ITS Financial LLC, the Dayton, Ohio-based Instant Tax Service franchiser and franchisees were accused of fraud by the U.S. Justice Department.
The department today said it filed federal lawsuits against ITS operators in Indianapolis, Chicago, Las Vegas and Kansas City, Kansas, claiming they intentionally prepare and file fraudulent tax returns with the aim of maximizing both customer refunds and their own preparation fees.
“The government claims these fees are outrageously high — for example up to $1,000 for preparing tax returns in as little as 15 minutes — and are often not disclosed to customers” in advance, the Justice Department said a press statement announcing the filings.
“ITS Financial knew of illegal activity within its franchises but took no meaningful steps to stop it,” the U.S. alleged in a fifth complaint, filed today at the federal court in Dayton. It seeks court orders barring the franchiser and each franchisee from continuing in the tax preparation business.
According to the ITS website, the company was founded in 2004 by Chief Executive Officer Fez Ogbazion and has grown to be the fourth-biggest U.S. tax preparer, with locations in 34 states.
Ogbazion is named as a defendant in the Dayton-filed complaint. Legal department officials at ITS’s headquarters weren’t immediately available to comment on the complaints.
That case is U.S. v. Ogbazion, 12-cv-95, U.S. District Court, Southern District of Ohio (Dayton). Other cases are U.S. v. Ghebremichael, 12-cv-2282, U.S. District Court, Northern District of Illinois (Chicago); U.S. v. Franklin, 12-cv-394, U.S. District Court, Southern District of Indiana (Indianapolis); U.S. v. Tewolde, 12-cv-516, U.S. District Court, District of Nevada (Las Vegas) and U.S. v. Tsehaye, 12-cv-2183, U.S. District Court, District of Kansas (Kansas City).
To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net