[JURIST] New York Attorney General Elliot Spitzer [official website] Wednesday launched a $250 million lawsuit [complaint, PDF] against H&R Block [corporate website], the largest tax preparation service in the US, for fraudulently coaxing its customers into a retirement account plan that lost them money. Spitzer said that money in the retirement accounts decreased over time because the low interest rate did not cover the fees associated with the account. The state began its probe of H&R Block in 2005 after being tipped off by an H&R block tax preparer. Spitzer claims that H&R Block opened more than 500,000 Express IRA [product backgrounder] accounts in the past four years, and 85% of customers who opened the accounts paid H&R Block more in fees than they earned in interest on their accounts. The lawsuit calls for H&R block to stop engaging in fraudulent practices, disgorge profits, and to pay damages, restitution, and civil penalties of no less than $250 million. Read Spitzer's press release on the suit; recorded audio [MP3] of part of his announcement is also available.
H&R Block Chairman and CEO Mark A. Ernst [official profile] defended [press release] the Express IRA product Wednesday, noting that "...of all the Express IRA accounts opened between 2001 and 2005, 78% have experienced positive net tax savings benefits and interest earnings." AP has more.