Courtesy of Pam Martens.
John Bogle, Founder of the Vanguard Group
Tax lawyers do not typically blow the whistle on their corporate employers because that law degree cost them (or their parents) a serious amount of money; the degree will result in outsized lifetime earnings; and, most importantly, because it is career suicide. Even when the tax lawyer may believe there is fraud that would trump the attorney-client privilege, whistle blowing in a court of law against one’s employer is a rarity for a tax lawyer.
So one must seriously ask what would motivate David Danon, a 1998 magna cum laude graduate of Fordham University School of Law who proceeded to work at top tier corporate law firms (where he obviously saw a lot of questionable tax deals) to blow the whistle on the gold standard of the mutual fund industry, the Vanguard Group, Inc. In making his claims, Danon is also besmirching the reputation of Wall Street legend, John Bogle, who founded Vanguard and has served as its top spokesperson for the past 40 years.
In his whistleblowing lawsuit, unsealed last month in New York State Supreme Court, Danon names only Vanguard Group, Inc. and two subsidiaries as defendants. But by calling the company a major tax cheat, Danon is challenging the reputation of Bogle and the company’s Big Four accounting firm, PricewaterhouseCoopers (PwC).
Danon went to work for Vanguard in Pennsylvania in August 2008, according to his LinkedIn profile. He continued to work there for the next 4 years and 11 months until June 2013. The month prior to his departure, on May 8, 2013, Danon filed his 40-page, sealed whistleblower lawsuit, making breathtaking claims against his employer, such as the following:
“Vanguard has operated as an illegal tax shelter for nearly forty years, providing services to the Funds at prices designed to avoid federal and state income tax, sheltering hundreds of millions of dollars of income annually, avoiding approximately $1 billion of U.S. federal income tax and at least $20 million of New York tax over the last ten years.”
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