Unusual Verdict: Jackson Hewitt Liable For Franchisee’s Actions

BusinessWeek:

Last Wednesday a jury found that franchisor Jackson Hewitt Tax Services (JTX) must pay a Sarasota dentist $575,000 for his losses in being duped in a broad investment scheme by franchisee Daniel Prewett, a convicted felon.

Prewett had been in prison for a tax fraud conviction prior to running his tax preparation franchises for over ten years.

And yet the brand appointed him as a franchise owner. Attorneys for the investor testified that Jackson Hewitt never conducted criminal background checks to find his fraud conviction. They instead gave him a lifetime achievement award.

Prewett is currently serving an 18-year prison term in laundering cash for undercover agents and financing a sale of cocaine. He had been arrested by undercover federal agents in 2006, while working in his tax preparation office. After he posted bail, he conducted business as usual, although he was barred from doing so. In 2007, he fled the country and was later captured in Italy. Prewett was extradited to the United States for sentencing.

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