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JK Harris & Company Sued

For years JG Tax Group has been attempting to educate the public of the dangers of working with a tax resolution firm.  Read on below to see how one of the largest in the industry, JK Harris, was sued for deceptive advertising and business practices.

JK Harris And Company Sued By Attorney Generals 18 State Attorney Generals Enter Into Lawsuit Against JK Harris And Company Over Deceptive Advertising Practices And The Company’s Ability To Truly Resolve Clients’ Tax Problems

$6M JK Harris Settlement Approved

Charleston County Circuit Court Judge Perry M. Buckner III Monday approved a $6 million settlement of a class-action lawsuit involving JK Harris.

A judge has approved a $6 million settlement of a class-action lawsuit involving a high-profile North Charleston company, saying the proposed amount is as much as the business can afford to pay without possibly going bankrupt.

Charleston County Circuit Court Judge Perry M. Buckner III signed the order late Friday granting approval of the proposed settlement in the class-action suit against JK Harris & Co. The lawsuit was sparked by consumer complaints about JK Harris' heavily advertised tax-resolution services, which make use of an IRS program known as "offer in compromise." Under that program, taxpayers with substantial back tax bills can make an offer to pay less than the amount owed, which the IRS may or may not accept.

The plaintiffs had claimed that JK Harris charged them upfront for help resolving their back-tax cases, then failed to deliver the promised help.

 

JK Harris denied those allegations but agreed in April to settle the case "to avoid the cost and distraction of litigating class actions in multiple venues," the company said in a statement at the time.

 

In his order Friday, Buckner noted that South Carolina court rules require that the judge in a civil suit must "assure that the settlement represents adequate compensation for the release of the class claims" and must decide "whether the settlement is fair, adequate and reasonable." Buckner ruled that the proposed $6 million payout "is fair and reasonable based upon defendant's financial status, including its considerable debt," a finding that he said was supported by testimony from Roy Strickland, a forensic accountant hired by the plaintiffs to examine JK Harris' books.

In addition, Buckner wrote, "the settlement is adequate in the sense that the settlement fund is the most defendant can afford to pay without possible bankruptcy. Should defendant enter bankruptcy, collecting on even an individual judgment is in doubt."

Monica Linder, vice president of JK Harris' legal affairs department, issued a statement Monday saying that the company "is confident in the condition of our finances and does not foresee any difficulties in fulfilling the terms of the settlement."

The settlement also specifies 16 "business practices" the company has agreed to modify, mainly related to advertising and billing procedures.

Linder said, "it cannot be stressed enough that there will be no negative impact on the company's revenue, as the stipulations outlined in the settlement were implemented more than two years ago."

How much of a liability the case might have represented had it not been settled is suggested by figures in a document filed last month by plaintiffs' attorneys seeking payment of fees and expenses.

That filing argued that the lawyers were entitled to the payment in part because "the costs associated (with) litigating a low dollar claim that averages between $1,500 and $2,500 can be prohibitive for most class members."

If those figures represent the actual average claim against JK Harris, then the total liability the company faced if it had been forced to pay all claims in full from the nearly 68,000 potential class members would have amounted to between $101 million and $169 million. Under the approved settlement, JK Harris isn't required to make the full $6 million available immediately. Instead, the agreement calls for it to pay $500,000 into a fund this year and make increasing monthly payments starting in April 2008. The company's payments into the fund are expected to total $6 million in September 2011.

 

(Office Of The Vermont Attorney General)
Tax-Relief Company JK Harris Settles With Attorney General

CONTACT: Julie Brill, Assistant Attorney General, (802) 828-5479
July 3, 2008 - JK Harris, a tax-relief company that claims to be able to settle your debt with the IRS for “pennies on the dollar” has agreed to stop misleading consumers about its services and pay $1.5 million in refunds nationally, announced Attorney William H. Sorrell today.

“Consumers paid for tax help and got nothing but headaches in return,” said Attorney General Sorrell. “We’re making sure that JK Harris provides refunds to consumers who were harmed.”

Attorney General Sorrell and 17 other state attorneys general entered into a settlement with JK Harris and Company, L.L.C of Charleston, SC, and its president, John K. Harris. The settlement is contained in an Assurance of Discontinuance filed today with the Washington Superior Court.

The Vermont Attorney General was concerned about JK Harris’ conduct with consumers, including the following:

  • JK Harris did not help consumers with their tax problems as advertised and refused to give refunds when consumers complained that promised services were never completed.
  • JK Harris regularly advertised that it had more than 450 offices nationwide, but these offices did not help consumers once they paid their fee to JK Harris; instead, only the home office in South Carolina could assist consumers.
  • JK Harris claimed that consumers files would be handled by “tax experts” or “ex-IRS agents” when in fact the people handling the cases did not have tax expertise.

