NEW YORK, March 17 /PRNewswire/ -- Wolf Haldenstein Adler Freeman & Herz LLP today filed a class action lawsuit in the United States District Court Western District of Missouri, Western Division, on behalf of all persons who purchased the common stock of H&R Block, Inc. ("HRB" or the "Company") (NYSE: HRB) between January 31, 2005 through March 14, 2006, inclusive, (the "Class Period") against defendants HRB and Mark A. Ernst, the Company's Chairman, President, and CEO. The case name is Michael Nettie v. H&R Block, Inc., et al. A copy of the complaint filed in this action is available from the Court, or can be viewed on the Wolf Haldenstein Adler Freeman & Herz LLP website at http://www.whafh.com. The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities. In particular, in February 2005, California Attorney General Bill Lockyer sued the Company over its highly publicized referral anticipation loans ("RALs") seeking "hundreds of millions of dollars" on behalf of customers and $20 million in civil penalties. Mr. Lockyer's action joins a long list of lawsuits that have targeted HRB's RALs -- cash advances that the Company arranges for customers so they won't have to wait an extra one to four weeks for a check from the federal government they are otherwise entitled to receive. In return for the loans, customers must agree to give a percentage of their tax refunds to HRB and its banking partners. Further, the Company reported inflated earnings during the Class Period. As reported on or about February 23, 2006, the Company must restate results for fiscal 2004 and 2005, plus previous 2006 quarters, because of errors in calculations regarding its state effective income tax rate. Reportedly, the errors resulted in the Company understating state income tax liabilities by at least $32 million as of the end of April 2005. Indeed, on March 13, 2006, the Company announced it would delay filing its quarterly report on SEC Form 10-Q until it has completely sorted out its problems. Finally, on March 15, 2006, New York Attorney General Elliot Spitzer sued HRB alleging that the Company over the last four years opened more than 500,000 "Express IRA" accounts, an individual retirement account ("IRA") that can take the form of either a Traditional IRA or a Roth IRA, for clients of its tax-preparation service; but 85% of the customers who opened the accounts paid the Company fees in excess of what they earned in interest. According to Mr. Spitzer's complaint, the program exploited lower income, working families who were led to believe the plan presented an excellent opportunity to save for retirement. Mr. Spitzer's complaint further avers that Mr. Ernst was aware of the improper fee practices along with other high-ranking members of management. Revelations concerning the Company's improper practices concerning the Express IRA scheme hammered the Company's stock. By late afternoon trading on March 15, 2006, the Company's price per share was down 5.5% at $20.28; earlier, shares traded as low as $19.80 per share, passing the previous 52-week low of $21.58 set on March 16, 2006. HRB's use of these improper practices served to artificially inflate the Company's reported earnings during the Class Period because the Company's earnings were generated through an improper and unsustainable business practice. Accordingly, the Company's Class Period statements concerning its compliance with applicable laws and regulations were false. Also, the Company, having disclosed the existence of -- and touted the success of -- the Express IRA plan and the RALs program, was obligated to disclose the risks associated with the business, including that members of management, e.g., Mr. Ernst, were aware that these plans (or at least how they were implemented) ran afoul of certain regulations. Failure to disclose this information constituted material omissions, the ultimate disclosure of which harmed the Company's stockholders. If you purchased H&R Block common stock during the Class Period, you may request that the Court appoint you as lead plaintiff by May 16, 2006. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wolf Haldenstein, or other counsel of your choice, to serve as your counsel in this action. Wolf Haldenstein has extensive experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the country. The firm has approximately 60 attorneys in various practice areas; and offices in Chicago, New York City, San Diego, and West Palm Beach. The reputation and expertise of this firm in shareholder and other class litigation has been repeatedly recognized by the courts, which have appointed it to major positions in complex securities multi-district and consolidated litigation. If you wish to discuss this action or have any questions, please contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575-0735 (Gregory M. Nespole, Esq., Gustavo Bruckner, Esq., Paulette S. Fox, Esq., or Derek Behnke), via e-mail at email@example.com or visit our website at http://www.whafh.com. All e-mail correspondence should make reference to HRB.
SOURCE Wolf Haldenstein Adler Freeman & Herz LLP