N.Y. court reinstates IRA lawsuit against H&R Block

NEW YORK Thu Jan 8, 2009 12:46pm EST

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NEW YORK (Reuters) - A New York state appeals court has reinstated a lawsuit against H&R Block Inc that accused the largest U.S. tax preparer of fraudulently marketing Express IRA retirement accounts to hundreds of thousands of lower-income clients nationwide.

A Supreme Court Appellate Division panel in Manhattan on Tuesday overruled trial justice Karla Moskowitz's July 2007 ruling that she lacked personal jurisdiction over the company and its H&R Block Services Inc unit. The panel said the state had provided sufficient evidence to pursue the matter.

Moskowitz had allowed New York to pursue allegations of fraudulent and deceptive practices and breach of fiduciary duty against H&R Block Financial Advisors Inc, which H&R Block sold two months ago to Ameriprise Financial Inc.

An H&R Block spokeswoman did not immediately return a call seeking comment.

Eliot Spitzer, the former New York attorney general, had accused Kansas City, Missouri-based H&R Block in a March 2006 lawsuit of steering roughly 500,000 clients into Express IRAs but failing to disclose fees that often more than wiped out the interest generated.

Andrew Cuomo, Spitzer's successor as attorney general, took over the case when Spitzer became New York's governor.

(Reporting by Jonathan Stempel; editing by John Wallace)

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