Under the terms of today’s Assurance of Discontinuance, JK Harris must make clearer disclosures to consumers. The company must tell consumers under what circumstances they might qualify to reach a compromise with the IRS on back taxes and how often the company is successful in reaching a compromise for customers with the IRS.


Any Vermont consumer who filed a complaint with the Vermont Attorney General’s Office, the Vermont Consumer Assistance Program, or the Better Business Bureau, or who files a complaint with the Vermont Attorney General’s Office within the next 90 days will be eligible for a partial refund from JK Harris. More information about this Assurance of Discontinuance and Vermont consumer protection in general may be found on the website of the Vermont Attorney General at www.atg.state.vt.us. The Refund Request claim form is available for consumers.

States participating in the judgment along with Vermont are Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, and West Virginia.

 

(Office Of The Texas Attorney General)
Attorney General Abbott Charges JK Harris With Misrepresenting Its Ability To Reduce Unpaid Tax Debts

South Carolina firm’s advertisements overstated, misrepresented its tax resolution services

AUSTIN-Texas Attorney General Greg Abbott today charged JK Harris & Company, LLC, its owners and two related firms with materially misrepresenting their ability to help Texans resolve their unpaid tax obligations. According to the state's enforcement action, JK Harris failed to provide promised services, misrepresented its employees' professional skills and experience, overstated its ability to reduce debts that customers owe to the Internal Revenue Service, and accepted large, prepaid fees from customers whose tax liabilities the firm knew - or should have known - it could not reduce.

"The defendants are charged with unlawfully misrepresenting - and overstating - their ability to reduce unpaid debts that taxpayers owe to the IRS," said Attorney General Greg Abbott. "Struggling Texans who paid large, upfront fees were told that their unpaid taxes could be resolved for pennies on the dollar. Today's enforcement action seeks restitution for the defendants' Texas customers and a court order enjoining the defendants' unlawful conduct."JK Harris and related companies, LLC, JKH Financial Recovery Systems LLC, and Professional Fee Financing Associates, along with the firms' owners, John K. Harris and Charles R. Harris, Jr., are all named defendants in the state's enforcement action. Citing Texas Deceptive Trade Practices Act violations, the state is seeking an injunction, penalties, fees and restitution for the Texas-based JK Harris customers.

The defendants' advertising and marketing materials claimed that JK Harris could settle customers' unpaid tax obligations for pennies on the dollar. JK Harris typically charged $2,000 to $5,000 - paid in advance - for its tax resolution services, which largely relied upon the IRS' Offer-in-Compromise (OIC) program.

According court documents filed by the state, the defendants charged customers without actually reviewing individual tax files to see whether individual taxpayers were eligible for relief through the OIC program - which is limited to very specific situations. The state's investigation revealed that few of JK Harris' customers qualified for OIC relief. Further, the defendants' often failed to file their customers' OIC application forms and frequently took no steps to reduce customers’ tax debts. When customers realized that JK Harris had undertaken little or no action, they frequently demanded refunds - and the defendants often failed to return the customers' money.

The state's enforcement action also cites the defendants for misleading customers about JK Harris' regional employees' qualifications. While the defendants' advertisements claimed that former IRS agents, Certified Public Accountants, lawyers, and other professionals were "available to meet with consumers in 325 locations in 43 states," investigators discovered that JK Harris' regional offices are staffed by sales personnel - who are not trained tax experts. As a result, Texas customers who believed they could actually meet with JK Harris tax resolution experts in person were misled.

The Better Business Bureau and the Office of the Attorney General have received approximately 1,000 complaints against the company in the past 36 months. Texans considering tax resolution services should research a firm before entering into a contract or paying any fees.

Texans who need additional information, believe they have been harmed by a tax-assistance firm's unlawful conduct or wish to file a complaint may contact the OAG at (800) 252-8011 or do so online at www.texasattorneygeneral.gov.

 

(Office Of The West Virginia Attorney General)
Attorney General McGraw Stops JK Harris And Company From Misleading Consumers; Refunds Money

A South Carolina tax-relief company that claims to be able to settle your debt with the Internal Revenue Service for "pennies on the dollar" has agreed to stop misleading consumers about its services and pay $1.5 million in refunds, announced Attorney General Darrell McGraw today.

"For an exorbitant fee, JK Harris promised to help consumers with their tax problems. Instead of getting tax help, consumers only got deeper in debt," said McGraw.

McGraw and 17 other state attorneys general entered into a consent judgment with JK Harris and Company, LLC of Charleston, South Carolina, and its president John K. Harris. McGraw claims that JK Harris did not help consumers with their tax problems as advertised and refused to give refunds when consumers complained that promised services were never completed.

