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The
New York-based financial giant provided inaccurate tax advice to
customers and potential customers on wire products primarily
marketed at small and mid-size businesses, the U.S. Attorney for
the Eastern District of New York's office said. Customers were
told, for example, that the company's fees were tax-deductible
as a business expense.
Harry Chavis, a special agent in charge at the Internal Revenue
Service’s office in New York, said the company “misled their
customers by touting tax breaks that simply didn’t exist."
Authorities said an internal investigation led to the
termination of approximately 200 employees in 2021, and the
company discontinued the products entirely later that year.
“Financial institutions like American Express have no business
pitching inaccurate tax avoidance schemes to sell products and
turn a quick profit,” Judy Philips, Acting Attorney for the U.S.
for the Eastern District of New York, said in a statement. “This
resolution ensures that American Express will be held
financially accountable for the unacceptable conduct of its
sales employees in misrepresenting the tax benefits of these
products.”
American Express said the disputed sales practices ended in 2021
or earlier and that it will pay roughly $230 million in total to
resolve the matter.
“We cooperated extensively with these agencies and our
regulators and took decisive voluntary action to address these
issues, including discontinuing certain products several years
ago, conducting a comprehensive internal review, taking
appropriate disciplinary measures, making organizational
changes, and enhancing policies, compliance, and training
programs,” the company said in a statement.
Under the terms of the agreement, American Express will pay a
$77.7 million criminal fine and forfeit $60.7 million, which
represents the net revenue attributed to sales of the wire
products, according to the U.S. Attorney’s office.
The company has also separately entered a multimillion dollar
civil settlement with the U.S. Department of Justice.
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