Paul L. Caron

Monday, October 27, 2014

Vanguard Seeks to Dismiss Whistleblower Suit by its Former Tax Lawyer

VanguardFollowing up on my previous posts (links below) on the whistleblower suit brought by a former Vanguard tax lawyer alleging that the mutual fund giant evaded over $1 billion in taxes:  the Philadelphia Inquirer reports that Vanguard has filed a motion to dismiss the law suit:

Vanguard Group, the Malvern mutual fund giant, has responded to a New York whistleblower lawsuit by former Vanguard tax lawyer David Danon with accusations of betrayal, theft and ethics violations the company says should bar him or his lawyers from bringing the complaint.

The company also offers a defense of Vanguard's "unique" legal structure, noting company officials have testified about its practices before Congress, and widely publicized its arrangements since its founding by John C. Bogle 40 years ago.

In documents made public after New York state court Judge Joan A. Madden declined Vanguard requests to keep them sealed away, the $3 trillion-asset company argues Danon "grossly betrayed" his former employer, violated confidentiality arguments and broke state bar association ethics rules when he illegally "stole hundred of privileged and confidential documents" related to Vanguard's income tax and financial arrangements.

Danon has argued that the harm that Vanguard is doing other U.S. taxpayers -- his suit estimates the company's unpaid taxes at over $1 billion -- justifies his actions under whistleblower protection rules. But Vanguard says federal courts have thrown out similar lawsuits. ...

Danon has until Nov. 17 to respond to Vanguard's memo.

Prior TaxProf Blog coverage:

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