McGraw alleged that JK Harris regularly advertised that it could help people who owed back taxes to the IRS by filing an Offer in Compromise (OIC) on their behalf resulting in them only having to pay "pennies on the dollar" of what they owed. JK Harris charged money up-front for this service without actually determining if consumers qualified for an OIC. The IRS accepts only a small number of these kinds of cases. In many cases, JK Harris did not even apply to the IRS to help consumers as promised but still refused to give those consumers their money back.

According to McGraw’s complaint, JK Harris regularly advertised that it had more than 45 offices nationwide. In reality, if a consumer wanted to talk with a JK Harris representative in person about the tax services he had purchased, he would have to travel to Harris’s main office in Charleston, South Carolina. Harris’s other offices are staffed only by sales representatives who could not help consumers with their tax problems.

JK Harris also claimed that consumers’ files would be handled by "tax experts" or "ex- IRS agents" when in fact the people handling the cases did not have tax expertise. JK Harris case managers changed frequently, and consumers complained that they often had to provide the same information to the company several times.

Under the terms of today’s consent judgment, JK Harris must make clearer disclosures to consumers and pay them refunds if they aren’t able to work out a compromise with the IRS. The company must tell consumers up-front under what circumstances they might qualify to reach a compromise with the IRS on back taxes and also provide the consumer with the percentage of OIC offers the IRS actually accepts. The company must also refund consumers’ money if the IRS does not provide them with an OIC.

JK Harris agreed to a number of other reforms to its advertising and sales practices and is barred from offering or performing credit repair services. The judgment also applies to JK Harris Financial Recovery System, LLC and Professional Fee Financing Associates, LLC, both owned by John K. Harris.

A total of 37 West Virginia consumers have complained to Attorney General McGraw’s Consumer Protection Division about the company since 2000. Any West Virginia consumer who filed a complaint with the Attorney General McGraw’s Consumer Protection Division, the South Carolina Department of Consumer Affairs, or the Better Business Bureau, or who files a complaint within the next 90 days, will be eligible for a partial refund from JK Harris. Consumers may contact Attorney General McGraw’s Consumer Protection Division toll-free at 1-800-368-8808 or by email at consumer@wvago.gov.

States participating in the judgment along with West Virginia are Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, and Vermont.

 

(Office Of The Connecticut Attorney General)
Attorney General Sues J.K. Harris For Deceptive Mailings
Offering Help With Nonexistent Court Cases

February 11, 2004
Attorney General Richard Blumenthal today announced he has sued J. K. Harris Financial Recovery Systems LLC (JKH-FRS) of South Carolina for sending Connecticut consumers letters offering to help them resolve nonexistent court cases. Blumenthal filed the lawsuit on behalf of Department of Consumer Protection (DCP) Commissioner Edwin R. Rodriguez.

In December, J.K. Harris sent letters to hundreds of consumers in New Haven, Meriden and elsewhere alleging that a "judgment" had been "filed" against them by a municipality in a court of law for nonpayment of an unspecified debt. The letters, which were ominously stamped "Final Notice," offered assistance in resolving the supposed court cases and paying off the debts.

In virtually all instances, there was no court case, let alone a judgment.
"J.K. Harris Financial Recovery Systems deceptively sought to scare consumers and solicit cash to pay nonexistent judgments," Blumenthal said. "The company's scheme to foster false financial fright and make a quick buck was illegal and reprehensible. These deceptive pitches are especially troubling because they undermine public trust in government by misrepresenting its actions. My office will seek full restitution for consumers panicked into paying and a court order."

"This company seeks to profit through panic," Rodriguez said. "Through its misleading and threatening promotional materials, it frightens consumers into seeking its assistance, even where no such assistance is warranted. I am strongly opposed to such exploitation. I hope this lawsuit brings financial restitution to those who have been harmed by this scam, and puts an end to this predatory practice."

The Attorney General and the Commissioner urge consumers to be suspicious of unsolicited correspondence offering "help" with debts, court cases, or other problems. Such solicitations may be consumer scams that should be reported to DCP and the Attorney General's Office.

 

(Office Of The California Attorney General)
JK Harris Settlement Offer


California Attorney General Brown has announced a $1.5 million settlement for consumers who were ripped off by JK Harris, the tax relief and credit repair company that made bogus claims that it could help settle debts with the IRS for "pennies on the dollar."

The attorney general alleged that JK Harris falsely advertised that the company could help people who owed back taxes to the IRS. The company also charged consumers up-front fees for this service without actually determining if consumers qualified for the services.

