BELOW IS A REPORT OF AN ARTICLE FROM THE STATE BAR WEBSITE:
“Tax Lady” Roni Deutch, familiar to many TV viewers with her promises to help people reduce their tax bills, submitted her resignation to the State Bar last month and is no longer eligible to practice law.
Her formal resignation on May 20 came just a few weeks after she held a news conference outside her offices in North Highlands near Sacramento to say that she was broke and was going to quit the bar.
Last August, then-Attorney General Jerry Brown filed a $34 million lawsuit charging Deutch with swindling clients and orchestrating a “heartless scheme” in which she promises to reduce clients’ IRS tax debts “but instead preys on their vulnerability, taking large upfront payments but providing little or no help in lowering their tax bills.” Her sales agents claimed a success rate in dealing with the IRS as high as 99 percent, the suit said, when she actually only helped reduce the IRS payments of 10 percent of her clients. The suit said Deutch, who spent $3 million a year on advertising, much of it on late-night cable TV, operated a $25 million-a-year business. She also wrote two books on taxes and gave tax advice on some national television programs.
In April of this year, Attorney General Kamala Harris asked a Sacramento County Superior Court to hold Deutch in contempt for violating a court order by shredding millions of pages of documents and failing to refund $435,000 to clients. Deutch “decided to disperse funds to friends, family and other creditors,” Harris said. “By draining her estate and that of the law firm, Deutch has placed her clients at serious risk of never receiving their refunds.”
At her May 12 news conference, Deutch denied the allegations against her and said she was “totally, completely broke” and was shutting down her practice, although she said the 70 “Roni Deutch Tax Center” franchises may continue on their own if they choose to do so. She said she had stopped accepting new clients at the end of February and that she had returned $285,000 in refunds. A court filing by Deutch indicated that a December court order requiring her to change her business practices began her financial downturn by resulting in a reduction of her firm’s revenue from $2 million a month to $350,000 a month.
State Bar Chief Trial Counsel James Towery acknowledged that Deutch was under investigation by the State Bar, which has filed a request that the superior court assume jurisdiction over her caseload. Bar officials said they will assist the court to the extent possible to protect the interests of Deutch's former clients.