Judge weighs dismissal bid in IGT tax case

Brendan Riley

Thursday, June 17, 2004 | 10:55 a.m.

CARSON CITY -- A Reno judge has taken under consideration requests by International Game Technology and Nevada's attorney general to dismiss a whistleblower's claim that IGT filed false tax returns and owes up to $30 million in back state taxes.

Washoe District Judge Peter Breen heard arguments Monday on the requests to dismiss the case brought by former IGT employee Jim McAndrews, and to let the state Taxation Department handle the matter. The judge will rule at a later date.

McAndrews' lawyer, John Bartlett, urged Breen to reject the requests by IGT and Attorney General Brian Sandoval, and to continue with what he terms a case involving "massive tax fraud" by the big, politically connected slot machine manufacturer.

Bartlett said McAndrews, who worked for the state and later for IGT as an auditor, relied on the state's 1999 whistleblower 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. Whistleblowers are entitled to as much as 50 percent, although Bartlett said 20 percent is more common.

Sandoval has said McAndrews deserves praise for bringing up the tax issue, but Nevada law says tax collections are exclusively within the jurisdiction of the Taxation Department. He added the dismissal of the action in Breen's court wouldn't mean IGT is "off the hook."

In his dismissal motion, Sandoval said 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 has conducted an audit of IGT.

Wilkinson also said that by relying on the False Claims Act, as McAndrews wants, there's no way to keep financial details confidential.

IGT lawyers filed a separate motion that rejected the claims by McAndrews and agreed that the Taxation Department should handle the case.

To let such cases go forward in court rather than in the tax agency could result in someone such as McAndrews effectively becoming private tax collectors for the state, they said.

McAndrews, hired by IGT to work on tax matters, is now on administrative leave from the company. His complaint says he tried to bring tax compliance issues to the company's attention "but has been rebuffed in these attempts."

McAndrews alleges that IGT and Anchor Coin Inc. were involved in a joint venture and since 1997 filed false sales and use tax returns with the state on sales and leases of slot machines and slot components. Anchor Coin later was acquired and merged into IGT.