Whistleblower questions AG's stance in IGT case

CARSON CITY -- Whistleblower Jim McAndrews says Nevada's attorney general seems to be doing favors for International Game Technology, which has been accused by McAndrews of filing false tax returns and owing the state up to $30 million in back taxes.

In a legal brief filed Monday in Washoe County District Court, McAndrews' lawyer opposed requests by both the Reno-based slot machine manufacturer and Attorney General Brian Sandoval to drop the tax dispute and let the state Taxation Department handle the matter.

Attorney John Bartlett said Sandoval's office was "showing nothing but hostility towards this whistleblower in a case of massive tax fraud by one of the largest, wealthiest and most politically powerful corporations in Nevada."

Bartlett said McAndrews, who worked for the state and later for IGT as an auditor, relied on the state's 1999 whistleblower law, which gives people with inside knowledge about such cases a percentage of the amount eventually collected by the state.

If the state won, a treble damages clause in the law could push the total amount to $90 million, Bartlett said. Whistleblowers are entitled to as much as 50 percent, although Bartlett said 20 percent is more common.

"That a plainly written and legitimate tax statute should be ignored in order to allow a major corporation to cheat on its taxes is an outrageous proposition," Bartlett wrote.

"That the attorney general should assist to aid, directly or indirectly, a corporate malefactor, while forestalling from attempting to collect approximately $90 million, is outrageous."

Bartlett said Sandoval's stance in the case is "curious," and the manner in which he has "in effect advocated in favor of this corporation" raises questions "as to whether the attorney general's office should even be allowed to participate in this litigation."

Sandoval said Tuesday that McAndrews deserves praise for bringing up the tax issue -- "but Nevada law says tax collections are exclusively within the jurisdiction of the Department of Taxation."

"We're not in any way trying to absolve any entity from their responsibility to pay taxes," Sandoval said, adding that IGT "is not off the hook because of the mere fact we've sought to dismiss McAndrews' complaint."

In his Jan. 26 dismissal motion, Sandoval told Washoe District Judge Steven Kosach that the Taxation Department was the proper forum for resolving the tax dispute. His motion, written by Assistant Attorney General Ann Wilkinson, said the agency already was conducting an audit of IGT.

Wilkinson also said that by relying on the False Claims Act, as McAndrews wants, there's no way to keep financial details confidential. She said the claims act "creates a process that potentially circumvents the Taxpayer's Bill of Rights."

IGT lawyers John Desmond and Ryan Herrick filed a separate motion that rejected the claims by McAndrews and agreed that the Taxation Department should handle the case.

The IGT motion also says McAndrews can't show the company "knowingly" submitted false papers to the state and that's "the core of his case." Without any proof, the lawyers said the complaint must be dismissed.

To let such cases go forward in court rather than in the tax agency could result in someone like McAndrews effectively becoming "private tax collectors on behalf of the state of Nevada," they said.

McAndrews, hired by IGT to work on tax matters, is now on administrative leave from the company. His complaint says he tried to bring tax compliance issues to the company's attention "but has been rebuffed in these attempts."

McAndrews alleges that IGT and Anchor Coin Inc. were involved in a joint venture and since 1997 filed false sales-and-use tax returns with the state on sales and leases of slot machines and slot components. Anchor Coin later was acquired and merged into IGT.

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