A few years ago, our Daryl Nelson wrote that Michael J. Lindell looked like a guy who got a good night's sleep each and every night. Lindell is the inventor and chief promoter of "My Pillow," a product whose claims would make even Donald Trump blush, so Daryl figured that maybe he was one of those guys who had figured out how to make money while he slept.
But Lindell may be tossing and turning a bit these nights, after his company agreed to pay $1.1 million to New York, which alleged that My Pillow had knowingly failed to collect sales tax on pillows sold to sleepy New Yorkers.
“Out-of-state companies like My Pillow cannot shirk their obligations to New York. Companies that fail to collect and remit applicable sales taxes harm the State and local governments—something that cannot be tolerated,” said New York Attorney General Eric T. Schneiderman.
The case got underway when a whistleblower filed a complaint in state Supreme Court in Manhattan. Based on its investigation of the whistleblower’s allegations, the attorney general’s office contends that from 2011-2015, My Pillow failed to collect and remit approximately $537,000 in sales taxes on taxable sales made over the phone and through the internet to New Yorkers.
The settlement is the latest tax-related recovery resulting from an action filed under the New York False Claims Act, one of the state's most powerful civil fraud enforcement tools because it allows whistleblowers and prosecutors to take legal action against companies or individuals that defraud the government.
Those found liable under the False Claims Act must pay treble damages, penalties, and attorneys’ fees. Whistleblowers may be eligible to receive up to 30 percent of any money recovered by the government as a result of information they provide. The whistleblower in this action will receive $221,800 from the settlement proceeds.