CPA Partnership Battle Turns from Nasty to Ridiculous
Two Johnson County, Ind., CPAs who are being sued by their former partner have countersued, claiming he hired a stripper as a personal assistant and used the firm’s computers to look at porn on the Web.

In one corner, according to the Daily Journal, is Curtis L. Coonrod, a CPA whose firm, CLC Services, performs accounting for municipal and county government boards throughout central Indiana. Coonrod also holds a seat on the Indianapolis City-County Council. He is a well-known figure in central Indiana government and political circles. A former Marion County auditor, he is on his second term on the city-county council and is running for re-election this fall.

In the other corner are CPAs Eric Reedy and Jeffrey Peters, former partners in Coonrod’s firm. They left CLC last year to start their own accounting firm, Reedy & Peters LLC.

The accountants said Coonrod hired a former exotic dancer as his personal assistant and escort. Coonrod allowed her to purchase lipstick, perfume and oil changes with CLC funds, they said. Moreover, those gifts and Coonrod’s car loan to the woman were not reported to the IRS as income for tax purposes, which violates tax laws, the men said.

Their counterclaim includes affidavits from two other former employees of CLC. The affidavits claim Coonrod billed clients for the hours of his personal assistant, even though the woman did little meaningful work.

One affidavit states the former stripper “would almost daily clip the split ends from her hair, one strand at a time, for hours at a time, while sitting at the reception desk at the front of the office.” The woman “would often sleep with her head down on the reception desk.”

Peters and Reedy go on to say that Coonrod used the firm’s computers to visit a Web site called www.jailbabes.com and contact female prisoners, visited another site called the Sugar Daddy chat room and openly displayed in the office his personal letters with incarcerated women.

Peters and Reedy resigned from CLC last fall because they felt Coonrod’s behavior put their CPA licenses and professional credibility in jeopardy, their counterclaim says.

“It’s personal conduct unless the individual conducting it allows it to permeate the workplace,” said Sandra Blevins, attorney for the two accountants.

“It’s not just the fact that Mr. Coonrod hired a stripper to come in as an assistant; Mr. Coonrod had this assistant review Mr. Reedy’s and Mr. Peters’ work for mathematical and grammatical changes. This person is not educated in the accounting field. Mr. Coonrod would bill this time to clients.

“That, and the fact that Mr. Coonrod allowed this individual to represent the firm in public, and in general created a very unprofessional atmosphere in the workplace, not only was in violation of their contract, but these actions had implications for tax purposes,” Blevins said.

“Anytime an accountant is in partnership with another individual, and that individual has improper conduct, it can have an effect on the other accountant,” she said. “As we learned from Arthur Andersen, it can have an effect on the entire group.”

Caught in the middle are seven taxpayer-supported government entities that are clients of Reedy & Peters. On May 19, Coonrod filed a lawsuit against Reedy and the Reedy & Peters firm. The suit claims Reedy violated a non-compete clause in his employment contract with CLC.

The contract said that if Reedy left CLC, he agreed not to compete against his former firm, solicit its clients or attempt to take away any of its business for two years after leaving. Reedy signed the contract in March 1999. He and a fellow CLC partner, Peters, resigned Oct. 31 to start their own firm. The lawsuit claims the two ex-partners lured government clients away from CLC to their new firm, depriving CLC of business.