Owners Of Former Decatur Charged With Tax Fraud Conspiracy; Tax Evasion - Alleged $2.1 Million in Gross Receipts Unreported Over Three Years
Springfield, Ill. – An indictment returned today by a federal grand jury in Springfield charges three men who owned Ayat 1, Incorporated, which operated as Price Rite Food & Liquor, in Decatur, Illinois, with tax offenses related to failure to pay corporate federal income tax and Illinois sales tax. According to court documents, Jalal Nimer Asad, of Peoria; Mohamed Rebhi Qattoum, of Decatur; and Imad Ribhi Abdallah, of Washington, Illinois, each held ownership interest in Ayat 1, Inc. The indictment alleges that from July 2001 to March 2005, the three men conspired to under-report the corporation’s gross receipts by approximately $2.1 million for tax years 2002, 2003, and 2004.
The indictment alleges the defendants maintained two sets of business records for Ayat 1, Inc., one that reflected the true nature of the business’s income and expenses and another that substantially under-reported Ayat 1's true income. According to the indictment, a substantial portion of Price Rite’s business was transacted in cash; however, the indictment alleges that the defendants failed to deposit all of the generated cash in the corporation’s bank account, and generally split the remaining un-deposited cash amongst themselves. Information from the false set of books was allegedly provided to the business’s accountant for use in preparing Ayat 1, Inc.’s corporate U.S. income tax returns and state sales tax returns.
The indictment alleges the corporate income tax returns filed by Ayat 1, Inc., substantially under-reported the gross income, taxable income and the taxes owed by the business. For tax year 2002, the indictment alleges the corporation reported its taxable income as $8,802 with $1,320 tax due, when the defendants knew the actual taxable income was approximately $429,120 with $145,900 due in tax. For 2003, the indictment alleges the corporation reported its taxable income as $150.00 with $23.00 tax due, when the actual taxable income was approximately $439,636 with approximately $149,476 due in tax. For its tax return filed for calendar year 2004, the indictment alleges the corporation reported $3,108.00 in taxable income and $466.00 in tax due, when the taxable income was approximately $49,654.00 with approximately $21,684 in tax due.
Asad, Qattoum, and Abdallah are also each charged with three counts of mail fraud related to the corporation’s alleged under-reporting of sales receipts and Illinois sales tax revenues to the Illinois Department of Revenue from July 2001 to approximately June 2004. The defendants allegedly provided information from the false set of books to the business’s accountant to prepare monthly State of Illinois sales tax reports that were mailed to the Illinois Department of Revenue. The indictment charges that the corporation under-reported the business’s total sales receipts for February 2004 as $102,642 when actual sales were approximately $165,864; for March 2004 as $104,917 when actual sales were approximately $168,406; and for April 2004 as $110,891 when actual sales were approximately $168,493.
Imad Ribhi Abdallah, listed on documents filed with the Illinois Secretary of State’s Office as the President, Secretary and Registered Agent for Ayat 1, Inc., is also charged with three counts of signing false corporate U.S. tax returns for tax years 2002, 2003, and 2004.
Qattoum and Abdallah will be issued summonses to appear in federal court in Urbana, Illinois, at a date to be determined by the U.S. Clerk of the Court. A warrant has been issued for the arrest of Asad.
If convicted, each of the counts of conspiracy to defraud the IRS (one count) and tax evasion (three counts) is punishable by a maximum statutory penalty of five years in prison. The statutory penalty for each count of mail fraud (three counts) is up to 20 years in prison. The maximum penalty for each count (three counts) of signing a false tax return is three years in prison.
Members of the public are reminded that an indictment is merely an accusation; the defendants are presumed innocent unless proven guilty.
The charges are the result of an investigation by the Criminal Investigation Division of the Internal Revenue Service; the Illinois Department of Revenue; the Federal Bureau of Investigation; the Decatur Police Department and the Illinois State Police. The case is being prosecuted by Assistant U.S. Attorneys Patrick J. Chesley and Elly M. Peirson.
James A. Lewis
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