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Wednesday March 15, 11:32 am ET

By Samuel Maull, Associated Press Writer

New York State Files $250 Million Fraud Lawsuit Against Tax Preparer H&R
Block
NEW YORK (AP) -- New York state filed a $250 million fraud suit Wednesday
against H&R Block Inc., the nation's largest tax preparing service, charging
the company fraudulently steered customers into a losing retirement account
plan.
The news unnerved investors, who sent H&R Block shares down $1.54, or 7
percent, to $20.46 in morning trading on the New York Stock Exchange.

The lawsuit, filed in Manhattan's state Supreme Court, says Block advised
clients to buy an "unsuitable, fraudulently marketed, poorly performing,
fee-ridden 'retirement vehicle' called the Express IRA," an account that
actually shrinks over time.

The court papers, filed by Attorney General Eliot Spitzer, say the money in
the retirement account decreases because the only investment option offered
is a money market account with an interest rate so low that it does not
cover the fees -- "fees that H&R Block fails to adequately disclose."

The attorney general's lawsuit asks that the company be required to stop
engaging in any fraudulent practices, that the company be forced to disgorge
profits and pay damages and restitution caused by their scheme, and that it
pay civil penalties of no less than $250 million.
H&R Block said in a statement that it will "fight vigorously to defend the
Express IRA product and ensure it remains available to our many clients who
rely on it as a helpful savings option."

"Make no mistake -- we believe in the Express IRA product and are proud of
the opportunities it presents for our clients," said Chairman and CEO Mark
A. Ernst.