Her taxes were filed, but instead of receiving the proper tax forms, she had to ask the broker for them (they are usually automatically sent in February). After a lengthy discussion as to why they had not been sent, the documents were hastily generated, but the documents seemed as if they had been created on someone’s home computer. The stockbroker has stopped answering her calls. What can we do?

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Renee6, with today's technology, when one files IRS Income Taxes, an accountant or if your friend uses Turbo Tax, said information on profits and lost from stock sales, and for dividends can be automatically downloaded via the stockbrokerage house. It is all auto filled onto the IRS tax forms. Thus less need for those 1099's.

Monthly I still get paper copies from my stockbrokerage house even though they are always trying to get me to go paperless. I like to keep end of the month hard copies of the financials to compare month to month. Does your friend do this? Or is she relying on her Broker to manage everything?

Is your friend using a broker who gets a percentage of the buying/selling of stock? That could be why you see thousands of dollars going to the Broker. My Dad had a Broker who would buy/sell stock for him and charge Dad a percentage. That got pretty expensive.

I have all my stock in a brokerage where I do my own buying and selling for a few dollars for each buy/sell. But then again, I was the kid in high school who had a subscription to the Wall Street Journal :P

Anyway, food for thought.
Helpful Answer (2)

Renee, more information would be helpful.

1.   Who really filed her taxes, this time and in the past?   Her broker?  An accountant?   Does she have past tax forms, AS filed?   If not, she can get them from the IRS, but whoever prepared them should have given her an original to sign, and copies to keep.

2.   Or are you stating that the stockbroker didn't provide the necessary data for her to file?

3.   What factors led you to believe someone's home computer was used for the documents?   

4.   How long has she used this broker, and is he/she affiliated with a reputable company?    I'm not very familiar with quals, but I think a Series 7 license is required for a stock broker.    Someone else know??

5.   What specifically makes you suspect scamming?   Is data available for delineate the stocks, no. of shares including those that may have been sold, etc.?

To proceed with filing charges and/or recovery of funds:

6.    First you need to define/identify what you think the broker has done, what should have been done, what supporting documentation exists, and how the potential scam was undertaken.  

It's not unheard of for brokers to do this, but it's a serious accusation and requires sound proof before making accusations.  

7.   You might want to consider hiring a forensic accountant, or attorney with IRS experience, as it may be that if your friend was cheated, so was the IRS.    It all depends on how the funds were misappropriated and whether or not taxes were paid on the right amounts.  

8.    I would also ask the police how to proceed, once you have the supporting data.   I'm not sure specifically how white collar crimes are prosecuted, especially since if the IRS was defrauded as well, criminal action would probably be at the federal level.   It may be that both private litigation as well as police/prosecutor involvement are appropriate.

I've only known of a few attorneys who handled white collar crimes, and there were always "Chinese walls" erected around those working on the cases.   If you or your friend do need to hire counsel for civil action,  I would think a white collar criminal, or tax attorney would be the most appropriate.  You want someone who's up to speed on these very specific issues.  

GuestShopAdmin is an accountant and can give you more insight on this. I've P'M'ed her.
Helpful Answer (1)

Yes, you will need a lawyer. He will be legally able to get an accounting. If the stockbroker is not forthcoming, he could lose his license to buy and sell stock. I would not wait.
Helpful Answer (1)

Renee6, having cheap-looking documents is one thing, but can you provide any proof that money has gone missing or was mishandled? Do you have financial PoA for your LO? Can you check the accounts online or call the investment houses directly? You will need to have you LO on the phone with you and LO will need to provide proof (they may ask for his address, phone, SSN, etc). If not, you may need to contact an elder law specialist. There are others on this site who are actual attorneys and may provide more specific guidance.
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