In 2010, the Securities and Exchange Commission (SEC) enacted a law which encourages people in the know to “blow the whistle” on people or companies who are stealing from or cheating the government. The SEC rewards successful “whistleblowers” with up to 30% of sanctions collected by the agency.
Recently, an attorney has asked the agency to intervene in a legal battle between the attorney and his former employer. David Danon worked for Vanguard from 2008 to 2013, and according to Vanguard, sent company records to his home email address while he was employed by the company and “at the end of his employment”.
In May 2013, one month before leaving Vanguard, Danon filed an SEC whistleblower lawsuit against his employer and another lawsuit in New York state court. Danon alleges that Vanguard has been operating an illegal tax shelter for almost 40 years. According to the complaint, the company has avoided paying $1 billion in U.S. federal income taxes and at least $20 million in New York state taxes. The company allegedly accomplished this by providing services to the mutual funds it runs at prices that allow it to avoid federal and state income taxes.
Vanguard insists that the case is without merit and has said that it intends to defend itself in the courts. The company sent a letter to Danon after the filing of the lawsuit, saying that, “Vanguard intends to take all necessary and appropriate steps to protect its interests “. It also stated that Vanguard “reserves all of its rights to seek legal redress” if Danon fails to return the company’s documents immediately. Continue reading ›