But to accountant Michael DeGuelle, SC Johnson is the company that fired him after he blew the whistle on alleged fraudulent tax schemes that reportedly generated a windfall of millions of dollars for the privately owned company.
Since 2009, SC Johnson and DeGuelle have been locked in a bitter legal battle over the former employee's efforts to report the company's allegedly fraudulent tax returns to federal authorities.
DeGuelle said that after he refused to accept a higher salary in exchange for dropping his claims, SC Johnson fired him. The company has sued him for defamation in state court.
The company won the first round in Racine County. DeGuelle is appealing that decision.
DeGuelle is suing SC Johnson in federal court, and in December DeGuelle won the second round when a three-judge panel of the U.S. Court of Appeals for the Seventh Circuit found that he could sue his former employers in federal court for racketeering.
DeGuelle said he's happy with the appellate judges' decision, since it affirms protections granted to whistleblowers in 2002's Sarbanes-Oxley Act, which was passed after Enron's collapse.
"I think what it mostly brought out is that this case is much bigger than myself or, for that matter, SC Johnson," DeGuelle said. "The significance of the case is humongous: that now an employee is free to do the right thing for no reason other than that it's the right thing to do and an employer simply can no longer retaliate against them. That's humongous. That is the very heart of what happened at Enron. Enron wouldn't have happened if employees could have spoken up and reported the fraud."
SC Johnson played down DeGuelle's court victory.
Christopher Beard, SC Johnson's director of public affairs, responded to the Shepherd's inquiries with an emailed statement: "The Seventh Circuit Court of Appeals held that Mr. DeGuelle's complaint included enough unproven claims to start a lawsuit. However, Mr. DeGuelle's federal court lawsuit essentially attempts to re-litigate the Racine County suit where that court decided in SC Johnson's favor, dismissing all of DeGuelle's claims and awarding SC Johnson damages on its claims. Like the Racine County case, we believe we will prevail in the District Court and that the case will be dismissed."
The decision comes on the heels of an investigation by the Institute for Wisconsin's Future that found that SC Johnson had not paid state income taxes from 2000 to 2008. The company claimed that it received enough state research and development tax credits to wipe out its tax liability in Wisconsin. But Pulitzer Prize-winning journalist David Cay Johnston reported that the company uses sophisticated tax schemes involving its subsidiaries outside of the state to zero out its tax liability in Wisconsin.
Pattern of Dubious Tax Accounting?
The U.S. appellate court's summary of the case appears to show a history of DeGuelle's attempts to report on dubious tax accounting, as well as SC Johnson's retaliation against him for blowing the whistle.
DeGuelle alleges in court documents that SC Johnson seized on a mistake made by the IRS, which netted the company an extra $5 million in foreign tax credits, then altered and destroyed records so that it could take advantage of that mistake.
According to court documents, in 2001 DeGuelle reported the initial mistake to a superior, Daniel Wenzel, who told DeGuelle that they should wait and "this is why I go to church on Sundays."
In 2002, Wenzel allegedly instructed DeGuelle and another employee to exploit accounting rules and destroy documents so that it could reduce its tax liability by an estimated $2 million.
In 2005, Wenzel allegedly told DeGuelle to fraudulently alter an income statement, which would reap SC Johnson approximately $3.7 million.
Later, DeGuelle met with SC Johnson executives about working in a hostile environment and his concerns about the company's dubious tax claims. In March 2008 he received a negative performance review "even though such mid-year reviews were not routine, and despite the fact that DeGuelle received an Officer's Award in recognition of his superior job performance in January of that year."
DeGuelle continued to alert superiors about his tax fraud concerns and he received yet another negative performance review. He then informed human resources that he would report the tax fraud to state or federal agencies.
Allegedly, SC Johnson then decided to negotiate with DeGuelle, revoking his negative review and offering him a higher salary and a transfer if he'd drop his whistleblower claim with the U.S. Department of Labor. DeGuelle refused the offer and filed his claim on Dec. 18, 2008. He was terminated in April 2009. The company claimed DeGuelle distributed confidential documents outside of the company; DeGuelle claims he only shared them with federal investigators. SC Johnson filed suit in circuit court; DeGuelle sued the company in federal court.
DeGuelle said he's confident he'll win a jury trial on the racketeering charges and will prevail in his appeal in state court. But he said his attempt to do the right thing has come at a high personal and professional cost. DeGuelle had been out of work for two years. He now works as a state tax auditor, earning half of what he had made at SC Johnson. He said companies that had attempted to recruit him away from SC Johnson no longer want to bring him in for interviews.
He said that the battle with SC Johnson and his disillusionment with the court system led to severe levels of depression. The latest decision, however, has helped to brighten his view of the legal system and protections for whistleblowers.
"I feel an incredible level of vindication," DeGuelle said. "I had a lot of people tell me that I couldn't do it. And I've been able to do what I've said all along that I should be able to do."
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We live in a system where a man cannot get ahead unless two, three, four, or more other men fall behind, that's the dog-eat-dog, predatory system that our capitalist ways have become. In a simplified view of nature, if the Wolf ate too many plant-eating animals, the Wolf would run out of food, starve. Not all of the wolves, just enough wolves to bring the wolf population back into balance. Likewise, the plant eating animals cannot keep growing lest the supply of plants runs out, and the plants cannot move ahead of the supply of nutrients, water, and energy form the sun. Plus, the plants get the benefit of the decayed biological matter of dead plants, animals, and predators. In "bubble earth", every bit of matter that moves up the food chain, eventually comes back down, to repeat the cycle. -- The same must happen with money and the material goods that the money is equivalent to.
In a normal economy, when the wealthy gentleman spends money on the street, he is providing jobs to the working class to make the goods and provide the services that he buys. Means that his money at the top (earned from the community) comes back down to the working class of that same community. As long as everything he makes is being spent, the cycle keeps going. But if he sets it aside in Scrooge's counting house, it is not coming down to the working class, and we get poverty and starvation of part of that working class, it continues until there is only one man left. So governments created and controlled by the people came up with taxes to take what he did not spend and redistribute it among the lesser people.
When Reagan came along with his supply-side economics, the idea was that instead of waiting for high personal income taxes redistribute the money back down, tax the wealthy man less so that he may spend more in the community, provide more jobs, more money trickling back down. But, Mr Rich did not spend all his tax cuts here, he used it to set aside more in Scrooge's counting house, and it accelerated the growing inequality between rich and poor. (And some was spent over seas, where costs of goods and services was lower, an advantage he could use, but not the Middle class and working class back home). In effect, it was like letting the money stay in circulation on Wall Street, not to be recirculated back down to the bottom and let it work its way back up through Main Street. They simply did not have the patience to wait for it to come up through Main Street, "It's my money and I want it now!"
Please, people, quit looking selfishly only at your own narrow world, look at the bigger picture.