SARASOTA, Fla. (CN) – A felon used two Jackson Hewitt storefronts to sell more than 80 clients fraudulent money market and joint venture products in a Ponzi scheme, the 87 plaintiffs claim in Sarasota County Court. The plaintiffs say Jackson Hewitt failed to follow its own policies by not conducting a background check on Allan Scott, an alias that Dan Prewett used to purchase the franchises, or to check out his wife, Elizabeth George, who paid the franchise fee.
A background check would have revealed that Prewett pleaded guilty in New York to 12 counts of a 17-count indictment, including grand larceny and insurance fraud, the plaintiffs say. Prewett induced 19 people to buy insurance from a nonexistent insurance company and diverted premium payments for his own use, according to the complaint.
The plaintiffs add that a check also would have revealed that Prewett holds no degree nor licenses for accounting, tax law, selling securities, nor a Ph.D., all of which he claimed on his franchise applications.
“Had Jackson Hewitt performed a reasonable background investigation, it would have known who it was dealing with: Daniel Prewett, a convicted felon,” the complaint states.
Prewett’s corporation, SFS, bought the Jackson Hewitt franchises in 1993, the plaintiffs say. In June 1996, Prewett formed Jackson Hewitt Investment Services, (JHIS) and operated it out of a Jackson Hewitt location using the same resources and employees, according to the complaint.
Jackson Hewitt learned of the new entity in 2002 and demanded he change its name change, the complaint states. The plaintiffs say that Prewett then formed JH Investment Services, and Jackson Hewitt issued an addendum to the franchise agreement, allowing Prewett to operate the new business and giving Jackson Hewitt certain rights to inspect records, control advertising, and collect royalties and fees.
But plaintiffs say Jackson Hewitt failed to take any steps to investigate the misuse of the name association, in violation of their own franchise agreement, which prohibited operation of multiple businesses or the use of confusing similar company names that would cause customers to believe they were affiliated with or approved by Jackson Hewitt Tax Service.
The plaintiffs seek punitive damages for conspiracy, negligence and fraud. Their lead counsel is Robert Turffs of Sarasota.