New York Said to Be Cheated of Millions in Tax by Headhunter
Global headhunter Egon Zehnder allegedly cheated the city and the state of New York out of millions under a 10-year tax dodge designed to underreport U.S.-based earnings while ginning up illegitimate losses, according to a recently unsealed tax whistleblower complaint.
The complaint accuses New York-based Egon Zehnder International Inc. (EZI USA) and its parent Zurich, Switzerland-based Egon Zehnder International AG (EZI AG) of an elaborate scheme to offshore $86 million in U.S.-based taxable income while onshoring $7 million in deductible losses from its foreign affiliates. The net effect of the scheme allegedly cheated the Empire State out of $13.25 million in state corporate franchise taxes, city general corporation taxes and Metropolitan Commuter Transportation Mobility taxes between 2003 and 2013.
Egon Zehnder issued a statement disputing the allegations and attributing the complaint to “a disgruntled former employee who was dismissed for poor performance” in 2012. The company said it plans to “vigorously defend against these false accusations.”
The tab for the firm could climb to $47 million if the case succeeds and a judge awards treble damages, penalties, and interest under New York’s unique False Claims Act—one of the few such statutes that permits whistleblowers to allege large-scale tax frauds on behalf of a state.