TAMPA (CN) - A tax preparation chain claims it was sold a bill of goods by a payroll accountant and tax preparer whose business it bought. The buyer claims Prashant Govindaraju sold his Everest Consulting Group for $720,000, without revealing that he kept double books - one for the IRS and one for his customers - and that he pocketed the monthly payroll deductions and got most of his income from "theft and embezzlement from Everest's clients." Govindaraju waltzed to India, where he is spending his swag, according to the complaint.
National Tax Centers sued Govindaraju aka Prashant Raju and the Everest Consulting Group, in Hillsborough County Court.
National Tax president Barnell Jones, a co-plaintiff, says he bought Govindaraju's company for $720,000 after Govindaraju convinced him that he had a steady and profitable customer base, including more than 500 small business and individual clients. Jones said he was told to expect a net annual income of $300,000.
But he says Govindaraju "never disclosed the fact that the income of Everest was based in large part on theft and embezzlement from Everest's clients."
Govindaraju's "disclosures did not include any indication that Govindaraju had generated two sets of tax returns or that Everest pocketed part of client refunds without the clients' knowledge. They did not disclose that Everest was pocketing monthly payroll deductions rather than forwarding them to the IRS. They did not include the second set of paperwork - 1040s, 1099s, etc. - that Everest and Govindaraju had used to effect the theft against clients," according to the complaint.
Jones says that "the actual, legitimate income of EVEREST was approximately eighteen percent (18%) of that which was represented by the defendants. The remainder of the income received by Everest under Govindaraju's management was obtained fraudulently. In order to continue generating the income that had been represented to them, the plaintiff would have to continue to engage in acts of fraud against clients. This they refuse to do."
After untangling the two sets of books, Jones says, he estimates that Govindaraju swiped a total of $804,740 from 108 clients from 2007 through 2010.
Govindaraju "fled the country and is in India, where he has family" and "is rapidly transferring the proceeds of the sale out of the United States," according to the complaint.
Not surprisingly, Jones says, most of the customers of the business he are taking their business elsewhere, and his new business's "income stream is severely diminished" due to the "disastrous" dealings with Govindaraju.
The plaintiffs seek rescission of contract and damages for fraud, breach of contract, and other claims. They are represented by Joe Gonzalez of Tampa.
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