In class action, clients blame Compro Tax for fraudulent investments

Kelly Holleran May 6, 2009, 10:35am

Local residents are claiming they purchased interests in alternative energy sources on advice from tax preparers that the securities would provide them with tax credits.

Instead of bringing tax relief, however, the residents ended up being audited by the Internal Revenue Service because the securities they purchased were allegedly illegal.

In a class action lawsuit filed May 1 in Jefferson County District Court against Compro Tax and several of its employees, lead class plaintiff Elizabeth Gillepsie alleges she and other Beaumont residents went to numerous Compro tax preparers and certified public accountants from 2004 through 2008.

On the same day, another suit with similar claims and also seeking class action status was removed from a Jefferson County court to federal court. The federal government also filed a civil suit against dozens of tax preparers over allegedly fraudulent gas sales.

In addition to Gillespie, other plaintiffs named in the latest county suit are Brian Gillespie, Roland Garza, Carrie Beth Garza, Estela Garza, Minnie Delarosa, Augustin Delarosa Jr., Oralia Flores, Domingo Flores, Valentin Zapata, Shawn Pichoff, Lorena Pichoff and Lidia Rojas, all individually and on behalf of similarly situated individuals.

Defendants listed are Compro Tax Inc., Ronald Fontenot, Anthony Burrell, Silas Anderson, Ursa Bookman, Clevon Harper, Craig D. Johnson, Jacqeline Levias, Jackie E. Mayfield, Carlos Metoyer, Yusef A. Muhammed, Joann Spooner, Gloria Toren, Edward Trotty, Denise White and John Does 1-51.

"A class action would be superior to all available methods for the fair and efficient adjudication of this controversy," the complaint states.

According to the complaint, the defendants are "sophisticated federal income tax specialists that prepare federal income tax filings for the public," and in most cases are certified public accountants.

"Defendants, for their own pecuniary gain, convinced Plaintiffs collectively to file for and obtain tax credits by the purchase of working interests in alternative energy source development gas wells," the suit states.

The defendants convinced the plaintiffs that the tax credits were appropriate, legitimate and derived from actual alternative energy sources. However they concealed from plaintiffs that the entire tax credit scheme was improper and would fail immediately upon IRS examination and that the working interests were fraudulent shams.

"Defendants convinced Plaintiffs to purchase the Working Interests by convincing them that the tax credits were appropriate, legitimate and derived from actual alternative energy sources," the suit states.

However, the plaintiffs now allege the preparers misled them and failed to tell them the tax credit was improper and would immediately fail upon IRS inspection, the complaint states.

In addition, plaintiffs say the tax preparers were not even authorized to sell working interests and withheld knowledge that they were not actually purchasing real working interests or that the wells did not exist or produce legitimate energy sources that would qualify for tax credits.

Although the defendants knew the working interests were restricted by the IRS, they continued to sell them to the plaintiffs, the suit states.

"Defendants devised, structured and perpetrated a fraud against Plaintiffs," the suit states.

As a result of the plaintiffs' purchases of the working interests, they were forced to pay penalty and interest on unpaid tax, interest on loans used to pay the back taxes and associated penalty and interest on top of the money they spent to purchase the working interests.

The plaintiffs claim Compro and its 65 defending employees are guilty of negligence, professional malpractice, common law fraud and violations of the Texas Securities Act and the Texas Business and Commerce Code. Statutory fraud in stock transactions, fraud,

The putative class action plaintiffs are seeking unspecified direct, consequential, actual and punitive damages and equitable relief, plus pre- and post-judgment interest, attorneys' fees, costs and other relief to which they may be entitled.

They will be represented by Thomas L. Hunt of Thomas L. Hunt and Associates in Houston.

The case has been assigned to Judge Milton Shuffield, 136th District Court.

Gillespie et al vs. Compro Tax Inc. et al, Jefferson County District Court Case Number: D183-934.

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