Investigation
On April 3, 2007, the United States Justice Department announced that the federal government had filed civil injunction suits alleging tax fraud by five corporations owned or partly owned by Farrukh Sohail. According to the four lawsuits filed in federal courts in Chicago, Atlanta, Detroit and Raleigh, N.C, the corporations operate under franchise agreements with Jackson Hewitt Tax Services Inc. On September 28, 2007 the Department of Justice announced that it had reached settlements with each of the defendants in the case. Under the settlement agreements the majority owner, Farrukh Sohail, of each of the businesses will be barred from preparing tax returns for five years, roughly 15 of Mr. Sohail's employees have been permanently enjoined from preparing tax returns. Neither Mr. Sohail nor his incorporated businesses will pay any financial penalties under the settlement agreement, indicating that the fraud committed was not done with the consent of senior management in Mr. Sohail's business.
On September 6, 2007 Jackson Hewitt said that their internal review found no evidence its employees knew of the scheme that led to U.S. Department of Justice lawsuits. The internal review, led by former IRS Commissioner, Fred Goldberg: "...did not find evidence of corporate employee participation in, or knowledge of, the allegedly fraudulent tax return preparation activities."
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