel to Apple’s mobile software store.
“Just as we have allowed developers to set prices on the App Store, publishers set prices on the iBookstore,” she told newspaper.
In the lawsuit, filed in May 2008, Yahoo targeted a variety of individuals and companies, accusing them of trying to defraud people via a spam campaign that falsely informed email recipients that they had won prizes in a non-existent Yahoo-sponsored lottery.
Yahoo alleged that the defendants’ goal was to trick email recipients into providing them with personal and financial information that could be used to commit fraud by raiding victims’ bank accounts, using their credit cards and applying for loans on their behalf.
Judge Laura Taylor Swain from the U.S. District Court for the Southern District of New York ruled that Yahoo’s allegations are “uncontroverted” and said the company is entitled to $27 million in statutory damages for trademark infringement and $583 million in statutory damages for violation of the CAN-SPAM Act.
It’s not clear whether Yahoo will be able to collect the money. A default judgment is rendered when defendants in a case fail to plead or defend an action, as happened in this case, in which the defendants never responded to Yahoo’s complaint.
“Defendants have never responded in this action or appeared before the Court, much less cooperated with the Court,” the judge wrote in her decision.
The defendants include individuals from Thailand and Nigeria, as well as corporations from Taiwan and Nigeria. Yahoo estimates that they sent more than 11.6 million hoax lottery emails between December 2006 and May 2009.
U.S. prosecutors have launched a criminal inquiry into whether eBay Inc employees took confidential information from classified ad website Craigslist as eBay sought to build a rival service, a copy of a grand jury subpoena obtained by Reuters shows.
The two companies have been feuding for years in civil court over allegations that online giant eBay took a stake in Craigslist and then misappropriated confidential information while it covertly planned its own classifieds site.
The subpoena seeks information regarding several eBay personalities, including founder and Chairman Pierre Omidyar and Joshua Silverman, the former Skype chief executive who served as eBay’s representative on Craigslist’s board.
An eBay spokeswoman, Amanda Miller, said the company would cooperate in any inquiry related to the disputes with Craigslist.
“EBay believes that Craigslist’s allegations against eBay are without merit,” Miller said in an email on Tuesday. “We will continue to vigorously defend ourselves, and we will aggressively pursue our claims against Craigslist.”
Last year, a Delaware’s Chancery Court judge ruled that Craigslist properly removed an eBay representative from its board. The judge also ruled that Craigslist could not dilute eBay’s 28.4 percent stake in the company.
Miller said allegations of misconduct were leveled by Craigslist as a defense in the Delaware case, and the court did not rule in Craigslist’s favor on the defense.
Craigslist representatives did not respond to an email seeking comment.