NY sues H&R Block over investment scam
Remember my post from a few days back, IRS wants to allow third parties access to your return? Uncle Sam’s proposing that tax preparers can insert, along with all the rest of the forms one signs before filing, a consent form for the preparer to sell your personal information away for the almighty dollar. You don’t get to sign off to opt-in — it’s an opt-out proposal.
Of course the parties interested in this scam are big machine preparers like H&R; Block and Jackson Hewitt, not the mom-and-pop firms that actually care about their clients and return business.
Here’s an example of why H&R; Block, in particular, doesn’t deserve an opportunity to rip consumers off by scamming a way to acquire tax info — they’re already pickpocketing their customers in an investment fraud scheme. New York Attorney General Eliot Spitzer has slapped the tax giant with a $250 million lawsuit. (AP):
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 â€” “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.”
…Spitzer said that H&R; Block opened more than half a million Express IRA accounts in the last four years. He said 85 percent of customers who opened the accounts paid H&R; Block more in fees than they earned in interest.
Eliot Spitzer, btw, is cruising along as a Dem candidate for governor in NY, leading every poll.