The giant Citigroup is under scrutiny from the Indiana economist Eric Rasmusen as he attempts to force their hand into paying over 2 billion in penalties and taxes he says they should owe the government in New York State. Although he hasn’t received the full support of everyone either. In fact Rasmusen has to go at it solo as General Eric Schneiderman notified the courts that his office and law firm refuses to join in the law suit; however he does have the Buffalo law form of Hodgson Russ on his side.
A Costly Mistake from an Indiana Economist or the Case of his Career?
Someone from Schneiderman explained that the Attorney General will not be joining the case (which is paid for by the tax payers of New York) but refused to give an explanation as to why. However taking on a company as large as Citigroup could end up in a battle of who has the most money, which when you’re trying to make Citigroup pay out over 2 billion dollars isn’t going to be an easy case to actually win unfortunately.
The fact the Attorney General refuses to get involved in the case also makes it more difficult for them to obtain all of the information they probably need to seal the deal and win the case for certain.
Rasmusen said “It makes it more difficult. They have investigative powers that we don’t have to get a hold of documents, interview witnesses. It adds to the credibility to have the attorney general on your side”.
The Case Itself
Rasmusen is using the “False Claims Act” to try and prosecute Citigroup which is a law that has extremely strong protections favoring the whistleblower or allegation maker, a law which the Schneiderman Group used successfully while he was state senate.
The law also means that Rasmusen as the prosecutor would also be eligible to receive a proportion of the 2 billion sought after if the case is successful and Citigroup are found guilty. Which could be the whole reason behind the economist even thinking of going at it alone without the support he really needs from the Attorney General. This may work in Rasmusen’s favor though as if he does win then he stands to gain 25 to 30%, whereas if the Attorney General was involved he would only take home 15 to 25%.
However the economist has said he expects he would just give away the money if he was to win the case. Only time will tell if that is true of it is just a ploy to try and make everyone think he isn’t continuing to pursue this without the needed support for the moral reasons alone VS the large financial reward if he is successful.
What Are Citigroup Saying?
“We believe the claims are without merit,” Danielle Romero-Apsilos, a Citigroup spokeswoman, said in an email response when asked about the case.
However they have had the case moved from state court to federal court in Manhattan and this isn’t the first time Citigroup has been accused of wrong doings. In 2014 the bank’s mortgage activities came under scrutiny and a $182 million deal was settled with Schneiderman.