Thomas B. Powell v. State Board of Certified Public Accountants of Louisiana

THOMAS B. POWELL * NO. 2021-CA-0385

VERSUS *
COURT OF APPEAL
STATE BOARD OF *
CERTIFIED PUBLIC FOURTH CIRCUIT
ACCOUNTANTS OF *
LOUISIANA STATE OF LOUISIANA
*******

APPEAL FROM
CIVIL DISTRICT COURT, ORLEANS PARISH
NO. 2020-07878, DIVISION “L”
Honorable Kern A. Reese, Judge
******
Judge Regina Bartholomew-Woods
******
(Court composed of Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins, Judge
Regina Bartholomew-Woods)

JENKINS, J., CONCURS IN THE RESULT

Jason R. Anders
Anders Law Firm
650 Poydras Street, Suite 1400
New Orleans, LA 70130

COUNSEL FOR THOMAS B. POWELL/APPELLANT

Eric Derbes
Bryan J. O'Neill
THE DERBES LAW FIRM, L.L.C.
3027 Ridgelake Dr
Metairie, LA 70002

COUNSEL FOR STATE BOARD OF CERTIFIED PUBLIC
ACCOUNTANTS OF LOUISIANA/APPELLEE

AFFIRMED; ANSWER TO APPEAL DENIED
December 22, 2021

RBW

RML

This administrative case comes before us on judicial review. Plaintiff

Thomas Powell (“Mr. Powell”) filed a petition for review in the Civil District

Court for the Parish of Orleans, seeking review of the final decision of the State

Board of Certified Public Accountants of Louisiana (the “Board”), in which the

Board determined that Mr. Powell was in violation of La. R.S. 37:79, La. R.S.

37:83, and La. Admin. Code Title 46:XIX §1707. After a hearing, the trial court

affirmed the decision of the Board. It is from this affirmation that Mr. Powell now

appeals. For the reasons that follow, we affirm the Board’s decision, as well as

deny the Board’s request to tax costs and award attorneys’ fees.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Thomas Blanchard Powell was certified as a Certified Public Accountant

(“CPA”) on January 30, 1987. Mr. Powell’s license to practice expired on

December 31, 1994. The firm’s permit for the entity “Thomas Blanchard Powell,

CPA,” also expired on December 31, 1994. Mr. Powell neither renewed his

license to practice, nor his firm’s permit. According to the Louisiana Secretary of

State, Mr. Powell registered the company Thomas B. Powell, CPA, Inc., on

February 5, 2002. The last annual report for that company was filed on May 12,

2014.

On January 24, 2019, the Board received a complaint (the “Complaint”)

against Mr. Powell filed by Raymond and Phyllis Loupe (the “Loupes”). The

Complaint alleged that Mr. Powell, through his company, Thomas B. Powell, CPA,

Inc., was hired to prepare and file the Loupes’ 2013, 2014, and 2016 federal and

state personal and business tax returns. The Complaint further alleged that Mr.

Powell failed to file their personal state tax returns and did not include their self-

employment income information (“Schedule C income”) on their personal federal

tax returns, even though the Loupes provided him with that information. The

Complaint states that the Loupes were required to hire another CPA to correct the

returns, owed significant additional tax liability on the unreported income, and

were subject to penalties and interest by the Internal Revenue Service (“IRS”) and

the Louisiana Department of Revenue.

An administrative hearing on the matter was scheduled for July 22, 2020.

Prior to the hearing, Mr. Powell and counsel for the Loupes proposed a consent

order to settle the matter. The proposed consent order was subject to Board

approval; however, after the Board deliberated, it concluded it did not have

2

sufficient information to determine the adequacy of the proposed consent order.

Immediately thereafter, the hearing on the Complaint commenced without

objection by Mr. Powell.

John Morgan, the Board’s investigator, and Mr. Powell testified at the

administrative hearing. Mr. Powell admitted that his license to practice along with

his firm permit for Thomas Blanchard Powell, CPA, Inc., expired December 24,

1994. He admitted that he knew both his license and firm permit had expired and

that he did not renew either one. Mr. Powell testified that, in 2002, he created the

corporation Thomas B. Powell, CPA, Inc. He stated that at the time, he was

working for a physician, preparing tax returns.1 He testified that he created the

company not as a “public accounting firm per se” but “merely as a tax entity.” He

acknowledged that he did not apply for a permit because he knew he could not get

one. Nevertheless, Mr. Powell admitted that the name Thomas B. Powell, CPA,

Inc., appeared on the invoices he sent to the Loupes. When asked about the

invoices and whether a client would reasonably believe that he was a CPA, Mr.

