Wednesday, February 25, 2004
Copyright © Las Vegas Review-Journal

Official's IGT case stance questioned

Attorney: Sandoval `showing nothing but hostility' toward whistle-blower

CARSON CITY -- Whistle-blower Jim McAndrews says Nevada's attorney general seems to be doing favors for International Game Technology, which McAndrews has accused 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 toward this whistle-blower 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 whistle-blower 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. Whistle-blowers 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."

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 audited IGT.

Sandoval said Tuesday 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."

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