Owner of Nationwide Tax Return Preparation Franchisor Convicted of Conspiracy, Evading Employment Taxes and Other Tax-Related Crimes
An Ohio resident was convicted Friday by a federal jury sitting in Cincinnati, Ohio of conspiracy to commit wire fraud, wire fraud, bank fraud, evasion of employment taxes and failure to pay over employment taxes, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
According to the evidence presented at trial, Fesum Ogbazion, 44, was the owner and CEO of ITS Financial LLC, which was the national franchisor of Instant Tax Service (ITS), a tax preparation business. Ogbazion founded ITS in 2004 and at one time it had more than 1,100 franchise locations throughout the United States.
From approximately January 2009 through 2012, Ogbazion conspired with others at ITS to generate loan and tax return preparation fees for ITS and its franchises by luring taxpayers into ITS franchises through a fraudulent nationwide advertising campaign. The ITS ads offered tax refund anticipation loans through an independent third party lender, despite the fact that ITS did not have such a lender to fund the promised loans. The evidence introduced at trial established that Ogbazion used the false advertising campaigns to entice customers into coming to ITS locations for a loan and then used their loan applications to prepare and file income tax returns – often without customers’ authorization. ITS charged its customers between $500 to $800 in tax preparation fees. Between 2006 and 2011, ITS collected more than $70 million in fees.
Ogbazion also failed to pay approximately $1.3 million in payroll taxes due from ITS and another business during four tax quarters in 2009 and 2010. Ogbazion evaded the Internal Revenue Service’s (IRS) attempts to collect the unpaid taxes by directing business revenue to nominee accounts, placing assets in the names of nominee entities and making false statements to an IRS revenue officer during the course of collection activity.
In 2013, ITS and Ogbazion were permanently barred from operating or being involved with any work or business relating to the preparation of tax returns.
Sentencing will be set at a later date. Ogbazion faces a statutory maximum sentence of 20 years in prison on the conspiracy count, 20 years in prison for the wire fraud counts, 30 years in prison for bank fraud, five years in prison for tax evasion and five years in prison for failure to pay over employment taxes. He also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Senior Litigation Counsel Corey Smith, Trial Attorney Mark McDonald and Paralegal Specialist Tiffany Thompson of the Tax Division, and Paralegal Specialist Laura Strubbe of the U.S. Attorney’s Office for the Southern District of Ohio, who prosecuted the case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office for the Southern District of Ohio for their assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.