Other allegations include:

  • Falsely claiming that “tax experts” or “ex-IRS agents” would help consumers when employees did not have that tax expertise
  • Sending bogus notices to make consumers believe they needed credit help
  • Not helping consumers as advertised and refusing to give refunds when consumers complained
  • Convincing consumers to sign up for credit repair services they did not need by sending them bogus notices about judgments

JK Harris claimed to have 450 nationwide offices but only one office in North Charleston actually handled consumers’ files. Other offices were only staffed by sales representatives and consumers who wanted to meet with a company representative had to physically travel to North Charleston. JK Harris case managers also changed frequently, and consumers often had to provide the same information to the company multiple times.

Under the terms of the settlement, JK Harris must clearly disclose the circumstances that qualify someone to reach a compromise with the IRS on back taxes. JK Harris must also reform its advertising and sales practices and is barred from performing credit repair services that do not comply with state and federal law. The judgment also applies to Professional Fee Financing Associates, L.L.C, a related company that provided financing for consumer contracts with JK  Harris.

The companies will also pay a total of $1.5 million in refunds to consumers. Any California consumer who filed a complaint with the California Attorney General’s Office, the Better Business Bureau, the South Carolina Department of Consumer Affairs, or who files a complaint with one of these offices within the next 90 days to be eligible for a partial refund. Consumers who wish to file a complain should do so in writing to:

Attorney General's Office Public Inquiry Unit P.O. Box 944255 Sacramento, CA 94244-2550 Or send an online complaint to: piu@doj.ca.gov

Attorney General Brown and 17 other state attorneys general recently entered into consent judgements and assurances of voluntary compliance with JK Harris and Company, L.L.C and JKHarris Financial Recovery System. L.L.C., both of North Charleston, SC to get the company to change its practices and pay restitution to consumers. States participating in the judgment include Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.

 

(Office Of The Massachusetts Attorney General)
Attorney General Coakley Stops Tax Relief Company From Misleading Customers

JK Harris to stop taking consumers money for tax services it fails to perform, pay $1.5 million in restitution


BOSTON – A South Carolina tax-relief company that claims to be able to settle consumers’ debt with the IRS for “pennies on the dollar” has agreed to stop misleading consumers about its services and pay $1.5 million in restitution, Attorney General Martha Coakley’s Office announced today.

“This company took advantage of people who paid for tax assistance and, in some instances, profited by taking their money and not giving them any help at all,” said Attorney General Coakley.  “This agreement will ensure that this firm is honest with its clients and provides refunds if they are unable to assist them.”

Attorney General Martha Coakley and 17 other state attorneys general entered into a consent judgment with JK Harris and Company, L.L.C of Charleston, South Carolina, and its president, John K. Harris.  Suffolk Superior Court Judge Linda E. Giles entered the judgment yesterday.  According to the complaint, also filed yesterday, JK Harris did not help consumers with their tax problems as advertised and refused to give refunds when consumers complained that promised services were never completed.

The complaint alleges that JK Harris regularly advertised that it could help people who owed back taxes to the IRS by filing an Offer in Compromise (OIC) on their behalf and consumers would only have to pay a small percentage of what they owed.  An OIC is a program implemented by the IRS to assist consumers who owed back taxes as a legitimate alternative to declaring a case not collectible.  JK Harris charged money upfront for this service without actually determining if consumers qualified for an OIC or while knowing that consumers in fact didn’t qualify.  The IRS accepts only a small number of these kinds of cases.  In many cases, JK Harris did not even apply to the IRS to assist consumers as promised, but still refused to give those consumers their money back.

The complaint further alleges that JK Harris regularly advertised that it had more than 450 offices nationwide, including several offices in Massachusetts.  Typically the person handling a consumer’s OIC was actually located at the JK Harris home office in Charleston, South Carolina.  If a consumer wanted to meet with a JK Harris representative about their file they had to physically travel to Charleston.  The other offices were staffed only by sales representatives who could not assist consumers with their tax problems.

JK Harris also claimed that consumers’ files would be handled by “tax experts” or “ex-IRS agents” when in fact the individuals handling the cases did not fit those descriptions and did not have tax expertise.  JK Harris case managers changed frequently, and consumers complained that they often had to provide the same information to the company several times.

Under the terms of today’s consent judgment, JK Harris must make clearer disclosures to consumers and refund them if the company is not able to work out a compromise with the IRS.  The company must tell consumers under what circumstances they might qualify to reach a compromise with the IRS on back taxes and provide an accurate percentage of how many OIC offers the IRS accepts.  The company must also refund consumers money if the IRS does not accept their case.

JK Harris agreed to a number of other reforms to its advertising and sales practices and is barred from offering or performing credit repair services.  The judgment also applies to JK Harris Financial Recovery System, L.L.C and Professional Fee Financing Associates, L.L.C both owned by John K. Harris.

Any Massachusetts consumer who filed a complaint with the Massachusetts Attorney General’s Office, the Better Business Bureau or the South Carolina Department of Consumer Affairs or who files a complaint within the next 90 days will be eligible for a partial refund from JK Harris.  Consumers can contact the Massachusetts Attorney General’s Consumer Hotline (617) 727-8400.

