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April 30, 2003 The United States Attorney's Office for the Northern District of California announced today that Zain I. Ali was sentenced yesterday to 12 months and 1 day in prison for income tax evasion. The sentence was handed down by U.S. District Court Judge Armstrong following a guilty plea on one count in violation of 26 U.S.C.§ 7201. Mr. Ali, 31 of Newark, California, was indicted by a federal grand jury on April 2, 2001. He was charged with three counts of income tax evasion for his 1994, 1995 and 1996 tax years. According to the plea agreement, Mr. Ali admitted that while he was the accounting manager at Vic/Tal Sales, he embezzled $386,248.63 over the years 1994, 1995 and 1996. As accounting manager, Ali's responsibilities included accounts receivable, accounts payable, preparing checks (including stamping the company president's signature on each check), reconciling checking accounts, and preparing monthly income statements, balance sheets and general ledger entries. In 1994, 1995 and 1996, Ali issued checks payable to himself which referenced the names of third-party vendors. These were actual vendors with whom Vic/Tal Sales did business; however, Ali fabricated the services rendered, the invoice dates and the amounts. To further conceal the embezzlement, Ali input false invoice data into the computerized accounts payable system. For each false invoice, Ali altered the accounts payable master file, substituting as the payee his own name and address for the vendor's. Ali used the president's signature stamp to endorse the checks. When canceled checks and bank statements arrived in the mail, Ali removed the canceled checks which reflected payments to myself to further conceal the embezzlement. As an accountant, Ali knew that income from embezzlement is taxable and must be reported on one's federal income tax return. For the years 1994 and 1995, Ali gave no information about his embezzlement income to his tax return preparer. Accordingly, Ali falsified his federal income tax returns by omitting $ 79,114.92 and $ 110,865.72 in embezzlement income for 1994 and 1995, respectively. Ali failed to file a federal income tax return for 1996 notwithstanding the fact that he knew that he had received $ 196,267.99 in embezzlement income for that year. Judge Armstrong sentenced the Defendant to 12 months and 1 day in federal prison, to pay restitution to the United States in the amount of $109,088.47, as well as a three year period of supervised release. The Defendant will begin serving the sentence on June 13, 2003. The prosecution was the result of a two year investigation by agents of the Internal Revenue Service. David L. Denier is the Assistant U.S. Attorney who prosecuted the case with the assistance of Kathy Tat. A copy of this press release may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can/press/index.html. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on http://pacer.cand.uscourts/gov.All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415)436-7181.
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