CNNMoney: Spitzer brings fraud suit against H&R Block

[DeepModem Mom]

Spitzer brings fraud suit against H&R Block
New York attorney general accuses accounting firm of defrauding customers, seeks $250 million in fines.
By David Ellis, CNNMoney.com staff writer
March 15, 2006


NEW YORK (CNNMoney.com) - New York Attorney General Eliot Spitzer sued the financial services firm H&R Block on Wednesday, accusing it of fraudulent business practices involving IRA accounts marketed to its tax preparation customers....

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The suit, filed in State Supreme Court in Manhattan, seeks $250 million in fines in addition to refunds from the Kansas City, Mo.-based accounting firm for steering approximately 500,000 customers into IRA accounts that were "virtually guaranteed" to lose money.

Customers who opened an Express IRA account were often burdened by unadvertised account fees, making it difficult to grow their savings, said Spitzer, who is currently seeking the Democratic nomination for governor of New York.

"(H&R Block) has been advertising itself quite consistently as being in your corner," said Spitzer at a press conference. "I think it is fair to say that they are not in your corner -- they've been putting their clients in the corner instead."

The suit contends that 85 percent of the account holder lost money after opening an Express IRA account....


http://money.cnn.com/2006/03/15/news/companies/spitzer_hr/index.htm?cnn=yes

[TheCowsCameHome]

1. Bwahahahahaha. New name - H & R Broke

Scumbags. Corporate scumbags.

[catmother]

2. they've been doing my taxes for years and of course, i'm always

told about their other services which i pay no attention to. lucky for me.:eyes:

[LiberalHeart]

3. Called 'em and asked if they sell that service in my town...

They do. Looks like it's all across the country. The person on the phone sounded like she was in pain discussing it.

[noonwitch]

5. Me, too

I have no complaints about their tax preparation services. I've never gone to them for anything more.

[Renew Deal]

4. Spitzer should stay at his job.

Let Suozzi become governor.

[Oceansaway]

6. i got a snail mail letter today

about a class-action lawsuit about the RAL refunds.....

they've done my taxes for eons....but i've never dealt with them otherwise

thank God...

[lapfog_1]

7. I have a friend that is a regional manager for them

and, boy, does he have some stories to tell.

H&R Block is NOT one of the better corporate citizens on the planet.

[fearnobush]

8. And to think our 401k's are managed by these firms.

Dam, I wish I had a pension like my dad did back in the good ole days when a pension was secure. Now we got these crappy fee laden 401k's that ain't worth 1/4 of there weight as a good old pension does.

[Jeff In Milwaukee]

9. ...to be fair

My bank charges me $5 per month if my savings account balance goes too low, which is about a zillion times more than I'm getting in interest. If what Block has done constitutes fraud, you'd have to haul virtually every bank in the country into court right alongside them.

The Express IRA isn't for everyone. It gets put into a money market account until you have $1,000 or more and can then roll it into a regular brokerage account. People who need the money (folks who are working poor) should never put their money into these accounts because many of them, as the lawsuit correctly claims, wind up withdrawing the money and incurring tax penalties.

It's a good product for the right client, but Block pushes its preparers to offer it to everybody. Not cool.

Full Disclosure: I do taxes for H&R Block.

[SuperWonk]

10. The Golden Goose...

" i got a snail mail letter today
about a class-action lawsuit about the RAL refunds....."

Where there is smoke, there is usually fire. Do you seriously think that this current suit is the only case of "shady" practices that H&R and HSBC have used?

The RAL lawsuit will be coming down the road to an attorney general near you. Don't be surprised when it hits the papers. This kind of consumer trap has to be exposed.