SOURCE: Kahn Gauthier Swick, LLC

March 30, 2006 12:49 ET

H&R Block -- HRB -- "Express IRA" Customers Launch Class Action Suit -- Lawyers at KGS Announce Filing

NEW ORLEANS, LA -- (MARKET WIRE) -- March 30, 2006 -- Kahn Gauthier Swick, LLC ("KGS") announces that a class action lawsuit has been commenced in the U.S. District Court for the Eastern District of Missouri, on behalf of H&R Block customers who purchased "Express" IRAs. No class has yet been certified in this action.


The suit alleges that H&R Block (NYSE: HRB), the nation's largest tax preparation company, steered hundreds of thousands of its clients into IRAs that were virtually guaranteed to lose money because of a combination of hidden fees and low interest rates. Over the past four years, H&R Block opened more than half a million "Express IRA" accounts for its tax preparation clients. Customers were told that the IRA paid "great rates" and was "a better way to save," but 85 percent of the customers who opened the accounts paid the company more in fees than they earned in interest. More than 150,000 H&R Block customers closed their accounts, incurring additional undisclosed fees, as well as nearly $6 million in tax penalties.

The lawsuit cites internal documents showing that H&R Block's senior management knew that many of its customers were losing money on their Express IRAs. For example, in a 2002 email to Mark Ernst, the company CEO, a district manager complained about the impact of these accounts on customers:

"I really don't think maintenance fees should exceed the amount of interest that we are paying on these accounts. Clients won't be happy seeing [their] investments decreasing ..."

Mr. Ernst forwarded this email to the Express IRA product manager and added his own comments: "The attached note . . . reflects the general sense that I think exists -- that Express IRA is the right thing for our clients, but the product is designed to nickel and dime clients to the point where our field people [don't] feel as good about the product as they should... ."

H&R Block Express IRA customers can learn more about their legal rights by visiting KGS' website and submitting their claims at the following web link:

Customers may also contact Lewis Kahn of KGS toll free 1-866-467-1400, ext. 100, or at 504-648-1850, or by email at, without obligation or cost.

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