Bloomberg News

Sprint Nextel Officers, Directors Sued Over Tax Claims

May 01, 2012

Sprint Nextel Corp. (S:US) officers and directors were sued by a Louisiana pension fund after New York’s attorney general accused the third-largest U.S. wireless carrier of deliberately failing to pay sales taxes.

Sprint officials, including Chief Executive Officer Daniel Hesse, failed to properly oversee the company and subjected it to liability, according to a complaint filed yesterday in New York state court by the Louisiana Municipal Police Employees’ Retirement System, a Sprint shareholder.

“Despite direct and actual knowledge of this tax dodging scheme, the individual defendants are continuing their efforts to evade the taxes owed to the state of New York and are turning a blind eye to the ongoing illicit conduct,” the pension fund said in the complaint.

New York Attorney General Eric Schneiderman sued Sprint in April, claiming the company failed to collect and pay more than $100 million in New York sales taxes on flat-rate calling plans. Schneiderman said he is seeking three times the underpayment, plus penalties. The office’s investigation began after a whistle-blower lawsuit, Schneiderman said.

The Louisiana pension fund, which accuses the defendants of breach of fiduciary duty, said the understatement of tax liability may require a restatement of Sprint’s financial results.

John Taylor, a spokesman for Overland Park, Kansas-based Sprint, declined to comment on the pension fund’s complaint. The company previously denied the attorney general’s claims and said it would fight the office’s lawsuit.

The case is Louisiana Municipal Police Employees’ Retirement System v. Hesse, 651436-2012, New York State Supreme Court (Manhattan).

To contact the reporter on this story: David McLaughlin in New York at

To contact the editor responsible for this story: John Pickering at

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