Abbott sues TaxMasters CEO

Keith Loria May 13, 2010, 12:52pm


HOUSTON (Legal Newsline) - Texas Attorney General Greg Abbott announced Thursday that his office has filed an enforcement action against a Houston-based tax resolution company and its owner over allegedly misleading customers.

TaxMasters, Inc., and its chief executive officer, Patrick Cox, are charged with violating numerous parts of the Texas Deceptive Trade Practices Act and Texas Debt Collection Act. The attorney general cited nearly 1,000 complaints about their conduct.

According to the Dallas Morning News, Cox is one of Republican Gov. Rick Perry's biggest campaign contributors in his re-election race.

Taxmasters spokesman DeWayne Logan told the paper that the firm has not had a chance to review the suit, but that the political donation was unrelated to the state's investigation into the firm.

"He made that contribution to the governor because he strongly believes in the governor," Logan said.

Abbott said a state investigation included nearly 1,000 customer complaints.

"In the midst of a national economic downturn, TaxMasters used a nationwide marketing campaign to offer services for distressed taxpayers who needed help dealing with the IRS," Abbott said.

The state's enforcement action said that the defendants misled customers about the terms of their service contracts, didn't disclose their no-refunds policy and untruthfully claimed that the firm's employees would immediately begin work on cases. The latter did not happen until the customers paid in full, even if it resulted in missed filing dates with the IRS.

"The state's enforcement action seeks to prohibit the defendants from continuing to violate the law and seeks restitution for the financially struggling taxpayers who were harmed by the defendants' unlawful conduct," Abbot said.

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