A Virginia resident has filed a class action lawsuit against a Chattanooga accounting firm, alleging accounting malpractice and citing damages resulting from the sudden closure of the accounting firm just days before a tax filing deadline.
Plaintiff Angel Colloku filed a class action lawsuit in Cook County Circuit Court against Croft & Frost PLLC; Paul Croft; and Jonathan Frost, citing allegations of accounting malpractice and negligence.
According to court documents, Croft & Frost is a Chattanooga accounting firm with a Chicago forum in its client engagement agreements. Starting as J.D. Frost & Co. in 2010, the firm allegedly grew rapidly, serving thousands of customers by the summer of 2023.
CF allegedly began to flounder financially in December 2022. Colloku's lawsuit attributes CF's financial troubles to poor investments and extravagant lifestyles of their principals, Croft and Frost. The firm eventually shut down and terminated all of their employees in September 2023.
Colloku's complaint alleges that the principals of CF, despite making extravagant promises, failed to deliver and engaged in questionable financial practices to keep its doors open. Instead of warning clients about the firm's precarious situation, the defendants allegedly redirected resources to stay afloat, leaving thousands of customers vulnerable. The firm's sudden closure just days before a tax filing deadline is claimed to have negatively impacted all customers due to the absence of an exit strategy for the struggling firm.
According to the complaint, on Dec. 9, 2022, Colloku engaged the firm for the preparation of federal and state income tax filings for the 2022 calendar year for himself, his family and his three businesses. He claims that on March 8, 2023, CF informed him that they had requested extensions for the filing of the 2022 tax filings. The tax filings were never completed as promised and became overdue.
Colloku claims that the defendants failed in their duty of care and professional obligations. Croft & Frost customers collectively suffered economic losses exceeding $4 million according to the lawsuit.
The complaint cites violations of professional conduct standards, including the AICPA Code of Professional Conduct and the International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants. The plaintiff argues that CF, by allegedly taking on more business than it could handle, not paying its employees, and abruptly closing just before a tax deadline, allegedly breached its duty of care to all customers. The complaint also alleges CF was negligent in planning and supervising its activities leading up to the firm's closure, alleging a failure to implement a plan to notify customers in a timely manner.
Colloku is seeking certification of his class action lawsuit to represent all customers of CF at the time of its shutdown. He is seeking actual and compensatory damages exceeding $4 million, plus attorneys' fees and other relief.
The plaintiff is represented by attorneys Alexander Loftus and Ross Good, of Loftus & Eisenberg LTD, in Chicago.