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Post date: July 21 2011

Schneiderman Bill To Crack Down On Tax Cheats Signed Into Law

AG Schneiderman’s Legislation Closes “Helmsley Loophole” That Let Tax Evaders Off The Hook; Goes Into Effect in 90 Days

Schneiderman: This Law Ensures No More Free Passes For White Collar Criminals


ALBANY – Adding a critical new tool in the fight against white collar crime, Attorney General Eric T. Schneiderman’s legislation to close a loophole that let tax evaders off the hook was signed into law today by Governor Andrew M. Cuomo. The Attorney General’s program bill, which was drafted in collaboration with New York County District Attorney Cyrus R. Vance, Jr., amends a law that prohibited the state from prosecuting income tax cheats who have been previously prosecuted in federal court for the “same criminal transactions” even if the crimes are distinct. The law will go into effect in 90 days.

“Tax evasion is a crime, but for too long, white collar criminals have benefited from a gaping loophole in state law that has let them off the hook. This legislation unties the hands of state prosecutors so that all tax violations can be prosecuted to the fullest extent of the law,” said Attorney General Schneiderman. “By cracking down on tax violations, this law ensures there will no longer be one set of rules for the powerful and another for everyone else. The days of giving tax evaders a free pass are over.”

Endorsed by the District Attorneys Association of the State of New York, Attorney General Schneiderman’s legislation (S.5776) eliminates a loophole in the so-called “double jeopardy” provision in the state’s Criminal Procedure Law that prohibited state prosecutors from seeking charges against tax criminals who have already been charged in federal court for separate, but related federal tax crimes. The legislation was sponsored by Senator Martin J. Golden and Assemblymember Joseph R. Lentol.

The so-called “Helmsley loophole” first gained attention following the investigation of billionaire hotel operator Leona Helmsley for income tax evasion by federal and state prosecutors. After the federal criminal case went to trial, the State presented its case. Despite the fact that the defendant had evaded taxes in both jurisdictions, the court dismissed the state charges on the grounds that they were based on the "same criminal transaction" as the federal tax charges. The Schneiderman law simply fixes this flaw that has impeded New York State's ability to prosecute and collect unpaid state taxes.

Attorney General Schneiderman has made restoring New Yorkers’ faith in government a top priority of his administration. Since taking office, he has announced a sweeping new initiative that will give the Attorney General's office the authority to investigate and potentially prosecute any wrongdoing involving government spending, including member items, contracts, and pension fraud.

Schneiderman also established a new Taxpayer Protection Bureau to target corrupt contractors, pension con-artists, and large-scale tax cheats who rip-off New York State government and its taxpayers. The Attorney General bolstered the Medicaid Fraud Control Unit and has already secured tens of millions of dollars in recoveries for New Yorkers. And he fulfilled his pledge to appoint a public integrity officer to all 13 of the Attorney General’s regional offices so that citizens can feel safe reporting local corruption to an independent prosecutorial authority.

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