Hapeville official leaves trail of fraud allegations, ruined lives

Hapeville City Councilwoman Ruth Barr faces a state revenue investigation for tax returns involving more than 7,700 taxpayers. BEN GRAY / BGRAY@AJC.COM

Hapeville City Councilwoman Ruth Barr faces a state revenue investigation for tax returns involving more than 7,700 taxpayers. BEN GRAY / BGRAY@AJC.COM

Editor's note: Georgia stands to collect more than $6 million from taxpayers whose returns may have been inflated by a Hapeville City Councilwoman who operated a tax preparers business. Revenue officials investigated and found 8,000 suspicious returns that Ruth Barr had handled, totaling $6.4 million. In December, the revenue department began contacting taxpayers who could owe back taxes because of returns that were prepared improperly.

Original story: A Hapeville city councilwoman facing trial for stealing more than $100,000 has a history of preying on her tax clients and is now under investigation by the state for preparing thousands of suspicious tax returns, an Atlanta Journal-Constitution/Channel 2 Action News investigation has found.

Last Friday, after AJC and Channel 2 reporters presented their findings to the state Department of Revenue, agents searched Ruth Barr’s offices in Hapeville and hauled away a truckload of boxes and file cabinets containing thousands of tax returns. The search warrant alleged forgery, false statements and tax fraud.

State revenue officials say the case is one of the largest tax preparation fraud investigations they’ve ever undertaken and is a stark example of why Georgians take risks when tax preparers handle their returns.

Georgia requires no training or certification of tax preparers and the industry is prone to fraud.

“It’s a buyer-beware situation today and it would be important that taxpayers do their homework before they engage with a tax preparer,” said Lynne Riley, the state’s revenue commissioner. “The state of Georgia currently has no requirements for someone to perform tax preparation services.”

Over the past four years, B&B Accounting and Tax Services, Barr’s company, has prepared more than 20,000 tax returns. When state revenue officials audited a sample of them last week, they said 80 percent appeared suspicious.

Georgia Department of Revenue agents haul away a file cabinet full of tax returns from B & B Accounting and Tax Services in Hapeville on May 6, 2016. The agency is investigating the business operated by Ruth Barr, a member of the Hapeville City Council.


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Now, thousands of Barr’s clients face potential tax penalties and back interest because of her actions. The state of Georgia may also have lost a significant amount of tax money.

“It could be in the millions of dollars,” said Josh Waites, the revenue department’s chief investigator. “You’re talking, with 4,000 customers a year, the numbers add up quick….She’s been doing this a long time and the pattern that she’s using is kind of typical of a preparer that’s using fraudulent means to obtain large refunds for their clients.”

But Barr’s alleged fraud appears to reach beyond her preparation of tax returns and includes fraudulent investment proposals or other schemes where she stole from clients during vulnerable moments of personal crisis, according to interviews and court records. The earliest evidence of questionable conduct uncovered in the AJC/Channel 2 investigation dates to 2009.

In 2014, a Fulton County Superior Court judge found Barr and her business made “fraudulent misrepresentations” to convince a client, Nongyao DeLong Key, who had recently lost her ex-husband, to loan her $182,354 of her life savings. Court records show Barr used the funds for personal and professional use and DeLong Key is still struggling to recover the money.

David Bass and his daughter, Leslie Bass-Tovar. Bass turned over his $109,000 retirement account to Ruth Barr, his sister-in-law, to invest in real estate. Bank records show she spent the money within a month and never invested it. That dispute is now part of a criminal case schedule to go to trial in May in Gwinnett County. SPECIAL

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Last November, the day after Barr was elected to Hapeville’s City Council, a Gwinnett County grand jury indicted her for theft in a separate case involving her sister’s family. Barr convinced her sickly brother-in-law to hand over his entire $109,409 retirement nest egg to invest in real estate. But within a month she had spent all the money for personal and business expenses, bank records show.

