A local tax-preparation business owner who pleaded guilty to instructing his employees to prepare more than 2,300 false tax returns has been sentenced to four years in prison.
David R. Franklin, 44, of Fishers had been charged with three counts of making and filing false tax reports. He was sentenced by U.S. District Judge Tanya Walton Pratt, the U.S. Attorney’s Office announced Thursday.
The filings happened between 2010 and 2012. Officials say the loss to the federal government was about $1.5 million. Franklin was ordered to pay full restitution as part of his plea agreement.
Franklin owned and operated 27 Instant Tax Service franchises in the Indianapolis area that employed more than 50 tax preparers.
In August 2013, U.S. District Judge Sarah Evans Barker granted a civil injunction against Franklin and Instant Tax Service, ordering them to cease preparing tax returns.
An Internal Revenue Service investigation found Franklin directed his employees to prepare Form 1040 Schedule C forms reporting inflated business income or losses, which then resulted in unauthorized earned income credits and refunds for clients of Instant Tax Service.
Franklin was ordered to serve three years of supervised release after his prison sentence.
A preparer who worked for Franklin, William Lee Brown, was sentenced in March to a year in federal prison after pleading guilty to two counts of filing and helping to prepare fraudulent tax returns.
Brown was ordered to pay almost $303,000 in restitution and also was sentenced to a year of supervised release, with six months of that period to be served on home detention.
Prosecutors said Brown filed 65 fraudulent tax returns between 2010 and 2012 while working for Instant Tax Service.
Instant Tax Service had a history of legal issues that led investigators to Franklin.
In March 2012, the U.S. Justice Department went to court seeking to close ITS Financial LLC, which had its headquarters in Dayton, Ohio. Investigators said its owner deliberately ignored systematic and pervasive fraud by Instant Tax Service franchisees.
The government estimates that the tax loss was $16 million in a single year for Instant Tax Service offices in St. Louis, Kansas City, Chicago, Indianapolis and Las Vegas.