Restaurant Owners Charged in Tax Fraud Scheme
BOSTON – Three restaurant owners were charged yesterday in a superseding indictment with tax fraud in connection with the operation of three Boston-area restaurants.
Hazrat Khan, 57, of Middletown, NY; Khurshed Iqbal, 57; and Rahman Zeb, 60, all Pakistani nationals, were charged in an 18-count superseding indictment with conspiracy and willful failure to pay over taxes. Khan and Iqbal were initially indicted in April 2016. Khan remains on pretrial release; Iqbal and Zeb’s whereabouts are unknown.
According to court documents, the defendants defrauded the government and avoided paying payroll and income taxes owed by two Crown Fried Chicken restaurants located in Boston and Chelsea and the New York Fried Chicken restaurant in Mattapan. Khan and Iqbal allegedly took steps to conceal their ownership interests in two of the stores and another conspirator, acting at their direction, provided the tax preparers for those stores with false information about the restaurants’ payroll and income, causing the tax preparers to file false tax returns. The indictment alleges a similar scheme at the Mattapan store, where Khan and Zeb conspired to provide tax preparers with false payroll and income information, resulting in the filing of false tax returns for that store as well.
Federal law requires employers to withhold payroll taxes and then pay them over to the IRS. To avoid paying taxes, Khan, Iqbal and Zeb are alleged to have falsely reported the number of employees—some of whom were undocumented workers—and wages paid to the IRS. They are also alleged to have 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, a maximum of three years of supervised release, a fine of $250,000 and restitution. The charge of willful failure to pay over taxes provides for a sentence of no greater than five years in prison, a maximum of three years of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, 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; 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. 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.
The details contained in the Indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.