FORMER GENERAL MANAGER OF WARSAW WIRELESS PLEADS GUILTY TO TAX FRAUD CHARGE
MONDAY AUGUST 08, 2011
Public Affairs Officer
COLUMBUS – Basil Asad, 38, of Cincinnati pleaded guilty to one count of willfully filing a false federal income tax return with the Internal Revenue Service (IRS). Asad faces a maximum prison sentence of three years and a fine of up to $250,000.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Tracey E. Warren, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office; and James Vanderberg, Special Agent in Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering, Chicago Region announced the plea entered yesterday before Senior United States District Judge S. Arthur Spiegel. Asad was released on bond pending sentencing on November 17, 2011.
According to court documents, in 2002 Basil Asad began his employment with Warsaw Wireless, Inc. and Warsaw Wireless of Kentucky, Inc. (Warsaw Wireless). Warsaw Wireless was mobile telephone stores which were owned by Asad’s cousin, Khalid Alnajar. Asad became the general manager and was trained by Alnajar on how the employees were to be paid.
Alnajar developed a practice of paying a substantial portion of the managers’ salaries under the table. From 2004 to 2007, Alnajar used three different payroll companies to pay the employees of Warsaw Wireless. Alnajar or Asad, acting on Alnajar’s behalf, supplied these payroll companies with information relative to how many hours the employees worked, as well as the amounts they were to be paid. However, the information supplied to the payroll companies did not reflect the true hours worked by, or the amounts paid to, Warsaw Wireless employees. Alnajar paid only a small portion of the wages of his store managers and other trusted employees through payroll and paid the rest of their salaries through personal or company checks. Alnajar directed Asad to write business checks to managers, including himself (Asad), on a regular basis, in amounts specified by Alnajar, which were in addition to the actual payroll amounts.
Alnajar used the payroll companies to prepare the Forms W-2 for his employees and the Forms 941 (quarterly federal employment tax returns) for Warsaw Wireless. Employment taxes consist of Federal income tax withholdings and Federal Insurance Contribution Act taxes (“FICA taxes”). FICA taxes consist of Social Security taxes and Medicare taxes. Alnajar did not disclose to the payroll companies the amounts paid to the employees by business check; therefore, the employees’ Forms W-2 and Warsaw Wireless’ Forms 941 reflected only the amounts paid through payroll. By doing so, Alnajar and Warsaw Wireless were able to evade the assessment of quarterly employment taxes. Also, Alnajar and Warsaw Wireless did not withhold and pay over the employer’s share of the employment taxes to the IRS.
Asad willfully filed a false federal 2006 income tax return with the IRS. Asad only reported the wage income which he received through payroll ($15,600) and not the additional amounts of income he received through the Warsaw Wireless business checks. Asad should have reported $82,000 in wage income. Therefore, Asad had $66,400 in unreported income relative to his 2006 federal income tax return.
On May 18, 2011, Khalid Alnajar, of Cincinnati, was indicted on 12 counts of employment tax fraud and two counts of willfully filing a false federal income tax return with the IRS. Alnajar is currently scheduled for trial on October 17, 2011 before Senior United States District Judge Sandra S. Beckwith.
This case is being prosecuted by Assistant United States Attorney Ben Glassman and was investigated by special agents of IRS-Criminal Investigation and the Department of Labor Office of Inspector General.