Household HSBC Watch

NEW YORK — 3/15/2006 - New York state has filed a $250 million fraud suit against HSBC’s partner in predatory income tax loans, H&R Block.

The suit against the nation’s largest tax-preparing service charges the company fraudulently steered customers into a losing retirement account plan.

The lawsuit, filed by Attorney General Eilot Spitzer in Manhattan’s state Supreme Court, says Block advised clients to buy an “unsuitable, fraudulently marketed, poorly performing, fee-ridden ‘retirement vehicle’ called the Express IRA,” an account that actually shrinks over time.

The court papers say money in the retirement account decreases because the only investment option offered is a money market account with an interest rate so low that it does not cover the fees, which it charges H&R Block fails to adequately disclose. Spitzer said the IRAs were virtually guaranteed to lose money.

The attorney general said more than 150,000 H&R Block customers closed their “Express IRA” accounts and incurred additional charges, as well as nearly $6 million in tax penalties. The state was tipped off to the situation by whistle blowers inside the company.

Block and predatory lender HSBC have come under fire for high cost income tax refund loans, while Block and Household International (HSBC) are under indictment for federal racketeering.