Founder of Nationwide Tax Return Preparation Company Sentenced to Prison for Fraud and Tax Crimes | OPA

An Ohio man was sentenced today to one year and one day in prison for conspiring with others to commit fraud in connection with the operation of a national tax return preparation company he owned and managed, as well as tax crimes.

According to court documents and evidence presented at trial, Fessum Ogbazion, of Cincinnati, collected millions of dollars in fees while fraudulently inducing customers to visit ITS Financial LLC, the national franchisor of Instant Tax Service (ITS), a tax preparation business he created in 2004. The ITS advertisements offered tax refund anticipation loans through an independent third-party lender, despite the fact that ITS had no such lender to fund the promised loans. Ogbazion used the false advertising campaigns to entice customers to visit ITS locations for a loan, then used the loan applications to prepare and file income tax returns, often without the customer’s authorization. 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 IRS attempts to collect its unpaid payroll 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 who attempted to collect ITS’s tax debt.

Ogbazion was convicted by a federal jury on June 6, 2017, of tax evasion, willful failure to withhold and pay over employment taxes, wire fraud, conspiracy to commit wire fraud, and bank fraud. After the trial, the court dismissed five counts of wire fraud but left intact the conviction for conspiracy to commit wire fraud and other counts of conviction.

In addition to the term of imprisonment, U.S. District Judge Timothy S. Black ordered Ogbazion to serve three years of supervised release and to pay approximately $933,708 in restitution to the United States.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement.

IRS-Criminal Investigation investigated the case.

Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Justice Department’s Tax Division and Paralegal Specialist Laura Strubbe of the U.S. Attorney’s Office for the Southern District of Ohio prosecuted the case.