David R. Franklin, Tax Preparation Fraud, Indiana 2013

David R. Franklin, a 44-year-old tax preparation business owner, has been sentenced to 48 months (four years) imprisonment for his role in directing the filing of over 2300 false tax returns, preying on the financially disadvantaged and resulting in a loss to the Internal Revenue Service and the American public of $1,501,000.

According to the investigation, Franklin, who owned and operated 27 Instant Tax Service (ITS) tax preparation stores in the Indianapolis area, employed and trained over 50 preparers. On August 8, 2013, United States District Judge Sarah Evans Barker granted a permanent civil injunction against Franklin and ITS, ordering them to cease preparing, filing or assisting in the preparation or filing of any federal tax return.

The Internal Revenue Service-Criminal Investigation initiated an investigation of Franklin, revealing that he trained and directed his employee return preparers regarding the preparation of federal income tax returns. Specifically, Franklin counseled and advised his employees to prepare false and fraudulent federal income tax returns for multiple clients from 2010 through 2012.

As a specific means of generating false returns, Franklin directed his employees to prepare Form 1040 Schedule C forms reporting inflated business income or losses, resulting in unauthorized earned income credits and refunds for taxpayer clients of ITS.

Assistant United States Attorney James M. Warden, who prosecuted this case for the government, stated that Franklin must make restitution of $1,501,000 and serve three years of supervised release after his sentence.

U.S. Attorney Josh J. Minkler emphasized the seriousness of Franklin’s offense, stating, "Mr. Franklin did not steal from an agency in Washington, he stole from his fellow citizen."

IRS Special Agent Gabriel Grchan added, "Dishonest tax return preparers should take notice that your activities do not go unnoticed. IRS Criminal Investigation is focused on protecting taxpayers by exposing unscrupulous tax return preparers through criminal prosecution and today’s sentencing is another example of these efforts."

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