Infosys Under Federal Investigation in Visa, Tax Fraud Case

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If Infosys Technologies was sweating bullets before, now it must be sweating cannon shells. According to Kenny Mendelsohn, the Alabama attorney who filed the lawsuit against Infosys alleging visa and tax fraud, Infosys is now under investigation by U.S. federal authorities.


Mendelsohn told me that his client, Jay Palmer, the Infosys employee who blew the whistle on the Indian outsourcing services provider, is cooperating with federal authorities as part of the investigation. Mendelsohn said he was not at liberty to disclose which federal authorities are conducting the investigation, or how they became involved in the case. He did confirm that Infosys is aware of the federal investigation.


Mendelsohn noted that after it became aware that Palmer was cooperating with federal investigators, Infosys demanded that Palmer surrender his laptop, and threatened to fire him if he didn't comply:

[Palmer] got a letter, basically setting out policies regarding his laptop. They demanded it, and I have advised him not to give it to them. I don't think it is being requested in good faith, or related to his whistleblower complaint. And I don't believe it's being asked for in good faith as it relates to this lawsuit. [The attorney representing Infosys in the case] Jay St. Clair has a right to request, under the rules of procedure, state or federal, that we provide him with the documentation that we have. A lot of this documentation has already been provided to the [Infosys] Whistleblower Team, to [Infosys] Human Resources, and to [Infosys corporate counsel] Jeff Friedel. The fact that they want his laptop is concerning to me. If that was important, then I would have thought that the Whistleblower Team would have asked for the laptop back in October when he made this claim. They didn't ask for it until after they became aware that Jay was cooperating with federal investigators. So it makes me concerned about their motive behind wanting that laptop, and I have a serious problem with them threatening to fire him if he doesn't provide them with that laptop.

Separately, in a development unrelated to the federal investigation, Infosys has filed documents to move the case from the Circuit Court of Lowndes County, Ala., to federal court. Mendelsohn said he had anticipated the move:

To me, it makes no difference-I'm happy to be either place. Actually, the federal courthouse is closer to my house than the Lowndes County one here in downtown Montgomery. It's no big deal-the law's still going to be the same. My guess is that for whatever reason, [Infosys] didn't feel comfortable having this lawsuit brought in Lowndes County, Alabama. Why they didn't want a Lowndes County jury hearing it, I don't know. But the federal judges are great judges here, and we'll still be getting a jury -- instead of all Lowndes County people, there'll be some from Lowndes, some from Montgomery, Autauga County, Elmore County. It's just a wider-spread jury panel.

I asked Mendelsohn if moving the case to federal court has any impact on the likelihood of a settlement. His response:

I don't think it has anything to do with settlement. It doesn't affect me in any way. The rules of law are that when you're in federal court on a diversity case, which is what this is called because there's a diversity of citizenships, you follow federal procedural law, but you still follow Alabama state law. So the federal judges still apply Alabama law as it relates to the claims that we've made. It doesn't make me feel any better or any worse about the case.