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Department of Justice v ITS Financial ruling

Department of Justice v ITS Financial ruling

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Published by Kelly Phillips Erb
Decision by Judge Black in the matter of Department of Justice v. ITS Financial
Decision by Judge Black in the matter of Department of Justice v. ITS Financial

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Published by: Kelly Phillips Erb on Nov 18, 2013
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12/02/2013

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION
UNITED STATES OF AMERICA, : Case No. 3:12-cv-95 : Plaintiff, : Judge Timothy S. Black : vs. : : ITS FINANCIAL, LLC,
et al.
, : : Defendants. :
DECISION AFTER TRIAL TO THE COURT: OPINION AND ORDER WITH FINDINGS OF FACTS AND CONCLUSIONS OF LAW GRANTING JUDGMENT TO PLAINTIFF AND PERMANENTLY ENJOINING DEFENDANTS FROM OPERATING, OR BEING INVOLVED WITH IN ANY WAY, ANY BUSINESS RELATING IN ANY WAY TO PREPARATION OF TAX RETURNS
As the attorney for the Government properly argued during closing: “This case presents an astonishing array of repeated fraudulent and deceptive conduct”  by Defendants. (Doc. 138 at 1). The evidence at trial of the fraud and deception  perpetrated by Ogbazion and his Defendant companies, the fourth largest tax preparation  business in the country, was so overwhelming that the Court concludes easily than an injunction under I.R.C. §§ 7402 and 7048 -- permanently barring Defendants from operating, or being involved with in any way, any business relating in any way to  preparation of tax returns -- is necessary to protect the public and the Treasury. The evidence at trial established that Ogbazion and his Defendant companies: Clandestinely trained and encouraged ITS franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income, and inevitably resulted in the submission of false federal tax returns;
Case: 3:12-cv-00095-TSB Doc #: 142 Filed: 11/06/13 Page: 1 of 233 PAGEID #: 7288
 
 2
Defrauded ITS customers, who are largely low-income, by marketing false and fraudulent loan products to lure customers into franchisees’ tax preparation offices; Defrauded ITS customers by requiring franchisees to charge phony fees, as well as exorbitant fees, of which Defendants kept an average of 18%; Forged customers’ signatures on loan checks and used those forged checks to operate Defendants’ businesses; Willfully failed to pay their own employment taxes, and then lied about assets in connection with the collection of those taxes, hiding money in a secret bank account, defrauding the United States and third party creditors; Lied on government forms, and encouraged franchisees to lie on government forms, including lying on IRS applications for EFINs and on IRS Forms 8879; Obstructed government agents and materially assisted franchisees in circumventing IRS law enforcement efforts involving the suspension of EFINs; Told franchisees to lie to government agents in connection with IRS compliance visits; and Violated the terms of the Order of Preliminary Injunction issued by this Court. Defendants’ repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning. The Court concludes that even today Defendants have not fully recognized their culpability. Ultimately, the nature, scope, and gravity of Defendants’ offenses, and the unrepentant attitude toward their commission, demonstrate the necessity for a complete injunction putting the Defendants permanently out of  business.
Case: 3:12-cv-00095-TSB Doc #: 142 Filed: 11/06/13 Page: 2 of 233 PAGEID #: 7289
 
 3
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This civil case is before the Court following a trial to bench on June 17, 18, 19, 20, 21, 24, 25, 26, and 27, 2013. (Docs. 98, 100, 108, 112, 117, 121, 125, 128, 129, 130). Following trial, the parties filed Closing Arguments (Docs. 138, 139) and proposed Findings of Fact and Conclusions of Law. (Docs. 136, 137, 140). Pursuant to Fed. R. Civ. P. 52, the Court now sets forth and enters its Findings of Fact and Conclusions of Law.
 I. FINDINGS OF FACT
1
 BACKGROUND
1.
 
Fesum Ogbazion is the CEO and sole owner of ITS Financial. Ogbazion is also the CEO and sole owner of Defendants Tax Tree and TCA Financial. Ogbazion founded all three companies. (Doc. 101 at 6:23-7:6; Doc. 77 at 3). 2.
 
Instant Tax Service is the brand of and for ITS Financial franchises across the United States. Instant Tax Service is a nationwide tax preparation franchise that Ogbazion developed. Instant Tax Service claims to be the fourth largest tax  preparation franchise in the nation. (Doc. 101 at 7:5-15; Doc. 77 at 3). 3.
 
As the founder, sole owner, and CEO of Instant Tax Service and ITS Financial, Ogbazion currently makes all the significant decisions for the company. Historically Ogbazion also made all significant decisions affecting the company. Ogbazion has the final say on decisions as the founder, owner and CEO. (Doc.
1
 Plaintiff’s citations to the record in its Proposed Findings of Fact ranged from wildly inconsistent to borderline unintelligible, slowing the work of the Court significantly.
Case: 3:12-cv-00095-TSB Doc #: 142 Filed: 11/06/13 Page: 3 of 233 PAGEID #: 7290

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