A.G. Schneiderman Announces $11 Million Multi-State Settlement Over Fraud Claims Against Long Island Tech Company
Agreement Means More Than $700K Will Be Returned To New York Taxpayers For Improper Billing Of Local And State Governments For Software Protection Plans
Schneiderman: Protecting New York Taxpayers And Making Sure Corporations Play By The Rules Keeps Our State And Economy Healthy
NEW YORK -- Attorney General Eric T. Schneiderman today announced that CA, Inc., has agreed to pay $11 million to New York State, seven other states, the District of Columbia and the federal government. The settlement resolves claims that the Islandia, N.Y.-based company engaged in a scheme to overcharge government customers, including local school districts and law enforcement agencies, for computer-software maintenance and servicing plans it sold from 2001 to 2009.
“New York’s law enforcement agencies, school districts and many state, city, and county governments should be able to acquire contracts free of scams that target and rip off our taxpayers,” Attorney General Schneiderman said. “This agreement reimburses more than 170 New York government entities for years of overcharges, money that will go toward valuable services for taxpayers at a time when budgets are stretched thin.”
CA, formerly known as Computer Associates, overcharged government customers when they renewed annual maintenance protection plans. It did this by charging customers for renewal plans immediately and before the former year’s plans had expired. After government customers renewed their annual service contract – sometimes several months before the prior year’s contract expired – the double billing began.
Of the $11 million in settlement money, New York, California, Florida, Hawaii, Illinois, Massachusetts, Nevada, Virginia and the District of Columbia will recover more than $3 million. Each state will recoup money based on the number of renewal plan purchases it made from CA.
New York State will receive a total of $708,795, with funds to be distributed to the State and the local governments that were overcharged by CA. These local governmental customers include New York City; the cities of Buffalo, Rome, Syracuse, and Yonkers; the towns of Ithaca, Penfield, Perinton, Pittsford, and Ramapo; Nassau, Orange, Rockland, St. Lawrence, and Niagara counties; and the Dutchess County and Broome-Tioga BOCES. The state’s Metropolitan Transportation Authority, the Port Authority Of New York & New Jersey, the New York Power Authority, and the Niagara Frontier Transportation Authority will be reimbursed, as will these entities: Clarence Central School District, East Williston School District, Greece Central School District, Plainview-Old Bethpage Central School District, South Country Central School District, Washingtonville Central School District, and Valley Central School District.
A list of the 179 New York government organizations that were improperly overbilled - and the amount they were overcharged and will be refunded - is available online here.
A copy of today's settlement can also be viewed here.
The lawsuit resulting in this settlement was filed in 2006 by whistleblower Ann-Marie Shaw in the United States District Court for the Eastern District of New York (Central Islip) under the federal False Claims Act and the various states’ False Claims Acts. These statutes are powerful civil fraud enforcement tools that allow whistleblowers and prosecutors to take legal action against companies or individuals that defraud governments. Ms. Shaw became aware of CA’s practices in selling maintenance renewal protection plans while she was an employee of CA. She will receive a percentage of the governments’ recovery, including 20 percent of the New York recovery, or $141,759.01.
This agreement represents a new approach in which multiple states work together to bring about a collective settlement under their False Claims Acts outside the health care area. New York and Illinois led the coalition of states working with the federal government in obtaining this settlement from CA.
Attorney General Schneiderman thanks the United States Attorney’s Office for the Eastern District of New York, the states, the District of Columbia, Ms. Shaw, and her lawyers for their investigative work on this matter.
New York State was represented by Taxpayer Protection Bureau Chief Randall Fox and Taxpayer Protection Bureau Volunteer Assistant Attorney General Inayat Ali Hemani, under the supervision of Executive Deputy Attorney General Kelly Donovan.