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Fesum Ogbazion, Instant Tax ServiceAn Ethiopian immigrant whose tax preparation chain claims to have grown into the nation's fourth largest tax preparation chain, has been sued by the United States. The Department of Justice seeks to shut down Instant Tax Service and the operations of five of its ITS franchises. The government alleges that the franchisor, ITS Financial Group of Dayton, Ohio,, and its owner, Fesum Ogbazion, deliberately ignored "systemic and pervasive fraud" on the part of franchisees.

 

 

 

Ogbazion opened his first tax shop when he was a junior in college. He first founded Instant Refund Tax Service, which was sold to Jackson Hewitt in 1994, before he started the company that is now operating. ITS has had as many as 1,200 offices in the United States, according to various reports on the Internet. In 2003, Ogbazion was honored by the Dayton Business Journal as one of its "40 under 40" for 2002. He began franchising in 2004 and at one point, Ogbazion said half his franchisees were of Ethiopian or Eritrean origin.

 

But Internet searches show many complaints about the company that echo the charges made by the government and come from areas involving ITS operations that are not part of the Justice Department's legal action. Among the allegations is that ITS and its franchisees charge "outrageously high" fees, up to $1,000 for preparing tax returns in as little as 15 minutes, along with imposing "junk fees" that are deducted from clients' refund checks. ITS operators are accused of inventing phony business fabricating deductions, falsifying filing status, and claiming bogus dependents, along with disregarding rues for claiming the earned income tax credit.

The government's announcement noted David Franklin, who operates multiple ITS stores in the Indianapolis area, is accused of conducting a two-week training course in 2010 in which his employees were explicitly instructed about how to prepare fraudulent tax returns. The complaint said the government's losses from stores in St. Louis, Kansas City, Chicago, Indianapolis and Las Vegas exceeded $16 million.

The government alleges defendants lured mostly low-income customers by encouraging them to apply for loans for which they did not qualify, prior to tax season. ITS preparers then completed  "estimate" returns based on the customers' last paycheck stubs which were filed without client authorization. ITS Financial also allegedly encouraged franchisees to lie to the IRS about the company's alleged practice of filing returns without the use or inclusion of W-2 forms.

Defendants named in the injunction lawsuits include Ogbazion, TCA Financial, ITS Financial and Tax Tree. Ogbazion is the sole owner of TCA, the holding company for the other two operations.

The franchisees accused are the following: Emanuel Ghebremichael and ERG Financial Corporation, which operate Instant Tax Service in the Chicago area via 16 stores and kiosks; David Ray Franklin Jr., Rachel Wiggins and William Brown and Instant Tax Refund Service, who have 22 ITS stores and kiosks in the Indianapolis area; Benyam Tewolde, Yordanos Kidane and Koraggio LLC, the ITS franchisees in the Las Vegas area, who have multiple stores that prepared more than 5000 returns in 2011; and Semere Tsehaye, Ahferom Goitom, A&S Tax Services LLC and ERI Enterprises. This group has five stores in the Kansas City, Mo, area, and 14 in St. Louis, Mo., and East St. Louis, Ill.

Last modified on Sunday, 02 June 2013
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