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N.J. court affirms dismissal of False Claims Act lawsuit against credit card processors

By John Sammon | Jul 31, 2017

Law money 01

NEWARK, N.J. (Legal Newsline) – A New Jersey appeals court has affirmed the dismissal of a lawsuit filed by a man who alleged credit card processors had evaded state fees and violated the state’s False Claims Act.

The court reached its decision on July 19, deciding that the fees are in fact taxes that are excluded from the act’s purview.

FCA lawsuits reward whistleblowers who allege companies have cheated state and federal programs. This case was brought by Leonard M. Campagna, who identified the defendants - Post Integrations Inc., Ebocom Inc. and Mary Gerdts - as out-of-state credit card processors that served New Jersey-based hotels. 

Campagna contended in the lawsuit that the companies had violated provisions of the New Jersey False Claims Act (NJFCA) in order to avoid paying New Jersey “assessments, fees, license costs and other charges.”

The state Attorney General's Office made a decision not to intervene in the action and the defendants filed a motion to dismiss the complaint for failure by the plaintiff to state an action upon which relief could be granted.  

Essex County Judge Michelle Hollar-Gregory originally dismissed the suit based on the allegation that false statements were made by the defendants to avoid paying taxes and similar liabilities, noting that the NJFCA excluded claims, records, or statements made in connection with state tax laws.

Hollar-Gregory rejected Campagna’s argument, stating the plaintiff had alleged that “claims” had been excluded from the tax bar, citing that conduct prohibited under the NJFCA rules has no such provision. Taxes are excluded from the purview of the NJFCA.

The court said the New Jersey Legislature expressly designed NJFCA strictures to exclude state tax matters. 


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Superior Court of New Jersey Appellate Divison