Powell answered in the affirmative. Mr. Powell testified that he did not have a

bank account for Thomas B. Powell, CPA, Inc., and therefore his invoices included

a notation that checks should be made payable to Thomas B. Powell.

Mr. Powell further testified that the email address he used to communicate

with the Loupes was tommycpa@bellsouth.net. He stated that his email address

was created in 2000. He stated that initially he had difficulty creating a unique

1
Mr. Powell indicated that although he prepared the tax returns for the physician, he did not sign
them.

3

identification for his email address and called his service provider for assistance in

setting up his email account. He explained that “cpa” was merely added to

establish an email address with a unique identifier. He testified that

tommycpa@bellsouth.net is the only email address he has ever had, which he used

for both personal and business purposes.

Mr. Powell acknowledged that the Loupes hired him to prepare the federal

and state tax returns for years 2013, 2014, and 2016. He testified that he submitted

prepared federal tax returns which did not include Schedule C income. Mr. Powell

explained he believed there were deductions that the Loupes were entitled to, but

he did not have all the information he needed at the time to support the deductions.

Thus, in order to limit the Loupes’ exposure to penalty fees associated with a late

filing, Mr. Powell knowingly omitted the Schedule C income from the tax returns

with the intention to amend them at a later date once he had the information to

support the deductions. He testified that he knowingly gave the tax returns to the

Loupes to file with the IRS with the omission of the Schedule C income. Mr.

Powell testified that this practice continued for tax years 2013, 2014, and 2016.

Additionally, Mr. Powell admitted that he did not file the Loupes’ state income tax

returns because he knew the federal income tax returns would change once he

amended them to reflect the deductions he believed the Loupes were entitled to.

Mr. Powell testified that the Loupes were aware of the status of their tax returns,

what was included, and what was omitted.

Mr. Powell also admitted to using an IRS Preparer Tax Identification

4

Number (“PTIN”) from 2014 through 2019, despite not timely completing the

competency test or continuing education classes required to maintain a valid PTIN.

After considering the testimony and evidence presented at the hearing, the

Board issued its final decision on August 20, 2020. The Board made the following

determinations: (1) Mr. Powell’s admitted failure to timely prepare the Loupes’

2013, 2014, and 2016 state income tax returns and his failure to include the

Loupes’ Schedule C income on the 2013, 2014, and 2016 federal income tax

returns constituted violations of La. R.S. 37:79(A)(4); (2) Mr. Powell’s continued

use of an invalid IRS PTIN from 2014 through 2019 constituted a violation of La.

R.S. 37:79(A)(7); (3) Mr. Powell’s use of the CPA title in his email address, while

not holding a valid, active Louisiana CPA license constituted a violation of La.

R.S. 37:83(C); and (4) Mr. Powell’s use of the company name Thomas B. Powell,

CPA, Inc., from 2002 through 2017, constituted a violation of La. R.S. 37:83(D).

Thereafter, Mr. Powell filed a petition for review of the Board’s final

decision in the trial court. A hearing on the petition was held, and the trial court

affirmed the Board’s final decision on April 19, 2021. The Board subsequently

filed a motion to tax costs and award attorneys’ fees in conjunction with the trial

court proceeding, which the trial court denied. It is from the trial court’s

affirmation of the Board’s final decision that Mr. Powell files the instant appeal.

STANDARD OF REVIEW

“[A] person who is aggrieved by a final decision or order in an adjudication

proceeding is entitled to judicial review” pursuant to the Administrative Procedure

5

Act. La. R.S. 49:964(A)(1). The scope of our appellate review is governed by the

same provisions as those for the trial court. See La. Const. art. 5, §10(B); La. R.S.

