Calif. AG says "Tax Lady" shredding her documents

By Jessica M. Karmasek | Apr 21, 2011


SACRAMENTO, Calif. (Legal Newsline) - California Attorney General Kamala Harris on Wednesday asked a Sacramento County Superior Court to hold "Tax Lady" Roni Deutch in contempt of court.

Harris also asked the court to imprison Deutch for five days on each alleged violation and fine her thousands of dollars for allegedly shredding millions of pages of documents and failing to pay refunds to her clients in violation of a court order.

"Deutch showed herself to be a predator for profit, preying on innocent, hard-working people who were simply hoping to settle their accounts with the IRS," Harris said in a statement.

"By defrauding these victims, and then pleading poverty, she created a real danger that her clients will never receive their advance fees back."

In August, the Attorney General's Office filed a $34 million lawsuit against Deutch for allegedly swindling thousands of people facing tax collection problems with the IRS. On Aug. 31, the court issued an order that prohibited Deutch from destroying evidence.

"Despite this order, Deutch has been routinely shredding documents on an almost a weekly basis," Harris said.

The attorney general estimates that, to date, Deutch has shredded some 1,643,000 to 2,708,600 pages of documents. Harris said Deutch's "shredding campaign" has permanently deprived her office of evidence needed to fully prosecute the action.

According to the Attorney General's Office, Deutch's law firm, which is based in Sacramento County, had revenues of at least $25 million a year. She spent $3 million a year on advertising, much of it on late-night cable television, and frequently offered tax advice on popular television shows, Harris says.

In her pitches, she promised to significantly reduce the IRS tax debts of people who signed up with her firm. Instead, Harris' office said, she took thousands of dollars in up-front fees from clients but offered little or no help in lowering their tax bills. Hundreds of clients complained to the Attorney General's Office and other government agencies.

In addition to shredding documents, the attorney general also charged that Deutch violated a Nov. 17 preliminary injunction by failing to issue some $435,000 in refunds to her clients within 60 days. Instead, she "decided to disperse funds to friends, family and other creditors. By draining her estate and that of the law firm, Deutch has placed her clients at serious risk of never receiving their refunds," Harris said.

Harris, in her office's court filings, asked that the court immediately freeze her personal assets and that it appoint a receiver to manage her law firm's business operations.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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