Account fleecing my mom

March 30, 2006 11:01 AM

Former accountant holding some papers hostage. How do I best handle this?

Last year my 80 year old mom put her finances in the hands of a new accountant referred to her by a friend. He did her taxes, which she paid him for and then, according to my mom, without getting her final go ahead he sold her stock portfolio and charged her what I felt was an exorbitant commission. After this happened my mom pulled her money from him and this year is having her taxes done somewhere else.

Now she's misplaced a copy of last year's taxes and needs another copy. Her new accountant tells her she also needs a 2005 Year End Statement which she's to get from last year's tax guy. She called him today to ask for these documents and he now says my mom owes him another $300 for additional work he did last year but never invoiced her for. When she asked him why he never invoiced her, he said he figured he would do so when she came back to him this year for her taxes. He's refusing to give her a copy of last year's tax return or the year end statement until she pays him the $300.

I haven't spoken with him yet so don't yet know what the "additional work" was. However, I'm about to call him and just wanted to be prepared for what I'm going to say if it gets ugly. So I have a few questions.

- can he legally hold back a copy of my mom's taxes and Year End statement like this? Or is there something that says he has to supply them.
- assuming he actually did any work, is my mom still liable for it if he never bothered to invoice her for over a year?
- if he refuses to release the paperwork, who can I threaten to report him to? Is there a CPA version of the Better Business Bureau? And would he even care if I were to make this threat? So many complaints seem to fall into a black hole and he might just say "go ahead".
- short of calling an attorney (which would likely cost more than $300), what other threats can I use to make this guy send my mom what is needed?

posted by gfrobe to work & money (18 comments total)

You tell him that if he doesn't immediately release all the documents, you will report him to whatever professional body licenses accountants in your area and start a complaint process which could lead to him being disciplined.

You can check with them first to see what your rights are.

What is your region?
posted by unSane at 11:11 AM on March 30, 2006

So was he her broker AND CPA? That's what it sounds like if he was able to sell her stock. Also, a year end statement for what? Her portfolio? If that's the case she can get it from whereever her assets are (were held).

I am confused.
posted by small_ruminant at 11:12 AM on March 30, 2006

You can request a copy of your tax return from the IRS, but it will probably be missing the supporting statements that the new accountant needs (such as depreciation basis, etc.). I don't know how helpful it will be, but Form 4506 is the one you would want.

If it is depreciation info, etc., the year before last might have the bulk of the info. The new accountant should be able to come up with a mock-up of last year's return based on the previous year. I.e., use the 2003 return to recreate the 2004 return, to carry forward to the 2005 return.
posted by blackkar at 11:35 AM on March 30, 2006

My mom lives in New Jersey. I'll try to find out the professional body in that area.

Sorry for the confusion Ruminant. He's a CPA who was referred to my mom as a financial adviser. He did her taxes and then after selling her portfolio recommended some high load mutual funds for her to invest in. I came in at this point and advised her to drop him.

My mom originally bought the stocks through a financial adviser in Florida and my mom gave that guy the OK to transfer her portfolio to this guy in NJ. So yes, the year end statement is for the stock portfolio. How do I find out where her assets were held? I'm sure there's paperwork somewhere in my mom's house but as I'm in the UK I'm unable to help her look.

It's a mess I know. I'm trying to find her a qualified accountant and advisor.
posted by gfrobe at 11:37 AM on March 30, 2006

Ask for a detailed invoice for the extra work he did... including dates. You're surely not going to pay when you have no idea what word was (or wasn't) done.

As stated, the IRS should be able to supply back tax returns.

Good luck.
posted by SoftSummerBreeze at 11:40 AM on March 30, 2006

She should be receiving monthly statements from the custodian (Schwab or ING or whereever). If he has a broker's license (which he does if is getting commissions) you can complain to the NASD.

Before you do that, though you should have your Mom write a letter to the guy spelling out what her problems with him are (obviously, you would write it and she would sign it). I would include the part about how he made inappropriate trades for her, given her age, financial sophistication, income level, whatever. The NASD won't do anything if you haven't tried to do it yourself first (in writing).

If the guy has a clean record the fear of a spot on it often will pull him around. If he's a crook he won't care about one more complaint against him. You can look him up on the NASD website to see if people have complained about him.

The name of his broker-dealer is supposed to be on all of his correspondence in small type at the bottom of his letterhead.
posted by small_ruminant at 11:53 AM on March 30, 2006

Maybe these people can help you.

It says further down the page, "Each month three members of the Board act as an investigatory committee to hear complaints brought against licensees for professional misconduct, performance of substandard work and failure to return records. The investigatory committee, in finding against a licensee, can recommend to the Board a fine, additional CPE, community service, or suspension or revocation of the license to practice public accounting."

Something you could definitely hold over the guy's head, anyway. Good luck.
posted by contessa at 12:01 PM on March 30, 2006

Thanks for the suggestions everyone. As the entire portfolio was sold in one shot, there is no longer a custodian like Schwab or ING so no incoming statements. I'll ask my mom if she has any paperwork from the guy that lists his broker-dealer. And have bookmarked the NJ State Board of Accountancy.
posted by gfrobe at 12:06 PM on March 30, 2006

And the NASD!
posted by gfrobe at 12:08 PM on March 30, 2006

If she pulled her money from him, her current advisor should know where that money was pulled from. Or did she just have the custodian send her a check? Then the check would tell.
posted by small_ruminant at 12:22 PM on March 30, 2006

IAAL, and in law school I worked at the SEC.
There are two separate issues here. (1) the portfolio sale--sounds terrible. Call the Securities and Exchange Commission Division of Enforcement. They are the one's with the muscle you need. Generally one call from the Enforcement Division induces involuntary relaxation of the bowel muscles in the target. They play for keeps and the lawyers there are the cream of the crop.

(2) the information being witheld. The Accountancy Board of your state should handle that.

This looks bad for the accountant--a single sale of the entire portfolio all at once? That's terrible.
posted by Ironmouth at 12:52 PM on March 30, 2006

Complaint Page, SEC.
posted by Ironmouth at 12:53 PM on March 30, 2006

Skip the idle threats. Send the complaint letters straight off to the regulatory agencies and cc the so called accountant.
posted by caddis at 1:20 PM on March 30, 2006

Thanks again. Unfortunately, I can't really prove any wrong doing on his part regarding the sale of the stock. He says he recommended to my mom that she liquidate the porfolio for investment in mutual funds and that she understood and agreed. My mom says he did recommend this and she was considering it but never gave him the final ok to sell.

However, given this latest dealing with him, I will file a complaint just to have everything on record.

Small_Ruminant, the money from the sale of the porfolio was wired into my mom's bank account so there was no check.
posted by gfrobe at 1:45 PM on March 30, 2006

gfrobe, her bank will be able to tell you where the money came from.
posted by small_ruminant at 1:48 PM on March 30, 2006

He says he recommended to my mom that she liquidate the porfolio for investment in mutual funds and that she understood and agreed. My mom says he did recommend this and she was considering it but never gave him the final ok to sell.

Don't things like this need to be in writing?
posted by davejay at 5:35 PM on March 30, 2006

No, they don't need to be in writing. But the onus is on the broker to prove she said to sell.
posted by small_ruminant at 6:08 PM on March 30, 2006

gfrobe,

You don't need to prove it. The broker-dealer is under an affirmative duty to provide suitable investments for her given her age and intellectual ability. This is not contract law.

You cannot go wrong by reporting it. You have to prove nothing. An investigation will ensue. Just collect the data and let the pros do it. There are literally rooms of people waiting for your call.
posted by Ironmouth at 9:23 PM on March 30, 2006