CPA Malfeasance - 2021 - 3 Cats Media

Publishing > Malfeasance 101 > CPA Malfeasance - 2021

2022/09/22 - Maryland CPA Review Board - Notice of Systemic Problems and specific problems related to an Individual Complaint ( view )

I will likely publish the full complaint and the CPAs response to the board as well, but that would be after resolution is achieved on this outstanding matter.

-------------------------------------------------------

To the surprise of many, a Certified Public Accountant (CPA) may only provide ONE pivotal role for Self-Employed individuals in a way no other related Professional can do at this time.

Other professionals including Bookkeepers, Enrolled Agents (for Tax Filing), Accounting Professionals who are not CPA's, and Tax Attorneys can often time's provide services that fill many of the roles played by CPAs but they can't do one thing.

When a Small Business Person applies for a Mortgage the bank almost always asks for a "Letter from your CPA verifying Self Employment". In many ways it's a bit of an "odd request".

First, there is an assumption that you use a CPA for Taxes when that is not remotely needed for many self employed people. If you don't you are generally fine with every other aspect of life EXCEPT when you go to apply for a loan, and if you don't have the name of a CPA on your tax returns at that time, you are starting off one step further down the qualification ladder. In such case, you may be asked to get an Attestation Letters from a CPA related to the details in your bookkeeping and tax filing, which would be a larger request than the one referenced above. I've worked with a CPA since 2000 or so, and I started doing back then because I learned about the need for support back then the hard way.
Second, given everything about a self-employed's income is found on a Tax Return which was signed by a CPA, why on earth would they need such a letter? It's almost as if they believe 1) a CPA might know more about your background than what is shown on your tax returns which he/she prepared (which might be tax fraud related), and 2) the request seems to be a probe to see if they'll disclose it.
Third, the question often avoids seeking an inquiry into who did the bookkeeping for the records and the level of service the CPA provided for Tax Preparation. There seems to be an assumption made that a "reasonable amount of due diligence" was provided by the CPA during tax preparation, which in fact should have happened, but there's a lot of implied trust in the entire system that could be fully holey if folks wanted it to be that way.

When it comes to CPAs, expect a Crook and Hope for Better...

Some CPA's are as crooked as $3 bills, just like a portion of all other Professionals.

With the Bank's Request, they aren't getting any "guarantees" worth the price of toilet paper in China, BUT without asking for the CPA letters, really gross situations that have little other way to expose themselves may be totally overlooked,

Imagine you are a banker and you got two years worth of tax returns from a potential borrower. By asking for the letter you are asking for 2 things:

You are trying to make in inquiry to confirm in fact the CPA who's name appears on the return was not faked. Obviously if that was faked, the borrower may also fake a letter from them, but it's a good due diligence request.
You are trying to make an inquiry to confirm the CPA who was involved in the returns is still engaged with the client. If not, you might want to ask a few questions and makes sure another one is, just to try to add some credibility to the file.

In the Final Analysis, the standard CPA letter for Self Employed borrowers is about checking off a check-box as one of numerous due diligence requirements. In many ways it means nothing, but in others, the bank would be negligent if they didn't ask for such verification.

It's an appropriate request.
It's one all of us who are self employed and sought lending have likely experienced.
It's one all CPAs should have accommodated 100's of times with a form letter if they have a reasonable book of business.

This is where things get interesting and weird simultaneously...

In the 2002 timeframe I was looking for a new CPA. The first one I had engaged in from 1999 or so was lacking in so many ways. I found a guy who was likely just a few years older than me who had some Big 6 Accounting Experience and had decided to buy into a small firm to get out of the rat race of corporate life. He had a good reputation in the real estate investment community and he had the education and communication protocols of a corporate hustler, which I really appreciated.

At the time I switched, I told him I viewed CPA's as an "insurance policy". I had the ability to do my own taxes or find lower cost providers, but I liked paying the premium for a CPA's support AND I knew I'd need him in the coming years for Bank Letters for loans. He seemed to appreciate my candor and I became his client.

From 2002 to 2008 he wrote 4 bank letters for me. Piece of Cake They were so simple he didn't charge me any extra fees for them. They were a free benefit of paying him to do my Taxes Annually.

