Restaurant Owner Pleads Guilty to Multiple Fraud Schemes
BOSTON – A restaurant owner pleaded guilty today in federal court in Boston to tax and insurance fraud at 11 Boston-area restaurants and to committing visa and immigration fraud in an effort to remain in the United States unlawfully.
Hazrat Khalid Khan, 57, of Middletown, N.Y., a Pakistani national, pleaded guilty to a five-count Information charging him with conspiring to defraud the Internal Revenue Service, failing to collect and pay over taxes, committing mail fraud, making false statements on a naturalization application, and committing visa fraud. U.S. District Court Judge Rya W. Zobel scheduled sentencing for August 16, 2017.
Khan’s plea will resolve two open cases in the District of Massachusetts and one in the Southern District of New York. The whereabouts of two of his co-defendants, Khursed Iqbal, 57, and Rahman Zeb, 61, both Pakistani nationals, remains unknown.
According to the Superseding Information, Khan was the partial owner of 11 fried chicken takeout restaurants in the Boston-area, including Boston proper, Roxbury, Chelsea, and Mattapan. As part of a tax fraud scheme that ran for years, Khan and his co-conspirators - generally the managers of these restaurants - defrauded the government and avoided paying payroll and income taxes owed by the stores. They paid their employees in cash and provided tax preparers with false information about the restaurants’ payroll and income, thereby causing the tax preparers to file false tax returns.
Federal law requires employers to withhold payroll taxes, which includes Social Security and Medicare taxes, and then pay them over to the IRS. To avoid paying taxes, Khan and several co-conspirators falsely reported to the IRS the number of employees at their stores - some of whom were undocumented workers - and the wages they paid them. They also failed to file W-2s showing wages paid to employees and falsely described on tax returns their sales, total income, compensation of officers, salaries and wages, and taxable income. Khan and his co-conspirators also failed to withhold payroll taxes and pay them over to the IRS.
The charges of conspiracy and failure to collect or pay over taxes provide for a sentence of no greater than five years in prison; the charge of mail fraud provides for no greater than 20 years in prison; and the charges of naturalization and visa fraud provide for no greater than ten years’ imprisonment. Each of the charges also provides for supervised release for a maximum of three years, a fine, 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.
Acting United States Attorney William D. Weinreb; Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; and Boston Police Commissioner William Evans, made the announcement. The case was investigated with the cooperation of the Massachusetts Insurance Fraud Bureau. Assistant U.S. Attorneys John A. Capin and Brian A. Pérez-Daple of Weinreb’s Criminal Division are prosecuting the case.