DoJ Goes After National Tax Prep Firm to Stop Widespread Tax Fraud

The Department of Justice has filed lawsuits in federal courts in Indianapolis, Chicago, Dayton, Kansas City, and Las Vegas seeking injunctions that would shut down the franchiser of Instant Tax Service and five franchisees of the national firm. The Justice Department has alleged that the franchiser of Instant Tax Service locations, Dayton-based ITS Financial LLC, and company’s owner, Fesum Ogbazion, have intentionally ignored pervasive tax fraud by the company’s franchisees.

According to the complaints, ITS franchisees knowingly prepare and file fraudulent tax returns. By maximizing the refunds their customers’ receive, the company and its franchisees are allegedly able to charge excessive tax preparation fees, including various charges that Ogbazion has allegedly referred to as “junk fees,” directly from the refund checks as they come in.  According to the government’s filings, the tax preparation franchisees charge as much as $1,000 for preparing tax returns that require just 15 minutes to prepare. It is alleged that the amount of the fees are frequently not revealed to customers.

The complaints also allege that the employees in these franchises often have very little experience in preparing tax returns and are encouraged and even trained by franchise owners to commit tax fraud.

According the Justice Department, the tax fraud committed by ITS Financial and its franchisees in St. Louis, Kansas City, Chicago, Indianapolis and Las Vegas cost the federal government more than $16 million in 2011 alone.

The Department of Justice has already successfully prosecuted four individuals who filed fraudulent tax returns for ITS franchises in Missouri and Ohio.

The newly filed lawsuits seek to enjoin the following companies and individuals:

  • In Dayton, Ohio: Fesum Ogbazion, ITS Financial LLC, TCA Financial LLC, and Tax Tree LLC;
  • In Chicago, Illinois: Emanuel Ghebremichael and ERG Financial Corp. (dba Instant Tax Service);
  • In Indianapolis, Indiana: David Ray Franklin Jr., William Brown, Rachel Wiggins, and Instant Tax Refund Service (dba Instant Tax Service);
  • In Las Vegas, Nevada: Yordanos Kidanem Benyam Tewolde, and Koraggio LLC (dba Instant Tax Service); and
  • In Kansas City, Kansas: Ahferom Goitom, Semere Tsehaye, ERI Enterprises LLC, and A&S Tax Services (dba Instant Tax Service).

Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.

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