Tuesday, May 19, 2009

Property Tax Reassessment Companies And Owners Charged With Criminal And Civil Cases

On May 13, 2009, criminal charges were filed by the Los Angeles County District Attorney’s Office (Consumer Protection Division) against Sean McConville, the operator of a private company that offered to “assist” homeowners with filing property tax reassessment forms for fees. McConville's company is Property Tax Reassessment. The prosecution alleges that McConville operated about a dozen such operations which are under investigation by local and state officials. Bail is set at $70,000.

McConville was charged in Los Angeles County Superior Court Case No. BA 356365 with one felony count of attempted grand theft of personal property and 32 misdemeanor counts of violating the state’s Business and Professions code by false advertising and business solicitation with a misleading governmental term or symbol.

This is not the only case for McConville. Two weeks ago, the Ventura District Attorney's Office charged Sean McConville with 20 felony counts for criminal conduct stemming from his property tax reassessment operations. The California Attorney General's Office also filed a civil lawsuit in San Diego County Superior Court against Sean McConville and his brother Michael McConville and their businesses, "Property Tax Reassessment" and "Property Tax Adjustment Services." The lawsuit seeks and injunction and and at least $2.5 million in civil penalties, and contends that these companies:

■ Made and continue to make untrue and misleading statements with the intent to induce consumers to purchase products and services in violation of Business and Professions Code Section 17500 and 17537.9;

■ Distributed solicitations implying a government connection, approval or endorsement in violation of Business and Professions Code Section 17533.6;

■ Distributed solicitations that appear to be billing statements in violation of California Civil Code Section 1716; and

■ Engaged in unfair competition in violation of Business and Professions Code Section 17200.

The lawsuit alleges that these companies targeted tens of thousands of Californians looking to lower their property taxes with mailers that read like government billing statements, featured official-looking logos and demanded hundreds of dollars in payments for reassessment and reassessment appeal services. The statements warned homeowners that if payments were not received by the "due date" they faced late fees or would have their file marked "non-responsive" or "ineligible for future tax reassessments."

The lawsuit contends that neither company adequately informed consumers that they were not a governmental entity, the solicitations were not a bill, purchase of the services was not required and services were available free of charge from county assessors. It is also alleged that few, if any, of the property tax assessment services homeowners were billed for in 2008 were completed.

Attorney Comment: While we are in the midst of an economic and real estate housing crisis, the government is being aggressive against any businesses that appear to take advantage of any homeowners. Any business in this area must be vigilant about being in compliance with the law. The government contends that the services offered by these companies are offered for free by the Los Angeles County Assessor's Office. In this case, two counties and the state attorney general's office have all charged the companies in criminal and civil cases. It is unusual for three different jurisdictions to pursue charges and cases simultaneously.

Like most fraud cases, the government tends to act where there is deception to the consumer. Where there is misleading content, mailers that appear to be from governmental agencies, there is a greater likelihood that criminal charges will be filed.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings.


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