Tax Service Shut Down by Federal Court

Posted by Siegel Tax Law on December 2, 2013

Instant Tax Service Closed by U.S. Judge for Fraudulent Practices

(Bloomberg) Instant Tax Service, described by a U.S. judge as the fourth-biggest tax preparation business in the nation, was ordered closed after a court found it engaged in abusive and fraudulent practices.

U.S. District Judge Timothy S. Black in Dayton, Ohio, said the evidence of fraud and deception perpetrated by ITS Financial LLC, the company’s formal name, and chief executive officer Fesum Ogbazion, was so overwhelming that an order barring it from the tax-return preparation business is necessary to protect the public and the Treasury.

Evidence presented during a nine-day trial in July showed the CEO and his businesses encouraged franchisees to file false tax returns and lured low-income customers into its offices by marketing fraudulent loan products, Black said. Other wrongdoing included forging customer signatures on loan checks and using the proceeds to operate its businesses, he found.

The company, in a post-trial filing, argued the evidence told a different story. The government’s proof was drawn from isolated incidents over several years, Instant Tax Service argued, contending it had taken corrective action that remedied most of the past problems identified at trial.

The death penalty injunction was unwarranted, it said in the July 31 filing.

Black was unconvinced.

Defendants repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning, the judge said in his decision. The court concludes that even today defendants have not fully recognized their culpability.

The case is U.S. v. ITS Financial, 12-cv-95, U.S. District Court, Southern District of Ohio (Dayton).