Houston company charged with scamming

ROUND ROCK, TEXAS (KXAN) - A Houston-based company has been charged with scamming nearly 1,000 customers throughout the country, including some right here in the Austin area.

The Texas Attorney General's office said that in the midst of the economic downturn, TaxMasters used a nationwide marketing campaign to target distressed taxpayers who needed help dealing with the Internal Revenue Service.

Instead of helping them, they hurt them, the AG's office said.

Log on to TaxMasters website and you will hear Chief executive Officer Patrick Cox ask, "Are you being audited? We'll solve your tax problems. We'll get between you and the IRS."

Watch his commercial here. Story continues below.

That was Thursday  morning. A search on Thursday afternoon featured TaxMasters on several websites, but none featuring Cox. 

Attorney General Greg Abbott said TaxMasters preyed on hundreds, including Round Rock business owner Danny Contreras.

"I didn’t do enough research prior, so I was taking whatever I could get to help me," said Contreras.

Thursday, Abbott charged TaxMasters, Inc., and Patrick Cox, with multiple violations. See the 122-page temporary restraining order here .

Contreras contacted TaxMasters website and was promised they would handle everything.

"I pay them the money, and that was supposed to kick start the process - and it did at first,” said Contreras.

So, Contreras went back to work as usual and says TaxMasters kept in touch with him for the next couple weeks. Then, more fees.

"To speak with the Internal Revenue Service and continue the process was another fee, then another,” said Contreras. “Anyway the fees ended up totalling $9,000 or $10,000."

If Contreras did not keep paying them more he said they told him they would keep his money and not do his taxes.

On Thursday, the Texas Attorney General's requested a temporary restraining order against TaxMasters, which would prevent them from legally operating.

Contreras is still out his money and finally went to the Attorney General's Office after he says he realized he was being scammed.

"I am really upset, because the hassle that I had to go through, and the hoops. They levied my bank account took me through all this stress. It would not have happened had I personally went and talked to the IRS,” said Contreras.

The state is seeking penalties up to $20,000 from TaxMasters for each violation.