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Instant Tax to Dodge DOJ Order

Adam R.'s picture

Posted November 20, 2013

Several e-mails sent by top executives at ITS Financial, the parent of troubled tax preparer Instant Tax, indicate that the company has made plans to circumvent the permanent injuction issued by the U.S. District Court for the Southern District of Ohio. 

On November 7th, the Court denied an appeal by ITS and went ahead with an order against the company and its founder, Fesum Ogbazion. A key aspect of the ruling was its dictum that ITS and its owner would be permanantly barred from operating a tax preparation business. 

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But emails sent within the next few days to franchisees show that the company intends to continue to operate, but under new ownership. Significantly, new ownership will be led by a top executive of ITS Financial. 

On Saturday November 9th, Fez Ogbazion sent an email to ITS franchise owners which hinted at a near-term plan to sell all assets of the company, including franchise agreements and any intellectual property, to a "familiar" individual:

Even though I plan to appeal the order, I have made the decision to sell the assets of the company....This basically means that the new purchaser will become the franchisor for your business....It is too early in the process to disclose the potential purchaser, however, the owner is an individual that you will be familiar with.

Subsequent emails have now identified Harbor Capital LLC as the new purchaser.  Harbor's CEO is Nirav Babu. Babu should stand as a "familiar" person to franchisees. According to his LinkedIn page, he has served as corporate counsel of ITS Financial, LLC. 

On Monday November 11th, Babu wrote an email to the same list of franchisees (sometimes referred to as the "Zees").

I am pleased to announce that Harbor has entered into an agreement with ITS Financial, LLC ("ITS") to acquire certain assets. Specifically, the trademark "Instant Tax Service" and existing franchise/license agreements are included in the Asset Purchase Agreement...This asset purchase agreement allows you to continue as an Instant Tax Service franchisee/licensee and operate for this coming tax season with Harbor as your franchisor.

Most of you already know who I am and those who do not, I look forward to meeting you. Most of my experiences with you and "Instant Tax Service" have always been positive and I look forward to continue that with this franchise relationship for years to come. 

Currently, the answering machine at ITS tells callers that you have reached "Instant Tax and Harbor Capital." 

In the body of a message sent to me by franchisee "Concerned citizen" (an anonymous franchisee), Babu is described as Ogbazion's "best friend and someone who routinely helped ITS hide money from the treasury [sic] and creditors."

"In ITS's motion for stay," Concerned citizen wrote, "they argue somewhat correctly that the ruling leaves them with no room to maneuver, but they turn around and sell the company to one of 'theirs' so that Fesum Ogbazion (the barred CEO) can continue to quarterback the company from behind the scenes." 

Counsel for Instant Tax did not return phone calls.