States participating in the judgment along with Massachusetts are Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.

This matter was handled for Massachusetts by Assistant Attorney General Jacqueline Welch of Attorney General Coakley’s Consumer Protection Division.

 

(Office Of The Illinois Attorney General)
MADIGAN SETTLES WITH TAX RESOLUTION COMPANY
FALSELY PROMISING TAX SETTLEMENTS FOR

“PENNIES ON THE DOLLAR”


Chicago – Attorney General Lisa Madigan today announced the settlement of an 18-state investigation of tax resolution firm J.K. Harris & Company and its two affiliated companies, JK Harris Financial Recovery Systems and Professional Fee Financing Associates. The settlement resolves allegations that the defendants, headquartered in Charleston, S.C., employed misleading advertising practices for their tax resolution services.

As part of the settlement, the companies will pay $1.5 million in restitution to consumers, and the states, including Illinois, will share in an additional pool of $300,000 to be paid by the defendants for the costs of investigating and litigating the case as well as for the states’ consumer education initiatives.
Attorney General Madigan’s office began investigating J.K. Harris & Company based on allegations that the firm misrepresented its ability to assist consumers in resolving their outstanding tax obligations with the U.S. Internal Revenue Service (IRS) and state taxing agencies.

Specifically, Madigan’s complaint against the defendants alleges that in luring consumers to purchase its services, J.K. Harris & Company claimed that it could settle consumers’ back tax obligations for “pennies on the dollar” and indicated that consultations would be provided by “tax professionals,” “tax experts” or “former IRS agents.” In fact, the vast majority of consumers who accepted J.K. Harris & Company’s offer did not speak to a tax professional, tax expert or former IRS agent. In addition, J.K. Harris & Company’s success rate is low because few taxpayers qualify to obtain “offers in compromise” (OICs) from the IRS. OICs are agreements between the IRS and taxpayers to allow taxpayers to resolve outstanding tax debts by paying less than the full amount owed. Importantly, the IRS uses OICs only in uncommon circumstances at the agency’s discretion once other avenues, such as repayment plans, have been explored and rejected.

“Consumers should be on the lookout for tax resolution offers that seem too good to be true,” Madigan said. “This agreement will help ensure that before signing up for these services, consumers are provided with accurate information concerning the limited nature of what these companies can offer due to the limited nature of the IRS OIC program.”

In some cases, the lawsuit further alleged, J.K. Harris & Company arranged financing for consumers to pay the contract fees through its affiliate Professional Fee Financing Associates, but the affiliate allegedly refused to release consumers from those financing contracts, even when J.K. Harris & Company failed to assist consumers in applying for the IRS OIC program as promised. The settlement requires the defendants to cease the alleged illegal conduct and to rescind contracts with consumers that resulted from those practices. In addition, the settlement requires that in its future business, J.K. Harris & Company must clearly explain to consumers the circumstances under which consumers might qualify to reach a compromise with the IRS on back taxes. J.K. Harris & Company also must reform its advertising and sales practices.

The third defendant in Attorney General Madigan’s complaint, J.K. Harris Financial Recovery Systems, allegedly operated as a credit services organization and mailed “urgent” messages to Illinois consumers advising them that a judgment had been entered against them and that the company could help consumers to avoid having their wages garnished and to re-establish their credit. In some cases, the judgment information was inaccurate and led consumers to believe that they owed a debt that they were unaware of or that they already had paid off. In fact, some consumers who received these solicitations never had such judgments entered against them, and some consumers had paid off the judgments described in the solicitations. The complaint alleges J.K. Harris Financial Recovery Systems violated both the Illinois Credit Services Organization Act and the Consumer Fraud and Deceptive Business Practices Act by failing to register with the Illinois Secretary of State as a credit services organization, collecting upfront payments for its services and making misleading representations about its services. As a result of the states’ investigation, J.K. Harris Financial Recovery Systems has ceased its operations.
Any Illinois consumer who filed a complaint with the Attorney General’s office or the Better Business Bureau, or who files a complaint on or before Sept. 10, 2008 will be considered for a partial or full refund from the $1.5 million national restitution pool. Consumers can obtain a complaint form online at http://www.illinoisattorneygeneral.gov/consumers/conscomp.pdf or by calling the Attorney General’s Consumer Fraud Hotline at 1-800-243-0618.
Assistant Attorney General Avonne M. Seals handled the case for Attorney General Madigan’s Consumer Protection Division.

