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California Wants|’Tax Lady’ Jailed

SACRAMENTO (CN) - California's attorney general on Wednesday asked a judge to imprison "Tax lady" Roni Deutch for shredding millions of pages of documents in violation of a court order. The state claims Deutch began shredding the day after a court ordered her not to destroy evidence in a $34 million lawsuit that accused her of swindling tax clients.

"Defendant Roni Lynn Deutch has acted with repeated disdain for this court's orders," the application for a contempt order states.

"The court issued an Order to Show Cause re Preliminary Injunction on August 31, 2010 (OSC), which specifically ordered Deutch to 'take reasonable steps' to prevent the shredding of any documents that would be discoverable in this litigation. Despite this order, Deutch has been routinely shredding discoverable documents on almost a weekly basis since the day the court issued its OSC. Deutch's shredding bins were inside her law firm, and she had access to these bins twenty-four hours a day, seven days a week. She and her subordinates could have placed any document they wanted in those bins, confident that those documents would be forever out of the People's grasp.

"Deutch's flagrant disregard of the OSC has prejudiced the People's entire case. The People will never learn with complete confidence what Deutch has shredded over the last eight months. The evidence that these documents would have provided to the People's claims is permanently gone. From this point forward, anytime Deutch asserts that the People do not have sufficient evidence for one of its claims, the Court will never know whether or not that evidence was part of the millions of pages that Deutch has shredded over the last eight months.

"Deutch did not stop there. The Court issued its Preliminary Injunction on November 17, 2010, which prohibits Deutch from failing to issue refunds to her clients within 60 days. By her own admission, as of April 5, 2011, her law firm has outstanding refund requests for hundreds of clients that are older than 60 days, and which total over $435,000. Deutch allowed these refund requests to age without seeking any changes to the Preliminary Injunction from the Court. Instead of using her funds to pay refund requests, per the Court's order, Deutch decided to disperse [sic] funds to friends, family, and other creditors. By draining her estate and that of the law firm, Deutch has placed her clients at serious risk of never receiving the full amount of their refunds."

The state says Deutch "willfully disobeyed the OSC and the preliminary injunction: "Despite the OSC's prohibition on shredding discoverable documents, the very next day after the OSC issued, Deutch conducted a purge of law firm documents that resulted in the shredding of nearly 2,000 pounds of the firm's documents, or about 200,000 pages. Deutch's shredding campaign continued on an almost weekly basis until at least March 24, 2011."

Deutch, whose firm raked in about $25 million a year, is known for her cable-TV commercials that promise to significantly reduce clients' tax debts.

"Instead, she took thousands of dollars in up-front fees from clients but offered little or no help in lowering their tax bills. Hundreds of clients complained to the attorney general and other government agencies," Attorney General Kamala Harris said Wednesday in a statement.

Harris asked Sacramento Superior Judge Shelleyanne Chang to fine Deutch $1,000 and imprison her for 5 days for each count of contempt.

Harris wants each Deutch's 29 shredding runs and each of the hundreds of clients she failed to issue refunds counted as separate contempt counts.

"Even assuming Deutch did not have the funds to pay the court-ordered refunds, which she did, she does not have the right to simply ignore a court order," the attorney general said.

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