49:964(G). “The court may affirm the decision of the agency or remand the case

for further proceedings.” Id. In Davis v. State Bd. of Certified Pub. Accts. of La.,

13-0514 (La. App. 4 Cir. 12/18/13), 131 So.3d 391, this Court explained:

A reviewing court may reverse or modify an agency’s
findings, inferences, conclusions, or decisions “if
substantial rights of the appellant have been prejudiced”
because the agency’s findings, inferences, conclusions, or
decisions are “[n]ot supported and sustainable by a
preponderance of evidence as determined by the
reviewing court.” La. R.S. 49:964 G(6) (emphasis
added). “In the application of this rule, the court shall
make its own determination and conclusions of fact by a
preponderance of the evidence based upon its own
evaluation of the record reviewed in its entirety upon
judicial review.” Ibid. (emphasis added). But also, “[i]n
the application of this rule, where the agency has the
opportunity to judge the credibility of witnesses by first-
hand observation of the demeanor on the witness stand
and the reviewing court does not, due regard shall be
given to the agency’s determination of credibility issues.”
Ibid. (emphasis added). We also give deference to agency
determinations of questions of law and mixed questions
of law and fact which the agency has been charged to
answer as well as the judgments of agencies upon the
professional behavior of a member of the profession
which the agency is charged to oversee.

Id., 13-0514, p. 5-6, 131 So.3d at 395. We further noted that “[a] reviewing court

may also reverse or modify an adjudication if the agency’s holding was ‘arbitrary

or capricious or characterized by abuse of discretion or clearly unwarranted

exercise of discretion.’” Id., 13-0514, p. 6, 131 So.3d at 395 (quoting La. R.S.

49:964(G)). Finally, a reviewing court may reverse or modify the agency’s

findings if:

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substantial rights of the appellant have been prejudiced
because the agency’s findings are (1) in violation of
constitutional or statutory provisions, (2) in excess of the
statutory authority of the agency, (3) made upon unlawful
procedure, or (4) affected by other error of law. See La.
R.S. 49:964 G(1)-(4). These grounds present questions of
law, and are reviewed de novo—without any deference to
the agency or the district court as the first court of
review. See Carpenter, 05-1904[,] p. 5, 944 So.2d at 608.

Id., 13-0514, p. 6-7, 131 So.3d at 395-96.

DISCUSSION

On judicial review with this Court, Mr. Powell raises two assigned errors:

(1) his due process rights were violated because he was not provided an impartial

decision maker as part of the administrative process; and (2) the Board’s finding of

alleged fraud is not supported by the evidence. We first address Mr. Powell’s due

process claim.

Due Process

Mr. Powell argues that his due process rights were violated when he was

required to submit to a full hearing immediately after proposing a consent order

where he acknowledged certain adjudicative facts and violations before the same

Board. Mr. Powell claims his rights were substantially prejudiced because the

Board had advanced knowledge of the adjudicative facts, and as a result, the Board

was no longer impartial.

La. R.S. 49:960(B) states in pertinent part:

[a]ny party may request the disqualification of a
subordinate deciding officer or agency member, on the
ground of his inability to give a fair and impartial
hearing, by filing an affidavit, promptly upon discovery
of the alleged disqualification, stating with particularity

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the grounds upon which it is claimed that a fair and
impartial hearing cannot be accorded.

Id. (Emphasis added). A review of the record demonstrates that neither Mr.

Powell, nor his counsel sought recusal or objected to any of the Board members

presiding over his case. Similarly, Mr. Powell did not waive or object to the

hearing taking place. Mr. Powell did not raise his concerns regarding the Board’s

alleged bias at any point during or prior to the commencement of the full hearing,

nor did Mr. Powell address the matter prior to the issuance of the Board’s final

decision. Mr. Powell raised the issue of impartiality for the first time on judicial

review. In accordance with La. R.S. 49:960(B), Mr. Powell failed to promptly

raise the constitutional issue. See Kelley Blue Book Co., Inc. v. La. Motor Veh.

Comm., 16-281, p. 16 (La. App. 5 Cir. 12/7/16), 204 So.3d 1139, 1151.

Even if Mr. Powell properly raised the constitutional issue, we find his

argument lacks merit. “[A] strong presumption of honesty and integrity exists in

those serving as adjudicators.” Kelley Blue Book Co., 16-281, p. 16, 204 So.3d at

1151-52 (citing Butler v. Dep’t of Pub. Safety & Corr., 609 So.2d 790, 793 (La.

