Sprint Nextel Corp. sued for over $300 Million
On Thursday, Sprint Nextel Corp., the third largest mobile service provider in the United States, was sued by the state of New York for over $300 million for allegations of tax fraud. The State of New York claimed that Sprint intentionally decided not to collect or pay taxes, worth millions of dollars, for its cell phone service.
The complaint was filed in the New York Supreme Court by New York Attorney General Eric Schneiderman, in response to whistleblower information from the company Empire State Ventures. This lawsuit was the filed under the state’s False Claims Act, making it the first tax enforcement case to be filed under the act.
Sprint is accused of failing to properly bill their customers over the past seven years, leaving more than $100 million in taxes unaccounted for. Sprint decided not to pay and collect taxes to lower service costs by $4.6 million a month as a scheme to draw away customers from AT&T and Verizon Wireless.
Sprint’s shares have fallen in price after the news was released and is expected to have a first-quarter loss of about 41 cents per share, or $1.296 billion, according to Wall Street analysts.
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