A Lockheed Martin whistle-blower who received $5.25 million when his lawsuits were settled must pay taxes on that award, the federal appeals court in Atlanta ruled Wednesday.
Albert D. Campbell, once head of cost control for a $3.5 billion contract Lockheed had with the government, filed two suits against the company alleging fraud. In 2003, Lockheed settled for $37.9 million with the government and Campbell received $8.75 million, of which 40 percent -- or $3.5 million -- went to his attorneys.
The 11th U.S. Circuit Court of Appeals rejected Campbell's arguments that the $5.25 million was not taxable income. It also found Campbell owes a 20 percent penalty for underpayment of taxes to the IRS.
Campbell had argued that he was not liable for the "accuracy-related penalty" because he disclosed the $5.25 million payment on his tax return, that there was reasonable cause for the omission and that he acted in good faith. The court disagreed with each argument.
"Campbell did not disclose the amount in good faith and with reasonable cause merely be mentioning them in two places on his return," a three-judge panel said in a unanimous ruling. "He incredulously and conveniently ignored or overlooked the amount when it was time to do the math. ... It was an overt and intentional act to underpay."
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