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SACRAMENTO,
Calif. (AP) - California's attorney general sued "tax lady'' Roni
Deutch for more than $34 million on Monday, alleging that her law firm
regularly violates state law by making false promises that it will help people
resolve disputes with the Internal Revenue Service.
Attorney
General Jerry Brown contends that Deutch overstates her TV claims of winning
tax battles with the IRS. She advertises a success rate of up to 99 percent,
yet successfully reduces the amount of money her clients owe in taxes in just
10 percent of cases, the lawsuit says.
"She
promises to significantly reduce their IRS tax debts, but instead preys on
their vulnerability, taking large up-front payments but providing little or
no help in lowering their tax bills,'' said Attorney General Jerry Brown, the
Democratic nominee for governor in the November election.
Deutch's
law firm, which has its headquarters in the Sacramento suburb of North
Highlands, referred calls Monday to attorney Alexander Collins, who did not
immediately return a phone message from The Associated Press.
Deutch
says she runs the nation's largest tax resolution law firm. Her ads are in
heavy rotation on cable television and she has offered tax advice on national
networks, including NBC, CNN, Fox and CNBC.
Brown's
lawsuit, filed in Sacramento County Superior Court, says Deutch's firm takes
in at least $25 million annually, and spends $3 million on advertising.
The
AG is seeking a preliminary injunction to block what it alleges are unfair
business practices and false advertising.
The
case seeks unspecified civil penalties on top of $33.9 million in restitution
for the hundreds of clients Brown says filed complaints alleging they were
defrauded. Her firm collects retainers of up to $4,700 and refuses to return
the money when it fails to win tax settlements, the suit says.
Deutch
entices clients with television ads that make false claims, the lawsuit
alleges.
For
instance, it says one ad portrays three clients she purportedly helped save a
collective $86,000, yet all three still owe their taxes plus interest and
penalties. Deutch merely won the three clients a delay from the IRS'
collection efforts, according to the document.
Delays
orchestrated by the firm drive up her fees while often increasing the
interest and penalties her clients owe the IRS, the complaint alleges. It
also accuses her of creating false billings to justify fees that are often
higher than originally promised.
Deutch
has faced similar allegations before.
In
December 2006, she settled a lawsuit filed by New York City's Department of
Consumer Affairs that alleged she misled consumers with her advertising. She
agreed to pay $300,000, including $100,000 in fines and $200,000 in
restitution to consumers.
The
State Bar of California website shows Deutch has no public record of
discipline or administrative actions.
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