A local resident has filed civil actions against three local companies who import alcohol to Guam alleging they failed to pay proper alcohol taxes resulting in substantial losses to the government of Guam.
John Ryan brought the lawsuits against Carson Guam, Permarch Guam Inc., and Titan Imports under the False Claims and Whistleblower Act in 2019 and 2020 in the Superior Court of Guam and two of the cases have recently been unsealed. Two of the cases were made public after the Attorney General of Guam and the Department of Revenue and Taxation declined to intervene in the case.
According to the complaints, Ryan claimed he discovered certain alcohol wholesalers were not paying taxes on alcohol they imported to Guam after reviewing receipts for alcohol sold to retail stores. The lawsuits alleged the distributors exploited weaknesses in the system for tracking alcoholic beverage imports and assessing and collecting the taxes owed.
“(Ryan) believes the failure to pay alcohol taxes allows wholesalers to flood the market with ultra-cheap alcohol products that are purchased in large volume by Guam consumers, thus avoiding the social good that taxes provide in limiting purchase of alcohol by the public in large volume,” the complaint states.
He alleged distributors were found to be selling alcohol for amounts that were either less than the total tax value or almost exactly the cost of the total tax.
Alcohol excise taxes are deposited into the Healthy Futures Fund and used to support various government agencies like Guam Memorial Hospital and the Department of Public Health and Social Services.
The action attempts to recover hundreds of thousands of dollars in damages and civil penalties for the defendants’ alleged violations of the False Claims Act by avoiding paying alcohol taxes. Ryan stated there is no information that the Department of Revenue and Taxation ever launched any investigation into whether alcohol wholesalers had failed to remit alcohol taxes, court documents state.
He claims the documents he has are sufficient to establish that the companies are illegally avoiding their tax obligations.
Attorneys for Carson and Titan have denied the allegations and sought dismissal of the civil suits arguing the complaints fail to state a claim and that fraud must be plead with particularity.
Carson argued the complaint consisted of conclusory allegation of law, unwarranted inferences, and insufficient facts to support that the company violated the tax laws of Guam.
“The complaint rests on a foundation of untenable speculation, exaggeration, and unwarranted inferences,” wrote Carson’s Attorney Anthony Perez. “Excise taxes are due upon receipt by a wholesaler of the alcohol, not upon the sale of the alcohol.”
He added there is no showing that his client filed false GRT or income tax returns or failed to pay GRT or income taxes.
“Carson now suffers economic and social harm in having to expend money to defend this baseless case and damage to its reputation,” the response states.
In January, Judge Elyze Iriarte denied Carson’s motion to dismiss. The case against Permarch remains under seal while the Superior Court has set pre-trial conferences for the case against Carson for Aug. 23, and the case against Titan Imports for Feb. 4, 2022.
The Whistleblower False Claims Act is a local law passed in 2018 that allows individuals to report the underpayment of taxes levied on Guam.
If Ryan is successful, he stands to receive 15% to 25% of the total settlement as well as attorneys fees and costs.