 

(Office Of The Missouri Attorney General)
August 12, 2008
JK Harris didn't provide promised services to Missourians who sought help with tax problems, Nixon says in lawsuit


Jefferson City, Mo. - A South Carolina company that advertises it can help consumers resolve their state and federal tax problems didn't provide the services it promised, Attorney General Jay Nixon says. Nixon filed a lawsuit today seeking full restitution from JK Harris & Company LLC (JKH) for its Missouri customers who received neither the services for which they paid as much as $4,500 each nor the refunds they requested.

"JK Harris promises it can help consumers who are having tax problems, but the Missourians who complained to my office told a different story - one of unreturned phone calls, lost paperwork, and a worse financial situation than when they started," Nixon said.

The JKH Web site tells consumers the company has a step-by-step strategy - known as "The Process" - to help consumers with their tax problems. According to JKH, "The Process" includes providing immediate relief to consumers by attempting to stop collection activities by the IRS; assigning a case specialist to review the consumer's information and begin work on resolving the customer's tax problems; and submitting an offer to the IRS to resolve the customer's tax problems.

Consumers complained to the Attorney General's Office that after they paid for debt relief services, JKH failed to follow "The Process" in handling customer cases. The consumers also reported that they often had to resend their financial disclosure information and supporting documentation because JKH kept losing their paperwork, and that they would learn that their assigned case specialists were no longer working on their files only by calling JKH for updates. Those consumers who requested full refunds from JKH because they didn't receive the promised services had those requests denied.

Also named as a defendant in Nixon's lawsuit was a business affiliated with JK Harris called Professional Fee Financing Associates LLC (PFFA), which makes consumer credit loans as part of the JKH contract process with its customers. Nixon said PFFA's forms fail to disclose to consumers crucial information about finance charges, payment schedules, the total number of payments, and the total price the consumers will have to pay. PFFA also does not have the required certificate of registration from the Missouri Division of Finance.

Nixon is asking the Jackson County Circuit Court to issue an order requiring JKH and PFFA to provide full restitution to all Missouri consumers from whom they have received payment who have been hurt by the defendants' deceptive practices. The lawsuit also asks for preliminary and permanent injunctions to prohibit the defendants from further violations of Missouri consumer protection laws, as well as for penalties and costs that the court deems appropriate.


(Office Of The Tennessee Attorney General)
CONSUMERS HAVE UNTIL SEPT. 10 TO FILE COMPLAINTS TO BE ELIGIBLE FOR REFUNDS IN J K HARRIS AGREEMENT

You have 28 days to request a refund if you used the services of J K Harris tax relief company or its sister company, Financial Recovery Systems, Attorney General Bob Cooper announced today.

Tennessee and 17 other states filed a settlement with the South Carolina-based companies, alleging deceptive business practices. Tennessee filed its agreement on behalf of the Tennessee Division of Consumer Affairs, with both companies and their manager, John K. Harris on June 19. Consumers have until Sept. 10 to file complaints with the Division of Consumer Affairs for refunds.
J K Harris allegedly advertised that it had more than 450 offices nationwide, including six in Tennessee (Johnson City, Jackson, Memphis, Chattanooga, Knoxville, and Brentwood.) Only the main office in North Charleston, S.C., however, handled consumers’ files. The other offices were staffed by sales representatives.

The states also allege JK Harris claimed consumers’ files were being handled by "tax experts" when that was not always the case. Some allegations include that J K Harris regularly advertised that it could help people who owed back taxes to the IRS by filing an Offer in Compromise (OIC) on their behalf and consumers would only have to pay "pennies on the dollar" of what they owed. Other complaints were that J K Harris charged money in advance before determining whether consumers qualified for an OIC or while knowing they did not. The IRS approves a very small percentage of OICs each year.

Allegations against Financial Recovery Systems include attempts to frighten consumers into signing up for credit repair services they did not need by sending deceptive notices about judgments against them. The company’s services violated state credit repair laws.

Under the terms of today’s judgment, J K Harris must clearly explain truthfully what consumers can expect to receive from the companies’ services. J K Harris will also make several reforms to its advertising and sales practices. Financial Recovery Systems is barred from offering or performing credit repair services that do not comply with state and federal laws. Both companies will pay a combined $1.5 million in refunds to consumers in the 17 states.

Consumers who wish to file a complaint to be eligible for a refund may contact the Division of Consumer Affairs at www.tennessee.gov/consumer or 615- 741-4737 or toll-free in Tennessee at 1-800- 342-8385.

Any response you may have made to the "class action" lawsuit that was filed against J K Harris DOES NOT ensure that you are covered by this settlement. To be sure that you are covered by the state settlement, you will need to file a complaint with the Tennessee Division of Consumer Affairs at www.tennessee.gov/consumer or 615- 741-4737 or toll-free in Tennessee at 1-800- 342-8385. www.state.tn.us/attorneygeneral



(Office Of The Arizona Attorney General)
Terry Goddard Announces $1.5 Million Settlement over Misleading Business Claims


(Phoenix, Ariz. – June 12, 2008) Attorney General Terry Goddard today announced a $1.5

million settlement with South Carolina companies JK Harris and Company, LLC, and Financial Recovery System, LLC, resolving allegations that they misled consumers about the services available through their businesses. Goddard joined 17 other state Attorneys General in this settlement.

