A class action accuses Croft & Frost and its namesakes of malpractice in that the accounting firm took on more business than it could manage before abruptly closing its doors days before a tax filing deadline.
A proposed class action accuses Croft & Frost, PLLC and its namesakes of malpractice in that the accounting firm took on more business than it could manage before abruptly closing its doors days before a tax filing deadline, “pull[ing] the rug out from under” thousands of customers.
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The 14-page lawsuit says that despite the firm’s “basic duty” to undertake only the professional services that it could competently perform, the Tennessee-based tax preparer, CEO and founder Paul Croft and co-founder Jonathan Frost “bit off more work than [they] could chew” without having adequate staff to complete it.
The allegedly “overgrown and unperforming” company effectively shut down operations on September 12, 2023, without prior notice to clients, just three days before a quarterly tax filing deadline, the suit relays.
“Rather than advise customers, to whom they owed professional duties, that the accounting firm was teetering, the principals robbed Peter to pay Paul to stay afloat and kept promising the work would be done meanwhile not paying the huge staff necessary to do the work for thousands of customers,” the case contends.
According to the complaint, “the cracks at [Croft & Frost] started to show” when employees were paid in December 2022 with funds from another of defendant Frost’s companies. By September 2023, the executives’ “poor investments and outsized lifestyles” had put the firm in dire financial straits, the filing alleges.
On September 12, the head of human resources informed employees that the company was “implement[ing] an immediate workforce reduction,” which involved the abrupt termination of all workers, the lawsuit describes.
The suit claims that Frost, a self-proclaimed “business guru,” and Croft, who loudly “broadcast[ed] his grandiosity on social media,” overpromised and underdelivered with regard to the accounting services their firm could reasonably handle.
“The result of the hubris and grandiosity was a failed business that left hundreds of customers in the lurch when reality caught up to Croft and Frost,” the case charges.
The plaintiff, a Virginia resident, engaged the firm to prepare various personal and business tax filings for the 2021 and 2022 calendar years, the complaint states. The man claims to have waited through August 2023 for preparation of his latest tax returns without a word from the company and, in early September, began contacting Frost to seek information on the status of the filings, whose submission deadline was approaching.
Per the lawsuit, defendant Frost reportedly completed one of the plaintiff’s personal tax returns in early September but did not file the others.
“By mid-September Mr. Frost was apparently trying to handle the tax matters for thousands of customers including [the plaintiff] and his five related returns by himself with no staff,” the suit relays.
After the shutdown, customers were unable to get their business records from the firm, the case alleges, adding that one client was told she would have to pay $200 to get them from another company that had purchased the records.
The complaint contends that the defendants failed to exercise professional care and left many consumers to suffer the consequences when the firm closed its doors so suddenly that clients were unable to find a replacement accountant before the tax filing deadline.
The lawsuit looks to represent anyone who was a customer of Croft & Frost, PLLC at the time of its shutdown in September 2023.
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