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If you Google him, you will find that Hank Kuehne is “an American former U.S. Amateur champion and professional golfer who enjoyed some success on the PGA Tour.”  If you scroll down you will even see that he was, until recently, engaged to Venus Williams. Page down far enough and you will see that he apparently dated Paula Abdul before Venus.  Seems great so far . . . golf and women, two wonderful things.  Well . . . you have to page down pretty far, and it is well hidden but, if you persevere, you will find an example of what not to do as a financial advisor, tax preparer, and CPA.  This is exactly how you make a mountain out of a molehill.
                 
It seems that Hank Keuhne has sued his accountant[i]in the Federal District Court for the Southern District of Florida.  This case appears to be a classic example of what not to do and why not to cover it up. According to the Pleadings in the case, the accountant, Thomas J. Bertsch, held himself out as an expert in local, state and federal taxes and agreed to prepare Mr. Kuehne’s tax returns and provide him with financial advice.  However, despite inquiring as to the status of his taxes, it was not until Mr. Kuehne fired Mr. Bertsch in 2011 that he learned for the first time that he owed tax liabilities and penalties to the IRS for the years 2006 and 2007.[ii]  It was also at that time that Mr. Kuehne learned that Mr. Bertsch had made an offer in compromise to the IRS to settle these debts for $90,000.  However, the IRS countered with a demand in settlement for $342,715.  This reduced demand lapsed because Mr. Bertsch failed to respond to the IRS.
                 
This is a classic example of a simple, albeit large, tax error that was compounded by the failure to promptly reveal and resolve the matter.  If this matter was properly handled in conjunction with his attorney and the insurance company, the result would have been much different.  However, I suspect that since Mr. Bertsch failed to advise his client, he also failed to advise his employer, his attorney, or his insurance company.
                 
Now instead of simply being potentially responsible for the interest and penalties Mr. Bertsch is faced with a lawsuit in which he is facing fraud for his improperly claimed expertise, fraud for the cover up, and punitive damages, in addition to the now increased interest and penalties. Further, there is a possibility that the insurance company might deny coverage in light of the cover up and delayed reporting.  In addition to all that he now has an ethics violation and licensing violation that may cost him whatever licenses he might hold.
                 
I will assume that his supervisors and the owners of the company did not know what was happening.  Perhaps there should have been greater controls.  Who opens the mail?  Perhaps IRS notices should be reported to the responsible accountant and the supervisor or some other owner.  In any event, they must be concerned about the suit and coverage issues as the firm is a named defendant to several of the counts in the Complaint.
                 
When faced with this situation you should contact your attorney immediately. Your attorney can assist you in navigating your ethic and legal duties regarding reporting both to your insurance carrier as well as your client.  When handled properly from the beginning you can prevent the molehill  from ever becoming a mountain!
                 
If you have any questions or I can be of any assistance, please contact me at jmcguire@c-wlaw.com.
 
[i] Mr Bertsch does not appear to be or have been a CPA, but I have been unable to verify this.
 
[ii]There is also an allegation that Mr. Kuehne owes California state taxes over some gambling income.

 
 
The noisy withdrawal has long been a tool for attorneys in balancing their legal and ethical responsibilities with their
knowledge of a client’s improper activity.  It has also become a common issue for CPAs.  The basic concept is that the professional having become aware of a client’s improper activity (such as employee theft) withdraws from the representation and notifies the proper authority of their withdrawal.  The withdrawal is done in such a way that the authorities are alerted to the fact that there may be a problem. If the client has caused the professional to give their professional opinion on some false information or pretenses the withdrawal will often be accompanied by a withdrawal of the opinion.

This is most often noticed in large public company settings because of the public scrutiny that can essentially arise in almost any situation.  Further, the Securities Exchange Commission (“SEC”), particularly through the Sarbanes-Oxley Act of 2002 [“SOX”],has requirements, in certain circumstances, for a noisy withdraw.  The SEC even has an Office of the Whistleblower.  http://www.sec.gov/whistleblower

SOX requires that attorneys report “evidence of a material violation of securities law or breach of fiduciary duty” to the chief legal counsel or chief executive officer of the company.   If there is no appropriate response then report to the board of directors or appropriate committee of the board of directors.   This is referred to as “up the ladder”reporting.  In addition, it is both a good practice and requirement to attempt to resolve the issues with the client before making a noisy withdrawal.  
 
SOX requires a noisy withdrawal by an outside attorney if the company has not responded appropriately, the violation is ongoing or about to occur, and the likely result will be substantial injury to the investors.  In this situation, the attorney has one day to withdraw, indicating that the withdrawal was “based on professional considerations,” and must disaffirm any statements the attorney has made to the SEC which may be false or misleading.  In house attorneys must disaffirm but are not required to resign their employment.  
 
An issue arises as to how one disaffirms a statement and what confidential client information may be disclosed.  The SEC permits the disclosure of confidential information without the client’s consent. However, this rule is in conflict with various state rules.  The important thing is to make the withdrawal and any disaffirmance while revealing as little confidential information as possible. It is quite possible that the intent can be accomplished without revealing any confidential information.


The SEC has expanded the requirement for noisy withdrawal to CPAs in certain circumstances as well. Without getting into all the details, investment advisors, who are qualified custodians, must have an audit. The auditor is required to notify the SEC within one business day of any material discrepancies and make a noisy withdrawal.

There are other circumstances in which a noisy withdrawal would likely be appropriate for both attorneys and accountants, and following the SEC rules would go a long way to demonstrate that an accountant or attorney handled the matter properly.  The law in this area is still developing so if you find yourself in this situation, handle it very carefully.

I can be contacted at jmcguire@c-wlaw.com.