I had no other need for those until the winter of 2021. In a face-to-face meeting with him a few months prior to my first need, I gave him a heads up that my significant other (who was also his client) and I were getting jambed into a stressful situation with a primary residence move, and I'd be applying for a few refinances that would stretch us, so we could get into a position to make a purchase that would stretch us. I told him about the fact we were targeting Lines of Credit in First Position on Rental properties which are extremely difficult to find and secure and I told him I fully expected to be needing the obligatory bank letters when they were needed. He acknowledged his ability to help with half a breath, as expected.

Then it happened.

In December 2021 I sent him an email requesting the obligatory Bank Letter he had been told I'd be needing months prior. It should have been a THREE email volley.

I ask for the Letter.
He returns a copy of the 3-4 sentence letter he wrote over a decade prior with a change of date and some minor modifications.
I reply with a thanks.

Only it didn't happen that way at all.

He sent back a strange response indicating he couldn't write attestation letters in accordance with what I had presented (which was exactly what i'd presented numerous times prior and mentioned to him a few months prior). I volleyed the email back trying to get his attention a little. It seemed apparent his work load or life must have confused my request with something else he had going on as a busy CPA.

Surely that would work, right? We all have tough days, right? Except it didn't.

He replied back with a curt response and a link for a document with an unrelated level of attestation concerns from an industry rag, and a suggestion i consume it for my "reading pleasure".

It takes TWO to tango and I'm not into THREESOMES...

I was HOT, but I had to keep my COOL until I worked through the problem.

We had spent 6-8 weeks in a very tough and close underwriting process. We had finally gotten the conditional approval and this letter was just for a check-mark on the application. Nothing more. They had used my Taxes for my income calculations and now they just wanted to make sure I could produce a simple letter indicating my relationship with my CPA was still on-going and somehow, after 20 years of a reasonably decent working relationship my CPA was fully off the Reservation.

I called him on the phone. I prefer to do business all in writing. When he got on the phone I was able to snap him out of the world he was in a little. As he started spouting off projections unrelated to my request, I asked him to slow down and simply read my email again and the EXACT WORDS the bank provided for my request. I could hear the wheels grind to a far slower revolution when he read the request again, but unfortunately one of his lesser qualities is a complete lack to apologize for saying or doing anything wrong. I had learned to work around that years prior.

We got off the phone. Things seemed to be almost square. I sent him an email documenting the call and asking him to provide a simple letter (just as he had done numerous times prior). I indicated if that wasn't sufficient for some reason, I'd then come back to him and ask for a greater level of attestation service with fees associated.

He replied with a letter attached. I opened it and was floored. The bottom 1/3 of the page contained the text I'd have expected. The top 2/3s read like a gross disclaimer with overtones that would indicate my records may or may not have been worth the bits that were used to store them.

I was livid and he earned a mark. His behavior was not going to go without one hell of a crosscheck, but it was far too jammed up a the time to put the proper energy into it that he had earned.

I submitter the letter to the Bank Underwriter as he wrote it. I told her briefly about my encounter with him and my surprise and disappointment with the way the letter was written. I had developed a good report with her and she knew I knew my bookkeeping and accounting very well. She accepted the letter without question and we moved on to close that loan. They were only ONE of TWO lenders in the COUNTRY I could find to do the exact type of loan I was looking for, and the other had already fallen on their face by allowing a Loan Officer unlicensed in Maryland to make illogical decisions in the underwriting process.

My partner and I had gotten through the first eye-of-a-needle by the hair on our teeth. We had at least one if not two more to go and my CPA was basically MIA.

Several weeks later my CPA followed up to see how the loan closed out. He had indicated that NONE of his self employed clients were getting loans approved. With the support like he provided it didn't surprise me at all, and I wondered why on Earth it was surprising him.

I had time to vent on him a little and I took full advantage of it. I needed to see if whatever was affecting him had passed or if I should expect more of the same moving forward, in which case I needed to find a new CPA, and fast. I sent him a modified copy of the letter he wrote. I moved my information back to the top, I moved his information to the bottom and labeled it "Disclaimer" while making very minor changes that were appropriate given the fact I did provide him with Balance Sheets to cross check my income statements. What should have been a quick response saying "sure I can do that", wasn't. Several days later I had to follow up and he said he was still reviewing it. Eventually he came back and said "We can work with this".

