10 May 2002 - United States Attorney Patrick L. Meehan today announced the unsealing of a six-count indictment charging defendant Jameel El-Fahel and five other defendants with a multi-million dollar tax evasion conspiracy and other criminal offenses. El-Fahel, a naturalized citizen of the United States, is charged with two counts of conspiracy to defraud the Internal Revenue Service by employing a deceptive check-exchange scheme to allow his co-defendants to pay unreported cash wages to employees and then not withhold or pay any employment tax.

According to the indictment, El-Fahel owned and operated the Beirut Restaurant in Allentown, Pennsylvania. El-Fahel exchanged checks with co-defendants Michel Kastoun, Maha Kastoun, Issam Azar and Yacoub Salib, all of whom owned and operated businesses in the local garment industry. In exchange for these business checks, El-Fahel provided the Kastouns, Salib and Azar with numerous checks made payable to themselves and others. Defendants Jameel El-Fahel and his daughter, Rima Fahl, used bank accounts under the name of Beirut Restaurant and J & K Fashion to deposit the business checks for the co-defendants and provide cash and checks written against the accounts to the co-defendants, in amounts usually less than $10,000.00, to avoid currency transaction reporting requirements. The co-defendants and their agents cashed the checks provided by El-Fahel and Fahl and used the cash to pay unreported cash wages to their employees.

According to the indictment, defendants Michel Kastoun, Maha Kastoun, Yacoub Salib and Issam Azar paid Jameel El-Fahel and Rima Fahl a three percent fee for depositing their business checks and providing cash and checks back to pay unreported cash wages to employees. The three percent fee was never reported to the Internal Revenue Service as income

The Internal Revenue Code and regulations require employers to withhold from employees' paychecks and to pay to the IRS certain payroll taxes, including Federal Income Tax Withholding ("FITW") and the Federal Insurance Contributions Act ("FICA") taxes as follows:

a. Employers are required to withhold FITW on the wages of employees and pay the money withheld to the IRS;

b. FICA contributions are to be made up of four components: the employee's and employer's equal shares of 6.2% for Social Security and 1.45% for Medicare taxes. An employer is also required to withhold the employee's share and contribute it together with the equal employer's share, a total of 15.30% of wages, to the IRS;

c. Employers are required to file a quarterly combined FITW and FICA tax return on an Employer's Quarterly Tax Return, IRS Form 941, in the case of a corporation, or annually on IRS Form 1040, Schedule C, in the case of a sole proprietorship;

d. Employers are required to file an annual reconciliation of the quarterly tax return, IRS Form 940, in the case of a corporation, or on IRS Form 1040, Schedule C, in the case of a sole proprietorship; and

e. Employers are required to issue to each employee and file with the IRS an IRS Form W-2 reporting all wages paid, and all FITW and FICA withheld.

According to the indictment, defendants Salib and Azar paid more than $2,000,000.00 in cash wages to their employees without withholding, paying or reporting the required employment taxes. Defendants Michel and Maha Kastoun paid more than $700,000.00 in cash wages to their employees without withholding, paying or reporting the required employment taxes.

In addition, Jameel El-Fahel was charged with bank fraud and two counts of money laundering. According to the indictment, El-Fahel mortgaged his home at 2757 Suncrest Drive, Allentown, Pennsylvania, twice in the same week with two different banks. On September 10, 1998, El-Fahel obtained $195,000 from Bank of Pennsylvania after pledging his home as collateral. On that same day, El-Fahel obtained $145,000 from PNC Bank after pledging the same home as collateral. Shortly after obtaining the two second mortgages, El-Fahel caused nearly all of the loan proceeds to be wire transferred to Beirut Lebanon.

In addition, Rima Fahl, Esq. and her former client, Yacoub Salib, were charged with making a false statement to a United States Bankruptcy Trustee. According to the indictment, Salib filed for bankruptcy and was represented by Rima Fahl. At a hearing before the United States Bankruptcy Trustee, Salib and Fahl both made materially false statements regarding the status of certain business assets.

DEFENDANT	ADDRESS	AGE [Date of Birth]
JAMEEL EL-FAHEL a.k.a. "Jimmy"	Beirut, Lebanon	DOB: 1/31/41
YACOUB SALIB a.k.a. "Jacob"	3340 Harmor Circle Bethlehem, PA	DOB: 12/15/62
ISSAM AZAR a.k.a. "Sam"	186 Tilghman Street Allentown, PA	DOB: 8/25/63
RIMA FAHL	2688 Rolling Green Place Macungie, PA	DOB: 1/1/67
MICHEL KASTOUN	1760 Elmwood Drive Whitehall, PA	DOB: 1/1/58
MAHA KASTOUN	1760 Elmwood Drive Whitehall, PA	DOB: 10/12/54

If convicted, JAMEEL EL-FAHEL, a/k/a "Jimmy," faces a maximum sentence of 60 years imprisonment, 5 years supervised release, a $2,000,000 fine and a $500 special assessment.

Defendant YACOUB SALIB, a/k/a "Jacob," owned and operated clothing manufacturing businesses in Allentown and Bethlehem, Pennsylvania under several names, including Fountain Hill Sportswear, Fountain Hill Manufacturing and Rochelle Manufacturing. If convicted, Salib faces a maximum sentence of 10 years imprisonment, 3 years supervised release, a $500,000 fine and a $200 special assessment.

Defendant ISSAM AZAR, a/k/a "Sam," owned and operated Azar Fashions, Inc., which was located at 201 North 3rd Street, Allentown, Pennsylvania, 18102. If convicted, Azar faces a maximum sentence of 5 years imprisonment, 3 years supervised release, a $250,000 fine and a $100 special assessment.

Defendant RIMA FAHL was an attorney licensed to practice law in the Commonwealth of Pennsylvania. She practiced law in a law office located at 137 North 5th Street, Allentown, Pennsylvania, 18102. If convicted, Fahl faces a maximum sentence of 10 years imprisonment, 3 years supervised release, a $500,000 fine and a $200 special assessment.

Defendants MICHEL KASTOUN and MAHA KASTOUN owned and operated K & J Sportswear at 731 North Meadow Street, Allentown, Pennsylvania, 18102. If convicted, both Michel Kastoun and Maha Kastoun face a maximum sentence of 5 years imprisonment, 3 years supervised release, a $250,000 fine and a $100 special assessment.

The case was investigated by the Internal Revenue Service and Federal Bureau of Investigation and has been assigned to Assistant United States Attorney Thomas M. Gallagher.