New York State’s new Taxpayer Protection Bureau, which New York State Attorney General Eric Schneiderman established in January 2011, was designed to eliminate fraud and recoup money illegally taken from New York State taxpayers. The Taxpayer Protection Bureau recently targeted a food services provider relative to their rebate and billing practices. On October 5, 2011, Attorney General Schneiderman announced a $1.6 million settlement with Whitson’s Culinary Group stemming from allegations under the New York False Claims Act and allegations of overcharging school districts and other education providers to the tune of $800,000. This clearly will not be the last investigation or settlement.
The Whitson’s settlement has spurred investigations into fraudulent rebating practices by food services providers in other U.S. jurisdictions, including New Jersey, Massachusetts, and the District of Columbia. In addition, a member of the New York Attorney General’s Office recently testified before the United States Senate’s Homeland Security & Governmental Affairs Committee, identifying common practices in the food services industry and highlighting their impact on federal government programs like the National School Lunch Program. Accordingly, food services providers across the United States can expect to remain under intense scrutiny.
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