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A Bend accountant faces heavy financial penalties and further disciplinary action if he fails to live up to an order by the Oregon Board of Accountancy.

The board found that Arthur C.F. Pratt violated Oregon administrative rules on integrity and objectivity, due professional care and professional misconduct in his work with clients since 2004. According to a settlement agreement and order signed by the board in December, Pratt is subject to $20,000 in civil penalties and must reimburse the board’s costs, $30,000, if he violates conditions of the settlement.

Pratt must complete 32 hours of professional education in ethics, practice management and taxation by Jan. 31, 2018; enter a two-year mentoring and practice monitoring program; and pay $3,000 of a $20,000 civil penalty, which reflects four rule violations.

Pratt’s attorney, Frank Lagesen of Portland, said Pratt cooperated with the board’s investigation, which revealed a failure to prepare and file a decade’s worth of tax returns for one client and a lack of conflict-of-interest disclosures with others.

“He wasn’t trying to conceal anything,” Lagesen said.

The board started looking into Pratt in 2014 because of a complaint from trustees of an account for which Pratt failed to prepare and file 10 years’ worth of tax returns, according to the settlement document. One of the trustees, Sheila Hickey, who died in April 2014, had hired Pratt in 2004 to prepare tax returns for herself and two trust accounts set up by her late husband.

Pratt was paid $174,395, according to the settlement, but he didn’t prepare or file most of the returns for which he was hired. While the accountancy board couldn’t determine that Pratt’s fees were unjustified, the board concluded that he failed to prepare or file 10 years of returns for the trust and eight years of returns for Hickey.

Pratt did other work related to tax preparation, according to the settlement. When he was hired by Hickey in 2004, Pratt determined that the previous CPA failed to file returns for 2002, and he began gathering more information, according to settlement.

Pratt contacted previous CPAs and an investment adviser. Despite not filing returns over the next 10 years, he continuously gathered information from Hickey’s investment adviser, according to the settlement.

Pratt told the accountancy board he didn’t have enough information to file the returns, according to the settlement document. He admitted, however, that he should have withdrawn from the engagement.

Pratt is not the first local accountant to face board discipline. In 2014, Oregon revoked the license of Christopher Acarregui, who sold stakes in real estate deals to at least 14 clients. Acarregui failed to disclose his conflict-of-interest, and he pocketed some of his clients’ money, the board found after a four-year investigation.

Oregon administrative rules discourage CPAs from entering business deals — other than for their accounting work — with clients, and if they do the potential conflicts should be disclosed in writing, said Martin Pittioni, executive direct of the accountancy board.

Pratt also ran afoul of the disclosure rule. He borrowed more than $80,000 from clients without providing written disclosure of the potential conflict of interest, according to the settlement document. The settlement bars Pratt from doing any business deals unless he first receives the board’s OK.

The conflict-of-interest disclosure has been required since 2002, but Lagesen said Pratt wasn’t aware of the rule. Pratt borrowed $80,000 between 2008 and 2010 from one client, Alan Wilkinson, and $6,000 from another client, Lambert Neighbour, in 2011, according to the settlement.

Pratt declined to comment on the investigation and disciplinary case, citing the agreed-upon settlement. Asked about the purpose of his borrowing from clients, he said it was personal. “There were needs,” he said.

On Jan. 20, Pratt filed for Chapter 7 bankruptcy protection and listed business debts under $50,000 with fewer than 50 creditors.

Pratt, who first received his CPA license in 1981, is still practicing in Bend, Lagesen said.

—Reporter: kmclaughlin@bendbulletin.com, 541-617-7860