1992)). In Butler, the Louisiana Supreme Court explained:

An impartial decisionmaker is essential to an
administrative adjudication that comports with due
process, even if de novo review is available. Withrow v.
Larkin, 421 U.S. 35, 95 S.Ct. 1456, 43 L.Ed.2d 712
(1975); Gibson v. Berryhill, 411 U.S. 564, 93 S.Ct. 1689,
36 L.Ed.2d 488 (1973); Ward v. Village of Monroeville,
Ohio, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972);
Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25
L.Ed.2d 287 (1970); Matter of Rollins Environ. Services,
Inc., 481 So.2d 113 (La.1985); Wilson v. City of New
Orleans, 479 So.2d 891 (La.1985). To this end, the state
Administrative Procedure Act attempts to prevent
partiality or bias in adjudicative settings by prohibiting

8

ex parte consultations and requiring recusal of
subordinate deciding officers or agency members from
proceedings in which they cannot accord a fair and
impartial hearing or consideration. La. R.S. 49:960
(1987). See also 5 U.S.C. §§ 556–57 (1977 & Supp.
1992). The federal Administrative Procedure Act
similarly attempts to avoid potential bias or prejudice in
adjudications by providing that no employee engaged in
investigating or prosecuting may also participate or
advise in the adjudicating function. 5 U.S.C. § 554(d)
(1977).

Id., 609 So.2d at 793.

Mr. Powell claims that “[t]he agreed admission to adjudicative facts and

violations amounts to a prejudgment of the adjudicative facts in dispute that were

presented to the Board at the full hearing.” In other words, Mr. Powell avers that

the Board was no longer an impartial decisionmaker because the Board had

advanced knowledge of the facts prior to the administrative hearing. Mr. Powell

cites Matter of Rollins Environ. Servs., Inc., 481 So.2d 113 (La. 1985), as support

for his contention that the Board prejudged the adjudicative facts. However, we

find that Mr. Powell’s reliance on Rollins is misplaced.

In Rollins, after receiving a community complaint of noxious odors at a

hazardous waste disposal facility, the secretary for the Department of

Environmental Quality visited the facility to investigate the incident. Id., 481

So.2d at 115. Based on the conditions observed, the secretary ordered the

immediate shut down of the facility’s incinerator. Id. The secretary subsequently

made several public statements, indicating that she was determined to permanently

close the facility. Id. The secretary’s statements led Rollins, the waste facility

operator, to believe that the secretary had already decided that violations existed

9

and that the appropriate penalty would be to terminate their permit to conduct

business in the state. Id., 481 So.2d at 115-16. Rollins, therefore, sought a writ of

certiorari to require the secretary to recuse herself from participation in the

adjudication proceedings.

The Rollins Court held that “disqualification is appropriate for the

administrative decision maker who has prejudged the adjudicative facts in

dispute.” Id., 481 So.2d at 120. Consequently, the inquiry becomes “whether the

administrative officer has in some measure judged the facts in advance of hearing

the case.” Id., 481 So.2d at 116 (citation omitted). The Supreme Court was

careful to point out that there is a marked distinction “between an advance

commitment about the facts and some previous knowledge about the facts.” Id.,

481 So.2d at 121. Thus, “mere exposure to evidence presented in nonadversary

investigative procedures is insufficient in itself to impugn the fairness of the board

members at a later adversary hearing.” Id., 481 So.2d at 120-21 (internal citations

omitted).

Although the secretary’s “investigative function with regard to Rollins (mere

exposure to the evidence) would not alone require recusal,” the Supreme Court

stated that it was required to consider whether she had prejudged the facts in

dispute. Id., 481 So.2d at 116. The Supreme Court concluded that because of her

public statements, it would be “practically impossible for a disinterested observer

to conclude” that she had not prejudged the facts in dispute, and therefore, ordered

10

the secretary recused from participation in the adjudication proceedings against

Rollins. Id., 481 So.2d at 121.

Rollins is distinguishable from the case at bar. Unlike Rollins, there is no

evidence in the record or argument presented that suggests that the Board was

partial, bias, or unfair. Mr. Powell relies solely on the fact that the Board had prior

knowledge of the facts as presented in the proposed consent order immediately

prior to the administrative hearing. See also Hall v. State ex rel. Dep’t of Pub.

Safety & Corrections, 98-0726, p. 11 (La. App. 1 Cir. 4/1/99), 729 So.2d 772, 778

(citing Rollins, 481 So.2d at 120) (“one is not disqualified as an impartial

decisionmaker simply by prior exposure to adjudicative facts”). Moreover, it is

well-established that administrative agencies often “receive the results of

investigations, to approve the filing of charges or formal complaints instituting

enforcement proceedings, and then to participate in the ensuing hearings. This

mode of procedure does not violate the Administrative Procedure Act, and it does

not violate due process of law.” Withrow v. Larkin, 421 U.S. 35, 56, 95 S.Ct.

