Subway Franchisee and Gas Station Owner Sentenced to Prison in Multi-Million Dollar Conspiracy to Defraud the Internal Revenue Service
Defendant Failed to Report More Than $6 Million in Gross Receipts
A Subway franchisee and resident of Alexandria, Virginia, was sentenced to more than two years in prison today for conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente for the Eastern District of Virginia.
Obayedul Hoque, was sentenced to 30 months in prison followed by two years of supervised release by U.S. District Judge Liam O’Grady. Judge O’Grady ordered Hoque to pay a $20,000 fine and $2,022,106 in restitution to the Internal Revenue Service (IRS) for tax liabilities for the years 2008 through 2013.
According to court documents, Hoque owned and operated Skyhill Shell, a gas station in Alexandria and multiple Subway restaurant franchises in Washington, D.C., Arlington, Virginia, and Alexandria. Hoque admitted that between 2008 and 2014, he and his co-conspirators, who were managers of some of the Subway franchises and the gas station, conspired to defraud the United States for the purpose of obstructing the IRS in the ascertainment and collection of individual and corporate income taxes. Hoque and his co-conspirators did not deposit all of the gross receipts of the gas station or the Subway franchises into the corporate or partnership bank accounts. Instead, Hoque and the managers retained a portion of the gross receipts for their personal benefit and failed to report those funds to the IRS. For the Subway franchises that had no co-conspirator managers, Hoque retained all of the unreported gross receipts for himself.
For the period of 2008 through 2013, point of sales records for the Subway franchises reflected total sales of $20,805,667. However, Hoque and his co-conspirators provided false monthly sales figures to the accounting firm to prepare the Subway entities’ tax returns. As a result, Hoque and his co-conspirators caused false corporate and partnership tax returns to be filed for the Subway franchises which reported sales of only $14,377,696. Hoque and his co-conspirators also caused false corporate tax returns to be filed on behalf of Skyhill Shell. For some years, some of the entities did not file tax returns with the IRS. Additionally, Hoque filed false individual income tax returns with the IRS. Hoque admitted that his conduct caused a tax loss to the IRS of between $1.5 million and $3.5 million.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Uzo Asonye and Assistant Chief Caryn Finley and Trial Attorney Kimberly Shartar of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.