Owners of Boston-Area Fried Chicken Restaurant Charged in Tax Fraud Scheme
BOSTON – Three men who operated two Boston-area fried chicken restaurants have been charged with conspiring to file false tax returns as part of a long-running scheme to avoid paying payroll and income taxes.
Hazrat Khan, 56, of Middletown, NY, and Khurshed Iqbal, 56, whose whereabouts are unknown, were charged in an indictment unsealed today with one count of conspiracy to defraud the United States and 13 counts of willful failure to account for and pay taxes. Adalat Khan, 46, of Chelsea, Mass., was charged in an Information with one count of conspiracy and two counts of making and subscribing false tax returns.
According to court documents, the defendants used a variety of means to avoid paying payroll and income taxes owed by their restaurant, Crown Fried Chicken, which has locations on Warren Street in Boston and Broadway in Chelsea. As part of the conspiracy, Adalat Khan managed both restaurants and Hazrat Khan and Iqbal took steps to conceal their ownership interests. Adalat Khan, at the direction of Hazrat Khan and Iqbal, allegedly provided tax preparers with false information about the restaurants’ payroll and income. Federal law requires that employers withhold payroll taxes and pay it to the IRS. As part of the scheme, the defendants falsely reported the number of employees, some of whom were undocumented workers, and wages paid to the IRS. They also allegedly paid employees under the table and filed income tax returns that falsely described their sales, total income, compensation of officers, salaries and wages, and taxable income.
The charge of conspiracy provides for a sentence of no greater than five years in prison, three years of supervised release, a fine of $250,000 and restitution. The charge of failure to account for a pay taxes provides for a sentence of no greater than five years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, the costs of prosecution and restitution. The charge of subscribing a false tax return provides for a sentence of no greater than three years in prison, one year of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, the costs of prosecution and restitution. Actual sentences for federal crimes are typically less than maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Boston Police Commissioner William Evans, made the announcement today. The case was investigated with the cooperation of the Massachusetts Insurance Fraud Bureau. The case is being prosecuted by Assistant U.S. Attorneys John A. Capin and Eric P. Christofferson of Ortiz’s Criminal Division.
The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.