New York's Attorney General accused higher-ups at H&R Block of being aware that the tax prep giant's Express IRA accounts would be money losers for many of the same clients the chain was targeting to buy the retirement plans.
Attorney General Eliot Spitzer said that he has evidence that Block's executives knew of the fiscal unsoundness that lower-income clients faced when buying into the plans, and that those executives still penalized employees who failed to push the retirement accounts.
"In addition to designing a flawed product with hidden fees and marketing it fraudulently to unsuspecting customers, senior management steam-rolled conscientious employees who objected to the fact that clients were losing money," Spitzer said in a statement.
In a statement, Block said, "We look forward to the Attorney General's Office presenting its case in court rather than through the press. We continue to have complete confidence that our company and our Express IRA product will be fully vindicated once we've had our day in court."
Spitzer amended the $250 million fraud suit he filed in March against Block, adding copies of e-mail correspondence that he said showed that managers disregarded complaints from tax preparers about misleading marketing. The fraud suit accuses Block of steering more than 500,000 customers, including 30,000 New Yorkers, to the plans. Spitzer's office began its investigation last year after receiving information from an H&R Block tax preparer.
