Vexed judge says 'Tax Lady' Deutch may have violated court rules

Lawyers for the state attorney general's office on Wednesday alleged that tax attorney Roni Lynn Deutch violated court orders by diverting phone calls from would-be customers to family and former employees who had started their own tax resolution businesses.

Attorneys made the claim at a morning hearing in Sacramento Superior Court to determine whether a court-appointed receiver would continue to operate the Deutch firm or whether the California State Bar would assume control as the company winds down.

Deputy Attorney General Conor Moore said the alleged phone referrals could generate money that should go to pay court-appointed receiver Scott Sackett.

"There's a potential violation by going behind the receiver's back," Moore told Sacramento Superior Court Judge Shelleyanne W.L. Chang, adding he expected to have "conclusive evidence" by week's end.

Deutch, in May, shut down her law firm and resigned from the State Bar, saying she was broke. Once head of an estimated $25 million-a-year tax law practice, Deutch said her North Highlands-based firm was $10 million in debt and that she personally owed $5 million.

Sackett said he's in control of about $40,000 in assets and another $25,000 in reserves. The money is enough, he said, to run a skeleton crew at the firm for about another six weeks.

Moore alleged that recent calls to Deutch's toll-free telephone line (888) TAX-LADY, had been diverted to a call center and then to a tax resolution business operated by Deutch's brother Scott Juceam and other businesses opened by former Deutch associates, in violation of an April 20 court order.

Sackett said both the RoniDeutch.com website and the toll-free phone number have since been deactivated.

"The initial question was, 'Where were the leads going?' " Sackett said. "We fear now the leads were being transferred."

Deutch was not present at the morning hearing.

The revelation did not please Judge Chang, who had ordered a freeze on Deutch's assets in the April 20 ruling.

"The calls … really bother the court," Chang said, calling the actions, if true, "flagrant violations of court rules."

Deutch faces allegations by the state attorney general's office that she cheated her clients out of millions, owed hundreds of thousands of dollars in refunds and destroyed millions of pages of documents in violation of earlier court orders.

The latest allegations came during a morning in which a potential suitor emerged to take on the troubled tax law firm.

Representatives of Corona-based tax resolution firm Fair Tax Resolutions Inc. were present at the hearing but did not speak.

Court receiver Sackett said Fair Tax Resolutions representatives "took a cursory look at the files and did find value in the files," adding that the Corona firm could take over the work.

The firm, with offices in Colorado, Texas and in Sacramento, specializes in bankruptcies, settling credit card debts and negotiating offers-in-compromise and IRS installment agreements.

State Bar attorneys were concerned Wednesday, citing state rules that a law firm should be purchased by another law firm.

Later Wednesday, State Bar deputy trial counsel Robin Brune said: "I don't think it would be appropriate to allow the sale of the law firm."

Chang also delayed a State Bar bid to take control over the Deutch firm and its client files, continuing the issue until June 17.

• Read more articles by Darrell Smith

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