Kirby McInerney, who represented a former Moody’s employee, alleged that the firm underpaid New York State and New York City business taxes between 2002 and 2014 by “mischaracterising its income as supposed premiums to its wholly-owned captive insurance subsidiary”. The firm further alleged that Marsh aided and abetted the scheme.
The lawsuit was brought as a ‘qui tam’ suit, on behalf of the government to help the government recover money lost by fraud. The whistleblower receives a percentage of the share of the government’s recovery as an award.
The government declined the case, however, Kirby McInerney, on behalf of the client, pursued the claims for the benefit of the government. With this settlement, New York State and New York City will now share in the recovery of millions of dollars.
The settlement is also the largest non-healthcare recovery in 2019 under the New York False Claims Act.
In September 2018, Moody’s previously stated that they “acted properly” with regards to the tax treatment of its captive insurance company. The firm said it would demonstrate this at a “later stage”, despite accusations from a former employee that it pursued “aggressive, risky, and/or abusive” behaviour.
Marsh declined to comment. Moody’s has been contacted for comment but did not immediately respond.