The brother-in-law, David Bass, died eight weeks after learning the money was stolen. His final weeks were filled with stress because of the financial uncertainty facing his family, said Leslie Bass-Tovar, Barr’s niece, who said Barr prepared the family’s taxes.

“He worked very hard through his life to try to provide for his family and for it to be gone at the snap of a finger was devastating to all of us,” said Bass-Tovar. “She has hurt my family more than she’ll ever, ever know.”

Barr, 61, declined to comment about the allegations against her or the complaints by her tax clients. She also denied any wrongdoing in the dispute with her sister’s family.

“That is a family matter,” she said. “It’s a family that got upset over something that shouldn’t have been upset over.”

Nongyao DeLong Key sued Ruth Barr over a $182,000 loan she didn’t repay. Years later, she is still trying to collect the money that she won in a court judgment. WSB-TV

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A loan, then silence

At age 58, DeLong Key would like to be eyeing retirement. But such a goal, at least for now, is no longer possible.

Barr prepared DeLong Key’s taxes for 30 years and approached her in 2011, shortly after DeLong Key’s ex-husband died. Barr suggested an investment in property using a joint bank account DeLong Key had shared with her ex-husband, DeLong Key said.

When DeLong Key told Barr she wasn’t interested in investing, Barr asked for a loan to buy a building. DeLong Key viewed Barr as a successful businesswoman who she thought she knew after three decades of doing her taxes. She loaned Barr $182,354.

“It’s like your doctor, you trust them,” she said.

DeLong Key received a few payments from Barr, but then nothing. Barr didn’t return phone calls, emails or letters. DeLong Key even enlisted an online collection agency.

“Never got a response,” she said.

In November 2012, she filed a lawsuit in Fulton County court alleging fraud and breach of fiduciary duty. In a sworn deposition in the case, Barr acknowledged she never bought the building and that she used the money to buy office equipment and to pay old bills. She said she promised to repay DeLong Key and abruptly walked out of the deposition before DeLong Key’s attorney was finished questioning her.

In October 2014, a judge issued a $237,600 default fraud judgment against Barr and B&B Accounting, finding that she and the company made “fraudulent misrepresentations which they knew were false” with the intention of getting DeLong Key “to give them her money,” court records show.

A year and a half after that judgment, DeLong Key still hasn’t received any money from Barr. Her current attorney hasn’t even been able to depose Barr about her financial affairs and why she has ignored the court’s order to repay DeLong Key. In March, he filed a motion to have her found in contempt of court, jailed and ordered to sit for a scheduled deposition that she has skipped twice, records show. A hearing on that motion is scheduled for May 24.

“It’s my whole life savings,” DeLong Key said. “You keep trying to have faith in the system, sooner or later somebody will come and maybe you will get something out of it.”

‘Anyone’ can be a tax preparer

Even though Barr touts her business as accounting and tax services, she is not a licensed accountant. In Georgia, anyone can hang a shingle and start doing people’s taxes. Like 45 other states, Georgia doesn’t require any training or education standards for tax preparers. Riley said she doesn’t know how many tax preparers there are in Georgia.

The lack of standards has harmed consumers and left them exposed as they entrust their personal and financial information to an industry that operates with little oversight, said Chi Chi Wu, a staff attorney with the National Consumer Law Center, which has studied the issue.

“Both incompetence and outright fraud are unfortunately all to common in the tax preparation industry,” Wu said. “Anybody who’s basically over 18 can set up shop to become a tax preparer. They don’t need to have an accounting degree or be part of a training program. When you have that sort of lack of professionalism in a sector it unfortunately breeds a lot of problems.”

In Barr’s case, thousands of her clients could be exposed to potential penalties and back taxes. Barr could face prison time and a $5,000 penalty for each return that was done fraudulently.

An initial state audit found a pattern of “highly questionable” returns that appear to contain bogus deductions meant to jack up the refunds her clients received. The state identified as many as eight in 10 returns prepared by Barr’s company as having possible problems. Several had business expense deductions for cleaning companies, lawn services, janitorial services and other small independent businesses that investigators doubted were real.