1456, 1469, 43 L.Ed. 2d 712 (1975).

Here, the Board was called upon to decide whether to accept or reject the

proposed consent order. The facts elicited as part of the proposed consent order

were facts the Board learned of in their adjudicative capacity. If we were to adopt

Mr. Powell’s argument, it would have a limiting effect on an agency’s statutory

authority to interpret and enforce its own regulations. The Board could never hear

a proposed consent order before a hearing. If it did, then the Board could not

proceed with the hearing because it had prior knowledge of the adjudicative facts.

11

For this reason, as previously mentioned, our jurisprudence has recognized that in

considering an alleged due process violation, “a line has been drawn between an

advance commitment about the facts or a personal stake in the outcome of an

adjudication and the mere combination of functions within a single administrative

body.” Butler, 609 So.2d at 795 (citation omitted); Rollins, 481 So.2d at 121.

Mr. Powell’s due process rights were not violated simply because the facts

were known to the Board prior to the hearing. Mr. Powell has failed to present any

evidence that would indicate any member of the Board had prejudged the

administrative proceeding or that indicated a personal bias. The Board’s mere

exposure to the facts at issue, as part of the proposed consent order, does not

indicate a prejudgment of the adjudicative facts. Simply because the Board had

advanced knowledge of the facts prior to the hearing does not warrant a finding by

this Court that Mr. Powell’s due process rights were violated. We find no merit to

this assignment of error.

Fraud

In his second assignment of error, Mr. Powell alleges that there is

insufficient evidence to support the Board’s finding of alleged fraud. Specifically,

Mr. Powell claims the Board’s findings of fraud are not supported by any evidence

or testimony by the Loupes of an intent to defraud, reliance, or inducement.

“Fraud is a misrepresentation or a suppression of the truth made with the

intention either to obtain an unjust advantage for one party or to cause a loss or

inconvenience to the other. Fraud may result from silence or inaction.” La. C.C.

art. 1953. “Two elements are necessary to prove fraud: (1) an intent to defraud and

(2) actual or potential loss or damage.” Sun Drilling Products Corp. v. Rayborn,

00-1884, p. 15-16 (La. App. 4 Cir. 10/3/01), 798 So.2d 1141, 1152 (citing

12

Williamson v. Haynes Best Western of Alexandria, 95-1725, p. 83 (La. App. 4 Cir.

1/29/97), 688 So.2d 1201, 1239). “[F]or fraud or deceit to have caused [a

complainant’s] damage, he must at least be able to say that had he known the truth,

he would not have acted as he did to his detriment.” Sun Drilling, 00-1884, p. 16,

798 So.2d at 1153. “Whether this element is labeled reliance, inducement, or

causation, it is an element of a [complainant’s] case for fraud.” Id. “Fraud need

only be proved by a preponderance of the evidence and may be established by

circumstantial evidence.” La. C.C. art. 1957.

The Loupes alleged that Mr. Powell committed fraud because he accepted

money from them and led them to believe that he would be preparing their federal

and state tax returns. At the administrative hearing, the Loupes did not testify;

nevertheless, the Board’s final decision found Mr. Powell in violation of La. R.S.

37:79(A)(4) for: (1) his failure to timely prepare the Loupes’ 2013, 2014, and 2016

state income tax returns; and (2) his failure to include the Loupes’ Schedule C

income information on the 2013, 2014, and 2016 federal income tax returns.2

La. R.S. 37:79(A)(4) states:

After notice and a hearing as provided for in R.S. 37:81,
the board may revoke any certificate, permit, or
privileges granted pursuant to the provisions of R.S.
37:94, or suspend for a period of not more than five years
or refuse to issue or renew any certificate or permit, or
reprimand, censure, or limit the scope of practice of any
licensee or individual granted privileges as provided by
R.S. 37:94, or impose an administrative fine not to
exceed two thousand dollars per violation, or place any
licensee or individual granted privileges as provided by
R.S. 37:94 on probation, all with or without terms,

2
In the section entitled “Conclusions of Law,” the Board’s final decision sets forth, individually,
the factual basis for each violation it found. Below each finding of fact, the Board quotes the
applicable statutory language. The Board does not state specifically what portion of the statute it
found Mr. Powell violated.