JK Harris is a tax-relief company that claimed it could settle debts with the Internal Revenue Service for “pennies on the dollar.” Financial Recovery System is a credit-repair company that sent out bogus notices to make people think they needed credit help. Both have agreed to stop misleading consumers and pay $1.5 million in refunds to consumers.

According to the complaint filed today, JK Harris allegedly did not help consumers with their tax problems as advertised and refused to give refunds when consumers complained that promised services were never completed. The complaint also claimed that Financial Recovery System attempted to frighten consumers into signing up for credit-repair services they did not need by
sending them bogus notices about judgments against them. The company’s services violated state and federal credit-repair laws.

Today’s settlement resolves allegations that JK Harris regularly advertised that it could help people who owed back taxes to the IRS by filing an “Offer in Compromise” (OIC) on their behalf, enabling consumers to pay only “pennies on the dollar” of what they owed. JK Harris charged money upfront for this service without actually determining if consumers qualified for an OIC, or in some cases, while knowing that consumers didn’t qualify. The IRS approves only a small
percentage of OIC filings each year.

Today’s settlement, in the form of a consent judgment, requires JK Harris to explain to consumers under what circumstances they would qualify to reach a compromise with the IRS on back taxes. The company will also make several reforms to its advertising and sales practices.

The settlement bars Financial Recovery System from offering or performing credit-repair services that do not comply with state and federal laws.
Any Arizona consumer who entered into a contract with JK Harris or Financial Recovery System before today and filed a complaint with the Arizona Attorney General’s Office, the Better Business Bureau or the South Carolina Department of Consumer Affairs may be eligible for a partial refund. Consumers who file a complaint within 90 days from today with the Arizona Attorney General’s Office will also be eligible. Consumes can contact the Arizona Consumer Information and Complaints Unit at 602-542-5763 or in Tucson at 520.628.6504 for more
information.

The companies will pay a total of $1.5 million in refunds to consumers. The judgment also applies to Professional Fee Financing Associates, LLC, a related company that provided financing for consumer contracts with JK Harris.
States participating in the judgment with Arizona are Arkansas, California, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia. The consent judgment was filed today in Maricopa County Superior Court and is awaiting court approval. Assistant Attorney General Cherie Howe handled this case.


(Office Of The Ohio Attorney General)
Ohio Joins 17 States to Stop Tax Relief and Credit Repair Companies
from Misleading Consumers in Ohio


Three companies based in South Carolina faced a lawsuit today by Ohio and 17 other states for violations of state and federal laws for unfair and deceptive practices including misleading advertising and failing to deliver services. However, through negotiations, the companies and their manager John Harris agreed to make changes in business practices in order to be in compliance with the laws and to pay $1.5 million back to consumers in restitution.

A multi-state investigation began in 2004 after several attorneys general offices received complaints about JK Harris & Company, L.L.C., JK Harris Financial Recovery System, L.L.C., and Professional Fee Financing Associates L.L.C. Ohio received more than 90 such complaints. It was found that the companies solicited Ohioans primarily via television advertisements and mailings.
Here are summaries of the three companies and what they did:
JK Harris & Company L.L.C. (JKHC) - advertised tax relief services claiming it could settle debts with the IRS for “pennies on the dollar” by using an “offer in compromise” (OIC) with the Internal Revenue Service. A person has to meet many qualifications in order to make an OIC to the IRS. The investigation found that many people JKHC made this offer to would not have qualified for one to begin with. Also, JKHC in many cases collected fees in advance and did not provide the service agreed upon.

- advertised tax relief services claiming it could settle debts with the IRS for “pennies on the dollar” by using an “offer in compromise” (OIC) with the Internal Revenue Service. A person has to meet many qualifications in
order to make an OIC to the IRS. The investigation found that many people JKHC made this offer to would not have qualified for one to begin with. Also, JKHC in many cases collected fees in advance and did not provide the service agreed upon.

JK Harris Financial Recovery System, L.L.C. (FRS) – contacted Ohioans via mailings that stated the consumer would be facing some sort of court action due to their outstanding debt and that the company could help them get out of that situation for a fee.

The investigation found that in many cases there was no such debt faced by the consumer contacted and after consumers paid the company, they didn’t receive the service advertised.

– contacted Ohioans via mailings that stated the consumer would be facing some sort of court action due to their outstanding debt and that the company could help them get out of that situation for a fee.

The investigation found that in many cases there was no such debt faced by the consumer contacted and after consumers paid the company, they didn’t receive the service advertised.

