Subway Franchisee and Gas Station Owner Pleads Guilty to Multi-Million Dollar Conspiracy to Defraud the IRS

ALEXANDRIA, Va. – Obayedul Hoque, 49, of Alexandria, pleaded guilty today to charges of conspiracy to defraud the United States.

In a statement of facts filed with the plea agreement, Hoque owned and operated a gas station in Alexandria called Skyhill Shell and multiple Subway restaurant franchises in Alexandria, Arlington, and Washington, D.C.  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 gas station or the Subway franchises’ gross receipts 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 a co-conspirator 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.  Hoque also 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. 

Hoque faces a maximum penalty of five years in prison and a fine of $250,000 when sentenced on May 13, 2016. As part of his plea agreement, Hoque agreed to pay restitution to the IRS for tax liabilities for the years 2008 through 2013.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Caroline D. Ciraolo, Acting Assistant Attorney General of the Justice Department’s Tax Division, made the announcement after the plea was accepted by U.S. District Judge Liam O’Grady.  Assistant U.S. Attorney Uzo Asonye is prosecuting the case along with Assistant Chief Caryn Finley and Trial Attorney Kimberly Shartar of the Tax Division.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:16-cr-9.