The order followed a two-week trial in June. The chain, with about 150 franchisees, which was charged with filing tax returns for customers without their permission and encouraging franchisees to do the same. The Justice Department said franchisees were secretly trained and encouraged to file returns based on paycheck stubs. The court also found the defendants had franchisees provide tens of thousands of customers with Truth-in-Lending Act disclosure forms falsely stating that the loans carried no finance charge and had an annual percentage rate of several.
Court records said ITS Financial had about 150 franchisees that prepared more than 100,000 returns each year in 2011 and 2012. Two other Ogbazion companies, Tax Tree and TCA Financial, were also ordered to cease operating. An IRS study found Instant Tax franchisees in five cities cost the government between $10 million and $25 million in one filing season.
There was testimony about a widespread series of fraudulent practices by the chain. That included marketing fake loan products to lure its largely low-income clients into its offices; requiring franchisees to pay phony and exorbitant fees; forging customers' signatures on loan checks and using the proceeds to operate Ogbazion's businesses; willfully failing to pay more than $1 million in taxes while lying about assets in connection with the collection of those taxes and hiding money in a secret bank account.
The government said the parent company lied on government forms and encouraged franchisees to do the same; obstructed government agents and materially assisted franchisees in circumventing Internal Revenue Service law-enforcement efforts involving the suspension of electronic filing identification numbers; and told franchisees to lie to government agents during visits by the Internal Revenue Service.
The court credited an IRS study concluding that revenue losses caused by Instant Tax Service franchisees in five cities in a single tax-filing season was between $10 million and $25 million.
Ogbazion and ITS Financial were also found to have violated a preliminary injunction order entered in October 2012 in which they promised to obey various lending and consumer-protection laws during the 2013 tax filing season. The court said the defendants also discriminated against active-duty military personnel on loan applications and by failing to obtain a state lending license in a timely manner.