Hedge fund Harbinger Capital pays $30 million to settle charges of tax evasion by offshore manager

Hedge fund Harbinger Capital Partners Offshore Manager has agreed to pay $30 million to settle a lawsuit filed by the state of New York claiming the hedge fund manager knowingly evaded New York state and city taxes. A statement issued by the New York attorney general’s office claims that Harbinger concealed income it earned while doing business in New York.

“Harbinger Capital Partners Offshore Manager earned hundreds of millions of dollars in New York state and New York City, but deliberately dodged paying its fair share of taxes,” Attorney General Barbara D. Underwood said in the release. “Tax evasion forces ordinary New Yorkers to shoulder the bill. My office will continue to use every tool at our disposal to pursue those who knowingly violate the tax law and hold them accountable.” The suit resulted from an investigation that was launched after a whistleblower lawsuit was filed in March 2015.

The settlement agreement in the case states that the offshore manager for the Fund failed to pay an unincorporated business tax that it had previously agreed to pay in the amount of $4,115,239. In addition, it says that for three years it did not file city UBT returns. “Because it carried on its business in New York, Offshore Manager had an obligation under the New York State Tax Law to apportion and allocate income as taxable in New York State. ”

The settlement follows an earlier $40 million settlement in this investigation, which concluded in April 2017, with Harbert Management Corp., the investment manager that sponsored the principal hedge fund that Harbinger ran. As a result, a total of $70 million will be recovered. The unnamed whistleblower will receive $15.4 million from the settlement.

The whistleblower, in this case, will receive $6,600,000 for revealing the wrongdoing