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conditions, and limitations, for any one or more of the
following reasons:

(4) Dishonesty, fraud, or gross negligence in the
performance of services while holding a certificate,
license, privilege, or in the filing or failure to file that
individual’s own income tax returns.

In Davis, the accountant sought review of the Board’s order revoking his

CPA license. Mr. Davis provided accounting and tax preparation services for the

Magee family and its pharmacy business. Id., 13-0514, p. 8, 131 So.3d at 396.

When the Magees decided to expand their business to open multiple drugstores,

Mr. Davis became a partner in the business venture. Id. In exchange for part

ownership or equity interest, Mr. Davis provided professional in-house accounting

services, which included forming businesses, bookkeeping, maintaining the check

book and general ledger, and preparing financial statements in addition to sales and

income tax returns. Id. Mr. Davis also prepared the personal income tax returns

for his business partners. Id. When the Magees hired an outside CPA to provide a

fair market valuation of the business entities, it was discovered that there were

“material differences between the amounts of income, expenses, assets, and

liabilities in compiled financial statements and income tax returns.” Id.¸13-0514,

p. 8, 131 So.3d at 396-97. Mr. Davis was terminated, and a complaint was filed.

In revoking Mr. Davis’ license, the Board made numerous findings of fact

and concluded that Mr. Davis, on more than one occasion, violated La. R.S.

37:79(A)(4), (5), (7), (8), (11), and (12); La. R.S. 37:83; and Chapter XIX of

Section 46 of the Louisiana Administrative Code. Id., 13-0514, p. 7, n. 3, 131

So.3d at 396, n.3. The Board determined that Mr. Davis engaged in conduct that at

different times was dishonest, fraudulent, or grossly negligent, and failed to meet

the standards of professional conduct expected of certified public accountants. In

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particular, the Board found Mr. Davis acted with gross negligence when the

financial information Mr. Davis provided to the outside CPA was not prepared in

accordance with Mr. Davis’ professional obligations and could not be relied on for

the purpose of conducting a business valuation. Id., 13-0514, p. 9, 131 So.3d at

397. It further found Mr. Davis improperly structured the ownership of certain

businesses through entities owned by Roth IRAs, which the IRS considers an

abusive tax shelter. Id., 13-0514, p. 11, 131 So.3d at 398. In doing so, Mr. Davis

failed to inform his business partners that “these positions were risky or aggressive,

subjecting them to the possibility of adverse action by the IRS.” Id. The Board

found his failure to inform his partners of their exposure to the potential risks or

penalties they could face, should the IRS take adverse action, constituted gross

negligence. Additionally, the Board found Mr. Davis’ underreporting of sales and

taxes that resulted in the company paying penalties and interest constituted gross

negligence. By contrast, Mr. Davis was also found to have appropriated funds of

the entity without agreement of the partners, paid money to his sister without

agreement of the partners, and hid his self-dealing by manipulating the company’s

records. The Board found Mr. Davis’ conduct both dishonest and fraudulent.

Likewise, Mr. Davis committed fraud when he “forged the signature on a tax

return, and as a notary, improperly executed several documents filed with the

Secretary of State of Louisiana related to the entities formed by Mr. Davis.” Id.,

13-0514, p. 12, 131 So.3d at 398-99. This Court affirmed the Board’s decision to

revoke Mr. Davis’ license as the evidence was sufficient to support the Board’s

determination that Mr. Davis, among other violations, violated La. R.S.

39:79(A)(4).

Unlike in Davis, the Board does not specify whether Mr. Powell’s conduct,

15

under La. R.S. 39:79(A)(4), was dishonest, fraudulent, or grossly negligent. At the

administrative hearing and on judicial review, counsel for Mr. Powell argued that

the evidence was insufficient to support a violation of La. R.S. 39:79(A)(4) based

on dishonesty or fraudulent behavior. We examine next why we conclude the

evidence is insufficient insofar as the Board found Mr. Powell’s conduct relative to

his violation of La. R.S. 39:79(A)(4) was dishonest and/or fraudulent.

First, the Loupes did not testify at the administrative hearing. Consequently,

there is no testimony as to their alleged reliance on any representation Mr. Powell

may have made with respect to their federal and state tax returns. Mr. Powell

readily admitted that he did not include the Loupes’ Schedule C income on the

federal tax returns and did not prepare their state tax returns. In its appellee brief,

the Board makes much of the fact that Mr. Powell testified that his actions were

intentional. The question, however, is whether his intent was to defraud the

Loupes.