“She’s smart,” said Waites, the revenue inspector. “She keeps it kind of middle of the road. There’s not a lot of red flags that pop up with Ruth. That’s how she’s flown under the radar for so long. The more we look at there is definitely a pattern she uses. There are questionable returns.”

Rusty and Jennifer Perkins of Rockmart used Ruth Barr's service to prepare their taxes. Later, an IRS audit notice arrived that informed them that they owed more than $5,000 in back taxes and penalties.


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Unsuspecting couple faces IRS penalties

Rusty and Jennifer Perkins learned the costly lesson of working with Barr when an IRS audit notice arrived last year. Rusty, a Civil War re-enactment hobbyist who lives in Rockmart, had trusted Barr for decades to prepare his taxes.

But when the audit notice arrived Barr resorted to one of her common tactics: She disappeared, according to Perkins.

Rusty said he tried to call, but she never returned his calls. He went by the office and Barr was never there. All the years she was doing his taxes, Perkins had never reviewed Barr’s work and trusted she was doing her job. But during the audit, the Perkins learned that many of the deductions Barr had claimed were unjustified. One in particular stood out: Barr had claimed their Civil War re-enactment trip expenses as a business expense.

Now, the Perkins are faced with more than $5,000 in back taxes and penalties from the IRS, and the possibility of more financial hardship if the audits encompass earlier tax years. That doesn’t even include the state taxes they may owe.

Rusty Perkins filed a complaint against Barr with the Better Business Bureau, which has given B&B Accounting an F grade based on the complaint history against the company. Several customer complaints filed with the bureau detail calls that went unreturned, poor service and incorrect returns.

“Just pulling numbers out of the air and putting them down on somebody’s income taxes and leaving them for the burden later,” Perkins said. “I look back and think how many other people have gotten audits and have been tossed to the side?”

Ruby O’Neal turned to Ruth Barr for tax help after her husband died several years ago. O’Neal said the tax return that Barr prepared didn’t include income she owed and the IRS sent her a bill for back taxes and penalties. The ordeal led her to doubt Barr’s qualifications as a tax preparer. SPECIAL

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‘Please call me, there’s a problem’

Ruby O’Neal was married to her husband, Billy, for 25 years. He always handled the couple’s finances and taxes. After his death in 2009, a friend, who’d been using Barr for his taxes for years, recommended O’Neal turn to Barr for help.

Many of Barr’s clients appear to have found her in this way: those happy with healthy refunds were happy to recommend her, and Barr’s business grew by word of mouth.

At first, everything about O’Neal’s relationship with Barr seemed fine. But in March 2013, the IRS sent O’Neal notice that she owed $1,725 for the previous year — the first of O’Neal’s returns Barr had prepared. She under-reported O’Neal’s modest income by $11,495, records show.

When O’Neal took the notice to B&B’s office in Hapeville, Barr told her not to worry and that she would handle it, according to O’Neal. O’Neal said she paid Barr $3,810 with her credit card to cover the 2011 back taxes as well as the taxes owed for the 2012 tax year. Months later O’Neal, who is 78, received notice that the IRS hadn’t received the money.

“I called and called (Barr),”said O’Neal, who lives in Griffin. “I even went up to visit, knocked on the door, left notes on the door: ‘Please call me, there’s a problem. My tax money hasn’t been paid.’ Nobody would ever answer the door. They wouldn’t return my calls.”

Concerned about facing growing penalties, O’Neal said she eventually sent the IRS payment directly. She reported Barr to her credit card company, which opened a case about the disputed charges, and eventually credited the widow’s account. Months later, Barr’s firm sent the IRS a check to settle O’Neal’s liability, but only after getting the money from her brother-in-law’s retirement account.

O’Neal found Barr untrustworthy and questioned how she could still be operating a tax preparer’s business. The ordeal caused her countless hours of stress and worry.

“I cried and cried and cried,” O’Neal said. “How could anybody treat a senior citizen this way?”