Walden Macht Haran & Williams LLP - Card Compliant LLC and Phillip Rouse Agree to Pay $4.375 Million to Resolve Qui Tam Claims Over Allegations of Escheat Fraud Relating to Unused Gift Cards

NEW YORK, Dec. 20, 2024 /PRNewswire/ -- More than eight years after whistleblower William S. French filed a False Claims Act lawsuit under the New York False Claims Act ("FCA") alleging that Card Compliant LLC, Phillip Rouse and H&M Hennes & Mauritz, L.P. ("H&M LP") violated New York law by failing to escheat millions of dollars to the State of New York, Card Compliant LLC and Rouse have agreed to collectively pay $4,375,000 to settle the claims (H&M LP paid $36 million to resolve related claims in May 2022).

Collectively, the $4.375 million and $36 million settlements are believed to constitute the largest successful FCA escheat case in history. Dan Miller of Walden Macht Haran & Williams, LLP served as lead counsel representing Mr. French.

View the executed settlement agreement here.

The lawsuit alleged that H&M LP had a legal obligation to escheat millions of dollars in unredeemed gift card money to the State of New York, but instead of giving the money to the State, H&M LP implemented a plan to keep the money by entering a sham agreement with CardFact LTD which disguised the true nature of the funds H&M LP was required to escheat. Additionally, the complaint alleged that H&M falsely told the State that H&M LP's gift card liabilities had been transferred to CardFact LTD, when in fact, H&M LP had the money in its own bank accounts.

The $4.375 million settlement is the latest in Mr. French's series of successful False Claims Act claims against companies for alleged misconduct involving their escheat obligations. See, e.g., State of Delaware ex rel. William S. French v. Card Compliant, LLC et al., C.A. No. N13C-06-289 (Del. Super. Ct.).

Miller, who has represented Mr. French since 2016, commented on the settlement: "I am very proud of this case. To my knowledge, this is the most successful qui tam whistleblower escheat action in the history of the United States. Piecing together what happened here required extraordinary effort over a period of many years. The taxpayers of New York State should be thankful to both Mr. French and the New York Attorney General's Office, and in particular, Assistant Attorney General Laura Jereski. Their work to reach this outcome was phenomenal. Further thanks are due to our co-counsel, David Koenigsberg and the late John Menz, of Menz Bonner Komar & Koenigsberg LLP."

The case is captioned State of New York ex rel. William S. French v. H&M Mauritz, L.P., Index No. 101101/2016 (Supreme Court of New York, New York County). The claims against H&M LP are allegations only, and there has been no determination of liability.

WMHW's whistleblower practice group is one of the most successful qui tam groups in the country. Led by former prosecutor Dan Miller and Jon DeSantis, attorneys in the group have worked on cases that have returned more than $3 billion to state and federal treasuries across the country, including a dozen cases which were initially declined by the government.

SOURCE Walden Macht Haran & Williams LLP