The testimony and evidence in the record demonstrates that to limit the

Loupes’ exposure for a late filing, Mr. Powell prepared the tax returns without the

Schedule C income, with the intent that he would file an amendment once he had

the information he needed to account for the deductions he believed the Loupes

were entitled. He testified that the Loupes were aware of his plan, which is

evidenced in email correspondence between the parties that was submitted at the

hearing. Mr. Powell also testified he did not file the state tax returns because he

knew that once the federal tax returns were amended, the state tax returns would

change. Mr. Powell stated that he waited to file the state tax returns, because he

found it “unconscionable” to charge a client for the preparation of a return, only to

amend it and charge the client again. Notably, Mr. Powell testified that he had “no

16

idea” that it would take so long to obtain the information he needed to amend the

tax returns. He stated “what I should have done [was] to put a statement in the

return that said, ‘this return has been prepared with the best information we have

and most complete information at the time. It will be amended.”

The uncontroverted evidence presented at the administrative hearing

demonstrates that Mr. Powell’s failures in the preparation of the Loupes’ tax

returns arose from an attempt to further limit the Loupes’ tax exposure after their

previous CPA’s failures left them with significant tax liability. Likewise, the only

evidence presented at the hearing was that the Loupes were aware of the fact that

the federal tax returns needed to be amended, and in order to do so, Mr. Powell

needed additional information. There was no evidence to suggest that the Loupes

were not aware of the strategy to amend the tax returns, the status of their tax

returns, the contents of those returns, or the need for amendments. Because Mr.

Powell’s failures arose from an attempt to limit the Loupes’ tax liability and the

Loupes were aware of Mr. Powell’s plan, we find Mr. Powell’s conduct does not

comport with a finding of dishonesty or fraud. To the extent the Board’s

conclusions of law found, pursuant to La. R.S. 37:79(A)(4), dishonesty and/or

fraud relating to Mr. Powell’s preparation of the tax returns, the Board’s findings

are contrary to the evidence presented.3

Nevertheless, we are cognizant of the plain language of La. R.S. 37:79(A)(4)

and its statutory construction. In general, “unless the context clearly indicates

otherwise: (1) [t]he word “and” indicates the conjunctive; (2) [t]he word “or”

3
The Appellee’s brief points to the fact that Mr. Powell admitted that the “CPA” designation
appeared in his email address, on invoices, and in his company name despite his license having
expired as proof of Mr. Powell’s intention to commit fraud. However, a review of the Board’s
final decision does not identify any of these actions as a violation of La. R.S. 39:79(A)(4). By
comparison, the Board found the use of an invalid PTIN was a violation of La. R.S. 39:79(A)(7).

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indicates the disjunctive; and (3) [w]hen the article is phrased in the disjunctive,

followed by the words “or both”, both the conjunctive and disjunctive are

intended.” La. C.C.P. art. 5056. The statute is written in the disjunctive form.

Considering we find the evidence insufficient to find Mr. Powell’s conduct was

dishonest or fraudulent relative to the preparation of the tax returns, the question

becomes whether Mr. Powell’s conduct was grossly negligent.

“Gross negligence has a well-defined legal meaning, which is distinctly

different from the definition of ordinary negligence.” Brown v. Lee, 05-1302, p. 5

(La. App. 4 Cir. 4/5/06), 929 So.2d 775, 778 (quoting Pierre v. Zulu Social Aid &

Pleasure Club, Inc., 04-0752, p. 5 (La. App. 4 Cir. 9/29/04), 885 So.2d 1261,

1264). “Gross negligence has been defined as the want of even slight care and

diligence and the want of that diligence which even careless men are accustomed

to exercise.” Id., 05-1302, p. 5, 929 So.2d at 778 (quoting Pierre, 04-0752, p. 5-6,

885 So.2d at 1264 (internal quotations omitted)).

Mr. Powell admitted that he did not include the Loupes’ Schedule C income

on the federal tax returns and did not prepare their state tax returns. In his

deposition testimony, Mr. Powell acknowledged that he had the information he

needed to prepare the Loupes’ tax returns but did not do so to avoid more work for

himself in the future when he anticipated he would amend the tax returns. Mr.