WE? Who the HELL is WE?

I had worked with him for 20 years. As far as I knew, he was one of the two principals in his firm and I had NEVER spoken to anyone else in 20 years about my business with anyone other than him

I sent him an explicative filled notice that my partner and I would need to seek out a new CPA.
I made a very clear and concise request for any and all depreciation worksheets and any other documentation which we would need to move on to another CPA

In the wheee hours of the following morning my significant other got an email from him with depreciation tables for her rental. I got an email from him around the same time but it had no content in the body of the email and nothing attached.

I replied indicating I had gotten a blank email and I asked for my documents a second time. . I got no response back.

I waited a few days and sent another email requesting my docs. I copied my Attorney on that one. I got no response back.

The Energetic Violation

I was forced to start my search for another CPA without the luxury of being able to sa

"I've been with a CPA for 20 years. We've come to a parting of the ways. He's provided me with all the worksheets and documents needed to round out my tax return information and I'd like to discuss doing business with you. "

Instead I was forced to say

"I've been with a CPA for 20 years. We've come to a parting of the ways. Unfortunately request for my supporting material have been sent to him and he has not complied with those requests. I have some older depreciation numbers which may or may not be everything you need there and I don't know if I'm missing anything else. "

The difference between those two intros to a new CPA as Tax Season is ramping up is significant.

By having to start with the second one, the CPA's were instantly weary of me.

They know that most/all CPAs are bound by an ethical and legal obligations to turn over worksheets and documents to a client when requested. They know the only time they may not be obligated to do so is if there is a bill outstanding. Thus, they listened to me and thought I'd stiffed my CPA.

NOBODY DESERVES TO END A RELATIONSHIP WITH A CPA WITHOUT GETTING ALL DOCUMENTS DUE THEM AND A CONFIRMATION MESSAGE THAT THAT SAYS THEY HAVE PROVIDED ALL I SHOULD HAVE NEEDED TO MOVE ON TO ANOTHER CPA, Jeff...

Follow-up with the CPA and Complaint with Maryland DLLR

I had several false starts with new CPAs. I was jammed because we were looking to buy a home and refinance and we were being stretched to the max, such that every miserable little penny I had earned needed to count.

After we closed on a home and secured another refinance for another Line of Credit in First on another investment property, we had closed three out of three loans. Not bad considering my CPA had indicated none of his self employed clients could close one, and by that time I had built up a healthy bone to pick.

I sent him an extremely long and detailed DEMAND document outlining our experience and his behavior. In it I sought an explanation for the behavior and I sought to obtain the documents he had failed to provide and I sought to rule out the idea I may have been specifically targeted as opposed to a life management problem of his own.

He failed to respond.

I sent the same exact same document with a cover letter to the Maryland DLLR. They responded in a timely manner and my complaint had enough merit they forced a response from him.

The eventually replied indicating they did not find he had committed any crimes worthy of prosecution and they were closing the complaint. (there were concerns in the letter related to intentional sabotage).

I replied indicating I wouldn't have expected them to have found an criminal acts unless he had admitted to something (which was very unlikely). Then I asked who enforced ethics complaints. I was very surprised they didn't at least sanction him for failure to provide documents upon termination of a relationship as is required by their Professional Code of Conduct.

To my confusion and surprise, they replied back indicating they were in fact the group who would also enforce ethics violations and they asked if I wanted their decision to close the complaint to be reconsidered.

??? What the H-ll ??? Really ??? That didn't sit well.

I zeroed in on the behavior they should have been able to see from a mile away. I indicated I had made a request to terminate my relationship with him and never received documents that were due. and I had made 3 (actually 4) attempts to obtain those.

I acknowledged the fact that in the Scope of Life, and the complaints they likely fielded this might be tiny, but it was a big deal to me and hopefully they understood how it could be a big deal to others who might seek out his services.

The Maryland DLLR Director for this program agreed to revisit that portion of the complaint.

