They owed thousands of dollars to the Internal Revenue Service, but the lady in the TV commercials assured them that for a few thousand more she could get the tax man off their backs.
The pitch by self-described "Tax Lady" Roni Lynn Deutch was impossible to resist for many. Among those who bought in: a Central Coast of California contractor who found himself in a financial hole after a recent divorce; a plumber in the Florida Keys in danger of losing his business; an Indianapolis woman trying to sell her house; an Army corporal and father of two in Missouri preparing to ship out for Korea; and a Sacramento area retiree facing mounting debt.
Now, these and thousands of other clients of Deutch's North Highlands, Calif.,-based tax resolution law firm find themselves further in debt and no closer to solving their problems with the IRS.
Deutch's firm, at one time a $25 million-a-year practice, crumbled in May under the weight of fraud and contempt-of-court allegations and a $34 million lawsuit filed in August 2010 by the state's attorney general. She is accused, among other things, of doing little or no work on clients' behalf and crafting bogus billing statements to cheat them.
"It's not Bernie Madoff, but it kind of stinks," said 82-year-old client Robert Barabino Sr. of North Highlands.
Deutch closed her firm in a defiant May 12 news conference outside her office.
She claimed she and her practice were broke, owing a combined $15 million, while defending her reputation as America's Tax Lady, telling assembled reporters, "I'm not the monster the attorney general made me out to be."
But allegations by the attorney general's office and the State Bar of California echo the stories of Deutch clients from Sacramento and across the country who have contacted The Bee in the days since Deutch walked away from her firm.
On June 17, Deutch pleaded not guilty to contempt-of-court allegations at an arraignment in Sacramento Superior Court. The attorney general's office has accused her of shredding documents and failing to pay tax refunds to clients in violation of court orders.
Deutch and her counsel, Clyde M. Blackmon of Sacramento, declined to comment after the brief court hearing.
Among those who say they are Deutch's victims is contractor Warren Cooper of Prunedale, Calif., who said he paid $2,000 to Deutch's firm in 2009 to resolve tax issues related to his divorce. But frustrated by a lack of results, he called off the deal in 2010.
Cooper said he was promised an $1,800 refund. But when he called in May, a receptionist told him of the company's legal troubles.
"She said, 'The receiver's going to give you a call. It's out of the firm's hands.' I said, 'Why is my refund in the court's hands?' "
Cooper, who said he's now working directly with the IRS on his tax troubles, doesn't expect to see a dime from Deutch. "It took 30 seconds to take the money out of my bank account," he said. "Now it's been a year and I'm probably never going to get my money."
The attorney general's office, the State Bar, court-appointed receiver Scott Sackett and the Internal Revenue Service's Taxpayer Advocate Service are all working now to get answers for the approximately 4,000 clients who still were active when Deutch closed her office.
Clients have several options, said Donald Steedman, the State Bar's supervising trial counsel. They can try to resolve their tax matters on their own, hire a certified public accountant, or go to the taxpayer advocate.
The Taxpayer Advocate Service is designed to deal -- free of charge -- with many of the same issues Deutch promised to solve for thousands of dollars. It helps taxpayers -- particularly those whose problems have landed them in financial distress -- resolve IRS issues.
Army Cpl. Eric Pack is among the former Deutch clients whose tax problems have only gotten worse since he went to her for help.
Pack is stationed in Missouri, near St. Louis. He fears he will have his assets seized to pay tax debts from 2000 that, with interest, have swelled to more than $8,000.
Pack, who comes from Downey, near Los Angeles, hired Deutch in August 2010 just as the Tax Lady's troubles had begun to surface.
"They said they would be able to help me clear the 2000 debt and stop my other taxes temporarily, but nothing was ever done," he said.
When Pack called Deutch's offices in May, eight months and $2,500 later, he learned her firm was no longer open.
Pack has since called California and Missouri's attorneys general for help and enlisted a tax counselor, but that didn't stop the IRS from visiting recently.
The timing could scarcely be worse. Pack re-enlisted four months ago and ships out for a year's deployment to Korea in July, leaving his wife and three young children behind in Missouri. He worries his tax troubles will affect his family and military career.
"I won't have money for my bills, for my family," he said. "I could be tendered out" of the Army.
(Email reporter Darrell Smith at firstname.lastname@example.org.)
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)