Vanguard tax lawyer says he was fired for persistent questioning; company says he violated privilege
A former tax lawyer for the Vanguard Group claims he was fired for “persistent vocal questioning” about what he viewed as illegal tax underpayments.
In an affidavit filed in his whistleblower suit, lawyer David Danon of Wayne, Pennsylvania, says he relayed his “extremely serious” concerns about Vanguard’s tax payments with Vanguard lawyers and tax specialists, the Philadelphia Inquirer reports. When his warnings went unheeded, he says, he forwarded “selected whistleblower documents” to the Securities and Exchange Commission, the Internal Revenue Service and tax agents.
Danon’s May 2013 whistleblower suit, filed in New York, became public this summer after prosecutors declined to pursue the allegations, the story says. Danon alleges that Vanguard undercharges for services it provides to its own mutual funds, resulting in less declared income and lower taxes. The tax savings, he says, has amounted to $1 billion over the years.
Vanguard has said its “at cost” payments have been well-publicized. The company says Danon relied on confidential documents and violated attorney-client privilege in an effort to gain a cut of the back taxes and penalties. Danon counters that his use of the documents is protected under whistleblower laws and he has an obligation to expose wrongdoing.
