‘Hundreds of Thousands of Victims Trusted Him’: $70 Million Tax Refund Scammer Jailed
He was sentenced to a year and a day in jail for running a tax refund advance scheme that defrauded clients out of $70 million in overcharges.
Instant Tax Service, the nationwide chain of Fesum Ogbazion’s 1,100 tax preparation offices, was accused of luring consumers with adverts offering loans ahead of their expected tax refunds.
Although Dayton-based Instant Tax Service (ITS) claimed to have third-party lenders behind the loans it offered, prosecutors said the company did not. Authorities allege that instead of making advance payments, the company filed tax forms using the personal financial information of consumers, frequently without their consent or knowledge. Afterwards, the business could charge a lot of money for its services.
An investigation by the Ohio Attorney General’s Office found that the Dayton-based business raked in $70 million in such payments between 2005 and 2011.
“Ogbazion, ITS, and his worldwide advertising campaign were trusted by many hundreds of thousands of victims, who had every right to anticipate some kind of fiduciary duty from ITS.” Prosecutors said that Ogbazion deceived ITS consumers out of millions of dollars by abusing their confidence, intentionally misleading them, and intentionally misrepresenting the truth.
Messages left with Ogbazion’s lawyer for comment were not immediately returned. However, in court records, the attorney noted that his client had cut cuts when he lost access to funding during the 2008 economic crisis and his firm was floundering.
According to his counsel, the government’s portrayal of this as a “predatory, get wealthy at the cost of poor” plan is not accurate.
There has been an investigation going on since 2007.
As early as 2007, the Internal Revenue Service and other federal authorities were examining several of Instant Tax Service’s franchisees. As federal prosecutors prepared to file charges against ITS and Ogbazion, a federal court ordered a preliminary injunction in 2013 ordering the organisation to suspend operations. The company claimed to be the nation’s fourth-largest tax preparer at the time of the audit.
An indictment of Ogbazion and the company’s vice president, Kyle Wade, was made against them in 2015. Tax evasion charges were also brought against them for neglecting to pay their employees’ payroll taxes for multiple quarters. Ultimately, Wade was found guilty of hindering IRS operations.
An Ogbazion jury in 2017 convicted the businessman guilty of tax evasion, intentional failure to withhold and pay over employment taxes (including social security and Medicare taxes), wire fraud, conspiracy to commit wire fraud, and bank fraud. This case was overturned on appeal, but the conviction for conspiracy to conduct wire fraud and other charges was upheld.
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Once upon a time, this was a well-known immigration narrative.
Attorney Ogbazion noted in court records that his client formerly represented the traditional success tale of an immigrant. Ogbazion was born in rural Ethiopia to a shepherd and travelled to the United States as a youngster with the help of missionaries, according to him.
While still in college, Ogbazion discovered that the Internal Revenue Service (IRS) was considering letting people to submit their taxes online, so he set out to start a tax preparation firm with what little money he had. Jackson Hewitt bought his initial firm, which had grown to include hundreds of locations, for $3 million in 1999. According to court records, he then used the money to create ITS.