Illinois Whistleblower Lawsuit Against Cricket Wireless, LLC Settles for $11 Million
CHICAGO, Dec. 4, 2023 /PRNewswire/ -- Chicago whistleblower law firms Stephen B. Diamond, P.C. and Kim & Burns LLP and Florida law firm Buckner + Miles jointly announced an $11 million settlement among their clients Barrett Rodriguez and Jose De La Fuente, the State of Illinois and Cricket Wireless, LLC, a national prepaid wireless telephone service provider and wholly-owned subsidiary of AT&T. The settlement resolves allegations in a qui tam whistleblower complaint pursuant to the Illinois False Claims Act that was filed under seal on August 14, 2019 in the Circuit Court of Cook County Illinois and unsealed on June 10, 2021. The terms provide Relators also may petition for reimbursement of Relators' attorneys' fees and expenses.
Relators filed the False Claims Act lawsuit on behalf of the State of Illinois alleging Cricket Wireless caused its Illinois authorized retailers to omit payment of retailers' occupation tax with their ST-1 tax returns on $52 million of phone purchase discounts given to customers and reimbursed by Cricket. Relators alleged the reimbursements were taxable under Illinois law and that Cricket required its authorized retailers to use Cricket's point-of-sale software that did not collect taxes on the amounts of the discounts. The settlement pays 2.3 times the sales taxes owed on the $52 million of discounts Cricket reimbursed authorized retailers on 999,000 phones sold from July 2014 through June 30, 2019. Relators' counsel believe this was the first indirect false claim action under the False Claims Act and one of the largest recoveries in any action since Illinois enacted the statute in 1991.
The State of Illinois, through the Office of the Attorney General, declined to intervene in the action and obtained an order on June 10, 2021 authorizing Relators to prosecute the action. Relators and their counsel prosecuted the action against Cricket on behalf of the State of Illinois until two days before trial when Relators' counsel negotiated the settlement.
Under the Settlement Agreement, which became effective on November 29, 2023, Cricket Wireless agreed to pay the State of Illinois $11 million. The agreement also provides Relators shall receive the statutory maximum 30% share of the settlement amount.
The action is captioned, State of Illinois ex rel. Rodriguez v. Cricket Wireless, LLC et al., No. 2019 L 9005, Circuit Court of Cook County, Illinois, Law Division. Judge Patrick J. Sherlock presided over the action.
False Claims Act actions are designed to deter fraud against the government. The Act authorizes private citizens to bring claims as relators on behalf of the government against those who defraud the government. The government can collect up to three times the amount it was defrauded in addition to civil penalties. The Act is designed to encourage whistleblowers to reveal information about fraud against the government. Whistleblowers can receive 15 to 25 percent of the recovery when the government intervenes in the action and 25 to 30 percent of the recovery when the government declines to intervene. The False Claims Act protects whistleblowers against employment retaliation. Relators' counsel have brought numerous actions on behalf of the government that have resulted in millions of dollars in recoveries for the government and relators.
For additional information, please contact attorney Tony Kim, of Kim & Burns LLP, at (312) 995-7146.
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