Powell conceded that he could have attached a statement indicating the tax returns

were prepared with the best information available at the time and that the returns

would be amended. Mr. Powell stated that while inclusion of the aforementioned

statement is what he should have done, he did not because he anticipated that he

would be amending the tax returns in “short order.” Moreover, the evidence and

testimony demonstrate that the Loupes were aware of the status of their tax returns,

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what was included, and what was omitted. Mr. Powell’s admitted strategy to omit

the Schedule C income from the tax returns until he had the necessary information

to file amendments was ill-advised and poor decision-making.

In the same way the accountant in Davis failed to warn his clients of

potential risks associated with certain tax positions, Mr. Powell recommended and

implemented a filing strategy, yet he failed to warn of the penalties the Loupes

might face if the tax returns, he advised them to file, were not amended in a timely

manner. As Mr. Powell admitted, there were actions he could have taken to

mitigate those risks. His failure on both accounts supports finding him grossly

negligent in the performance of his professional obligations. Moreover, because

La. R.S. 39:79(A)(4) is written in the disjunctive form, evidence sufficient to

support any of the three—dishonesty, fraud, or gross negligence—will suffice as a

violation of the statute. While we do not find the evidence sufficient to prove Mr.

Powell’s conduct was dishonest or fraudulent, we do find Mr. Powell’s actions

were grossly negligent. Therefore, the Board’s ultimate finding that Mr. Powell

violated La. R.S. 39:79(A)(4) still stands.

Answer

The Board also filed an answer to the appeal in this case, seeking an award

of costs and attorney’s fees for the appeal proceedings, including the appeal taken

in the trial court. The Board relies on La. R.S. 37:79(B)(3), which states:

[i]n lieu of or in addition to any remedy provided for in
Subsection A of this Section, the board may require a
licensee or privilege holder to…[p]ay all costs of board
proceedings, including but not limited to investigation
fees, stenographer fees, witness fees or reimbursements,
and attorney fees involved in the imposition of a remedy
pursuant to this Section.

Id. (emphasis added).

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“Statutes providing for penalties and attorney’s fees are penal in nature and

must be strictly construed.” Alexander v. Centanni, 11-0783, p. 4 (La. App. 4 Cir.

11/16/11), 80 So.3d 590, 592 (citing Adams v. Burger King, 04-0146, p. 6 (La.

App. 1 Cir. 2/11/05), 906 So.2d 540, 544). The statute states that the board may

require the licensee to pay costs of board proceedings. In that the statute is penal

in nature, it is to be strictly construed. “The settled doctrine of statutory

construction Expressio Unius est Exclusio Alterius dictates that when the

legislature specifically enumerates a series of things, the legislature’s omission of

other items, which could have easily been included in the statute, is deemed

intentional.” Jackson v. City of New Orleans, 12-2742, p. 13, n. 8 (La. 1/28/14),

144 So.3d 876, 888, n. 8 (citations omitted). Additionally, other sections of the

statute contemplate the instances in which an award of fees and costs for district

court proceedings are permitted. We do not interpret La. R.S. 37:79(B)(3) to

include appellate proceedings among the costs the Board may require Mr. Powell

to pay. In that the subsection the Board relies on only mentions board proceedings

and other sections contemplate an award for fees and costs in trial court

proceedings, we decline to expand the meaning of La. R.S. 37:79(B)(3) to include

fees and costs of appellate proceedings in the trial court or in this Court.

Therefore, the Board’s answer to the appeal and request for fees and costs is

hereby denied.

CONCLUSION

Based on the foregoing reasons, we find the Board’s prior knowledge of the

adjudicative facts and violations, as presented in the proposed consent order, do

not rise to the level of a violation of Mr. Powell’s due process rights. Additionally,

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we find the evidence insufficient to establish dishonesty or fraud, pursuant to La.

R.S. 37:79(A)(4), as it relates to Mr. Powell’s failure to timely prepare the Loupes

state tax returns and failure to include their Schedule C income on their federal tax

returns. We nevertheless find the evidence sufficient to prove Mr. Powell acted

with gross negligence. Finally, we find that La. R.S. 37:79(B)(3) does not allow

for an award of fees and costs associated with appellate proceedings in the district

court or the appellate court.

DECREE

Accordingly, we affirm the Board’s decision. Furthermore, the Board’s

request for fees and costs as set forth in its answer to the appeal is denied.

AFFIRMED;
ANSWER TO APPEAL DENIED

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