The new “Sheriff of Wall Street” is going after tax cheats, pension plan frauds and corrupt government contractors, intending to raise hundreds of millions of dollars to help close New York state’s budget gap.
New York Attorney General Eric Schneiderman, who took office January 1 as the state’s top prosecutor, told reporters on Thursday that his office was establishing a new unit to root out large-scale tax dodgers, including those with offshore accounts.
“We cannot afford not to act on this. We cannot afford to leave money on the table,” Schneiderman said at his first news conference since succeeding Andrew Cuomo in a position dubbed the “Sheriff of Wall Street.” Cuomo is now the state’s Governor.
Schneiderman said his initiative to establish a “Taxpayer Protection Unit” and bolster an existing Medicaid Fraud Control Unit is part of efforts to close New York state’s looming $10 billion budget gap next year. The current budget ending on March 31 is about $136 billion.
The state, a center of the U.S. financial industry, faces a budget crisis — as do many other states across the country — brought on by the economic downturn. New York has projected deficits of $14 billion and $17 billion in coming years.
Schneiderman said that the new unit will conduct civil investigations and prosecutions against contractors and public officials who make or use false or fraudulent claims, records or statements to obtain government money. He encouraged whistleblowers to expose corruption.
Under an enhancement of the state’s 2007 False Claims Act, prosecutors have the power to crack down on large-scale, multi-state corporate tax fraud schemes, Schneiderman said.
“Offshore cases are absolutely covered by this,” the attorney general said. “We will cooperate with other states.”
Democrat Schneiderman is a former state senator who ran an election campaign last year promising to help restore public confidence in state government and on Wall Street.
Among the major financial civil fraud cases Schneiderman inherited from Cuomo is a lawsuit against accounting firm Ernst & Young over allegations it helped to hide Lehman Brothers’ financial problems, the first major government legal action stemming from the company’s 2008 downfall.
Another unresolved case is one brought by the office against Bank of America and its former chief executive officer Kenneth Lewis over the bank’s takeover of Merrill Lynch & Co.