Three men, one from New York, and two from Massachusetts, who operated two Boston-area fried chicken restaurants, were charged April 29, with conspiring to file false tax returns.
Hazrat Khalid Khan, 56, of Middletown, N.Y., and Khurshed Iqbal, 56, whose whereabouts are unknown, were charged 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, Massachusettes, was charged with one count of conspiracy and two counts of making and subscribing false tax returns.
The charge of conspiracy carries a maximum sentence of five years in prison, three years of supervised release, a fine of $250,000 and restitution. The charge of failure to account for pay taxes, carries the same punishment. The charge of subscribing a false tax return can lead to a maximum sentence of three years in prison, one year of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, as well as the costs of prosecution and restitution.
Hazrat Khan pleaded not guilty and was let out on a $100,000 bail, but with an electronic monitoring device. His lawyer told Times Herald-Record his client was happy to be back with his family in Middleton, N.Y.
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. Adalat Khan managed both restaurants and Hazrat Khan and Iqbal allegedly 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. But prosecutors claim 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 were not an accurate reflection of their sales, total income, compensation of officers, salaries and wages, and taxable income, prosecutors say.
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