Under no circumstances should they have attempted to close out that complaint without having explained their position on a total lack of communication from the CPA. The behavior was outlined as being problematic from the get go. It was simple to analyze and unless he provided false information back, which they should have conveyed to me as a cross check, it was black and white.

This CPA's behavior should be publicly and appropriately available in the Maryland DLLR system for others to consider if they also have problems with him.

When the replied indicating they weren't reopening the case with no additional information on the information he had provided them I was unhappy (to say the least). I demanded they provide his response documents so I could see what they had seen. When I saw them I was shocked.

For the rest o the story, see the Response documents at the top of the page.

CPA Details

The CPA involved in this matter was Jeff Stoller of Baltimore Maryland.
  https://www.linkedin.com/in/jeffrey-stoller-18666430/
  https://goodwichstoller.com/

His Firm was Goodwich Stoller and Associates although now he seems to be going by Stoller and Associates, PA.

Part of the complaint to DLLR was a procedural. He seems to have changed firm names right as the craziness I experienced transpired. He did that with no notice to us as clients. His email domain changed to the new name but his website is still related to the older name. As of 5/21/2022 you can see the confusion on his linked in profile too. While this is all minor in the scope of life, my contracting and real estate licenses have very stringent requirements for proper company name presentation and his current scatter seems a bit odd although trivial to most.

I worked with Jeff for 20 years. About every 5 years we would have some type of stressful communication issue. I thought of moving on several times but stayed each time. There are others who I referred to him. Some were happy and I presume they are still with him. There is one that I know of who got into an Audit and felt like Jeff left him standing to fend for himself when Jeff himself had approved of all expenses claimed at time of tax filing (as I understand it). I know he was able to move on and get someone to provide him with straightforward support on the matter. I went through my one and only Audit with Jeff. I found him to be very helpful with that but I have a pretty high degree of bookkeeping an accounting understanding.

As I indicated in the article. Jeff doesn't like to admit mistakes.

This seems like something he should have taken care of better, but so does my situation, so it's not an isolated event.

If only others had spoken out when they had bad experiences with Jeff, maybe we'd all could have moved on prior.

The Screen shots were taken 5/21/2022. His business name change seemed to transpire in the fall of 2020 or so. Seems he's still suffering from the confusion of it all. I can imagine that might last a while too.

Industry Insiders talking about problems with their peers...

Soon I'll publish a little snippet about industry insiders expressing concern for their peers and the health of their own industry as a result. I'd say this example just provided will do nicely for a case study on dysfunction.

The ZAP Accounting Software Connection...

This article has been sponsored by ZAP Accounting Software. ZAP Accounting Software is the worlds first automated double entry booking system in a spreadsheet platform. "We" are the fist in 8 billion to publish one and it''ll be very tough for others to do it without copywrite problems.

The only CPA who ever laid eyes on it before it rolled out in 2020 with a fully functional Balance Sheet was Jeff Stoller. He was also the only CPA who knew I had been working on an Intuit disruptor since shortly after we met in 2002.

He got a guided tour of the final product that day I went to his office and saw him face-to-face in 2020. During that meeting I revealed to him that it was my belief the Accounting Curriculum in college that he and I had consumed was a brainwashing system and that it could be realized by anyone who looked at the backend of this software. The simplicity of it all is revealed easily.

It is something that could have and should have been developed and published in the 1980s. As to why it wasn't published then nor after 1 million or more CPAs had been crowned since then is still a Mystery. No Mechanical Engineer should have had to figure this out. This was a CPAs job for sure, but they missed it completely. The increased fees for small business complexity seemed to have gotten in the way of a community contribution we all needed desperately.

As I was leaving his office that day, I sensed he had been a bit disoriented. Everything he thought he knew about the challenges of Bookkeeping Software had been gently yanked from under him. I had hoped he'd spend a little time exploring a system that could benefit many he rubbed elbows with, but realized the system created a direct threat to many in his industry.

I was disappointed when he was unable to script that simple letter for me as he had done numerous times over a decade prior. To this day I don't know who the "we" was he was referring to. I also doubt we'll ever know if that letter writing problem was actually an attempt to disrupt us commercially or just the result of the confusion spun with COVID Season kickoff and a new game of commercial fun getting under way.

https://www.zap-accounting-software.com/