Professional Fee Financial Associates L.L.C. (PFFA) – extended credit to consumers who entered into contracts with JKHC-then when JKHC couldn’t help the consumer they did not let the person out of their loan.

– extended credit to consumers who entered into contracts with JKHC-then when JKHC couldn’t help the consumer they did not let the person out of their loan.

According to the complaint, JK Harris regularly advertised that it had more than 450 offices nationwide. However, the attorneys general contend that only the main office in South Carolina handled consumers’ files. JK Harris also said that consumers’ files would be handled by “tax experts” or “ex-IRS agents” when in fact the people handling the cases did not have tax expertise as advertised.
Under the terms of the Order that has been agreed to and is before Judge Julie M. Lynch of the Franklin County Court of Common Peas for her approval, JK Harris must clearly explain to consumers under what circumstances the consumer would qualify to reach an OIC with the IRS on back taxes. JK Harris will also make several reforms to its advertising and sales practices. Financial Recovery Systems is barred from offering or performing credit repair services that don’t comply with state and federal laws. Both companies will pay a total of $1.5 million in refunds to consumers. The judgment also applies to Professional Fee Financing Associates, L.L.C, and a related company that provided financing for consumer contracts with JK Harris.

Any Ohio consumer who filed a complaint with the Ohio Attorney General’s Office or who files a complaint within the next 90 days will be eligible for a partial refund as a result of the settlement agreed upon today. Consumers can file complaints with our office at 1-877-244-6446 or online at www.ag4ohio.gov.
States participating in the judgment are Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.
www.ag4ohio.gov.

States participating in the judgment are Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.



(Office Of The Maine Attorney General)
JK Harris and Financial Recovery Systems: partial refunds for consumers
June 12, 2008

Attorney General's Office
NEWS RELEASE June 12, 2008 David Loughran, (207) 626-8577
Two South Carolina companies who purported to help people in financial trouble but were actually offering little or no benefit at all have agreed to stop misleading consumers. The North Charleston, SC companies JK Harris, a tax-relief company that did not deliver on its claim to settle IRS debts for “pennies on the dollar”, and Financial Recovery Systems, LLC, a credit repair company that sent out bogus notices to make people think they needed credit help, have agreed to pay $1.5 million in refunds to consumer across the country.
“Not only was the behavior of these companies illegal, their tactics were deplorable.” said Attorney General Steve Rowe.

Maine and 17 other states attorneys general entered into consent judgments and assurances of voluntary compliance with the two companies. The attorneys general alleged that JK Harris did not help consumers with their tax problems as advertised and refused to give refunds when promised services were never completed. They also alleged that Financial Recovery Systems attempted to frighten consumers into signing up for credit repair services they did not need by sending them bogus notices about judgments against them. The company’s services also violated state and federal credit repair laws.

According to the attorneys general’s complaint, JK Harris regularly advertised that it had more than 450 offices nationwide. However, the attorneys general found that only the main office in North Charleston handled consumers’ files. If a consumer wanted to meet with a JK Harris representative about his or her file, the consumer had to physically travel to North Charleston, more than 1100 miles from Maine. The other offices were staffed only by sales representatives who could not handle consumer inquiries.

JK Harris also said that consumers’ files would be handled by “tax experts” or “ex-IRS agents” when in fact the people handling the cases did not have the advertised expertise. JK Harris case managers changed frequently, and consumers complained that they often had to provide the same information to the company several times.

JK Harris promised to settle debts for “pennies on the dollar” and charged money upfront for this service without actually determining if consumers qualified for an IRS Offers in Compromise (OIC) or while knowing that consumers didn’t qualify. The IRS approves only a small percentage of OIC’s each year.

Under the terms of today’s consent judgment, JK Harris must clearly explain to consumers under what circumstances they would qualify to reach a compromise with the IRS on back taxes. JK Harris will also make several reforms to its advertising and sales practices. Financial Recovery Systems is barred from offering or performing credit repair services that don’t comply with state and federal laws. The judgment also applies to Professional Fee Financing Associates, L.L.C, a related company that provided financing for consumer contracts with JK Harris.

Since 1999 the Maine Attorney General’s office received 62 complaints about JK Harris. Any Maine consumer who filed a complaint with the Maine Attorney General’s Office, the Better Business Bureau or the South Carolina Department of Consumer Affairs or who files a complaint within the next 90 days will be eligible for a partial refund. The $1.5 million will be distributed on a pro rata basis to those consumers who have filed complaints.

Consumers can contact the Maine Attorney General’s Consumer Protection Division toll-free at (800) 436-2131 or via email at consumer.mediation@maine.gov.

States who joined Maine in the judgment are Arkansas, Arizona, California, Connecticut, Florida, Illinois, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.

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