Fraudulent Fowl

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53466460 - computer keyboard with a lack and white danger sign with text tax fraud

Have you ever wondered why eggs are packaged and sold by the dozen? The reason why actually dates back to the first century when an egg could be sold for a penny, or 12 for a shilling (which was equal to 12, or a dozen pennies). A Middletown, Massachusetts man, who was the co-owner of nearly a dozen chicken takeout restaurants in the Boston area, erroneously reported the number of pennies earned from selling his fowl. He and his co-conspirators committed tax fraud and workers’ compensation fraud by shortchanging the Internal Revenue Service (IRS) and two insurance companies of more than $2.3 million.

The chicken restaurant co-owner and his partners in crime carried out their tax fraud scheme by neglecting to pay payroll and income taxes owed by his 11 stores. Employees were paid in cash and the co-owner provided fake information about the company’s payroll to their tax preparers, who consequently filed erroneous tax returns. (When caught, I bet the co-owner chickened out and tried to blame the crime on the tax preparers.)

Tax fraud was just the tip of the beak for this chicken restaurant owner that ran afoul. He also committed workers’ compensation fraud when he underreported his payroll to two workers’ compensation insurance carriers, which meant he paid less for his workers’ compensation insurance premiums. (As you might eggs-pect, there was still more going on in the henhouse than just laying eggs.)

The restaurant co-owner, who is a native of Pakistan, made fraudulent statements on his naturalization application, which meant he also committed immigration fraud. He denied having a previous conviction for smuggling aliens. (I bet that really ruffled the government’s feathers.)

The 58-year-old Pakistani man pleaded guilty to multiple fraud schemes and was sentenced to 30 months in federal prison. He must repay $2,343,155 to the IRS and $27,863 to the two insurance companies he defrauded. After serving his prison sentence, he will face deportation proceedings. (He probably wishes he had flown the coop prior to being caught and prosecuted. I guess the yolk is on him.)

Today’s “Fraud of the Day” is based on an article entitled, Middletown man who co-owns Mass. restaurants sentenced for fraud,” published by Times Herald-Record on November 2, 2017.

BOSTON — A Middletown man who co-owns a string of chicken takeout restaurants in the Boston area was sentenced Wednesday to 30 months in federal prison for tax and insurance fraud, as well as immigration and visa fraud.

Hazrat Khalid Khan, 58, a native of Pakistan, will face deportation proceedings after he serves his prison sentence. He must also repay $2,343,155 to the IRS and $27,863 to two insurance companies.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.