A federal grand jury this week indicted two Dorchester residents and a Dedham man for their alleged roles in a tax-fraud scheme involving their now closed New York Fried Chicken take-out place.
The grand jury indicted Muhamad Siyab Khan and Khurshed Jehan Badshah, of Dorchester, and Ayaz Ali Shah of Dedham on charges of conspiracy to defraud the United States and filing false tax returns in connection with the New York Fried Chicken joint, formerly at 531 Columbia Rd. the US Attorney's office reports.
Shah and Badshah were also charged with two counts of willfully filing their own false individual income tax returns for tax years 2012 and 2013. Khan is additionally charged with two counts of aiding and assisting in the preparation and presentation of his own false and fraudulent tax returns for tax years 2012 and 2013.
The place was one of 11 New York Fried Chicken and Crown Chicken places in Boston and Chelsea set up by Pakistani nationals working with Hazrat Ali Khan, a Pakistani man living in Middletown, NY, who came up with a scheme to boost profits through creative bookkeeping.
Hazrat Ali Khan was sentenced to 30 months in federal prison and ordered to pay $2.3 million in back taxes and fines in 2017 after pleading guilty.
The outlets were located in Dorchester, Mattapan, Roxbury, Hyde Park, Brighton and Chelsea. The Hyde Park one was shut by the Boston Licensing Board over ownership questions, then allowed to re-open under a new owner.
The Columbia Road indictment, which refers to Khan as describes him as "Co-Conspirator #1," offers a similar story to all the other indictments against Khan and other local men at other restaurants: Khan offered to help the men start a business in exchange for a 40% ownership - and a slice of the true profits that were inflated by reporting false and dramatically lowered revenue and profit figures on tax returns.
According to the indictment, between 2009 and 2014, the three local men and Khan "used a variety of means" to evade paying income taxes on revenue from the shop, including hiding their true income from their tax preparer, not depositing nightly receipts in their business bank account, under-reporting pay on W-2 forms, keeping a separate set of books with the take-out place's true financial figures and filing false tax returns that substantially under-reported the place's revenue and profits. The local men also allegedly made payments to Khan in cash.
The three men could face up to eight years in federal prison if convicted.