Michael DeGuelle, a tax accountant fired from SC Johnson, makes the allegations in a 49-page complaint against top SCJ executives and the company itself. The case was filed in Wisconsin Eastern District Court.
Kelly Semrau, SCJ's vice president of global public affairs and communications, said Thursday in a written statement that DeGuelle's claims "have no legal merit." Here's her full statement:
"Mr. DeGuelle’s federal conspiracy and racketeering claims have no legal merit and we will ask the court to dismiss the complaint. This new federal complaint is based on the same allegations Mr. DeGuelle has made -- and the company has denied -- in the company's lawsuit against him in Racine County. We continue to be extraordinarily determined to continue with our defamation, replevin, conversion and breach of contract lawsuits against Mr. DeGuelle in Racine County and look forward to our day in court.DeGuelle, who managed the company's state taxes, claims SC Johnson illegally took foreign tax credits totaling $5,082,048 between 1998 and 2000, according to the lawsuit. The credits involved SCJ's foreign subsidiaries in Spain, Holland and Canada.
"We don’t believe that any of the claims against the individuals have any merit."
DeGuelle accuses SC Johnson executives with forcing him to destroy paperwork to cover up the illegal tax credits and eventually firing him for attempting to blow the whistle on the credits. At one point, the lawsuit says DeGuelle was inpsired to come forward with the allegations after hearing a speech from SC Johnson CEO Fisk Johnson about "doing the right thing."
The lawsuit explains how DeGuelle, who worked on domestic taxes, got involved with the international taxes. The foreign tax credits required revisions to the company's domestic taxes, which he worked on. But the lawsuit also claims SC Johnson executives encouraged him to secretly locate the incriminating international tax files at night and on weekends, so no one would know he was compiling the information.
The lawsuit also alleges SC Johnson initially received one of the tax credits by mistake, but then filed additional revisions to its taxes to exploit the mistake for further gain.
DeGuelle claims he was fired from his job over his effort to bring the illegal tax credits to light, first to company officials and later to the Department of Labor, which investigates allegations of illegal accounting methods under the Sarbanes-Oxley Act.
After firing DeGuelle, SC Johnson filed a defamation suit against him for taking confidential documents from the company. The case is ongoing before Judge Emily Mueller in Racine County Circuit Court.
The federal lawsuit, filed by attorneys Janet Heins and James Walcheske, lays out a detailed look at the alleged tax violations and DeGuelle's allegations of harassment, and firing, over his efforts to be a "whistleblower" on the alleged illegal activities.
DeGuelle filed the lawsuit against: Kristin Camilli, SCJ's head of human resources, Vice President and Chief Information Officer Mark Eckhardt, Executive Vice President Gayle Kosterman, Donald Pappenfuss, VP of Corporate Tax Robert Randleman, Global Tax Counsel Daniel Wenzel and SC Johnson.
As an interesting legal aside, DeGuelle is suing SC Johnson under the federal RICO Act, which was passed in 1970 as a tool to fight the Mafia. The lawsuit accuses SC Johnson of a conspiracy to silence DeGuelle, which the lawsuit describes as "racketeering."
Read the full lawsuit here.
Earlier stories HERE and HERE.