The US Attorney's office reports Hazrat Khan was sentenced to 30 months in federal custody today for a scheme in which he tried to avoid federal taxes by having the fellow Pakistani natives he recruited to run 11 Boston-area fried chicken places falsify revenue and employee records - and for lying about his past to stay in the country.
Khan, 58, of Middletown, NY, was also ordered to pay more than $2.3 million in back taxes and penalties to the IRS, and a smaller amount to two insurance companies.
The US Attorney's office says Khan, who pleaded guilty in April, faces deportation hearings after his release from his sentence, which also covers lying on immigration documents - he claimed he had never been convicted of anything, when he had actually been convicted of smuggling aliens into the US.
According to the US Attorney's office and testimony at Boston Licensing Board hearings, Khan set up a total of 11 New York, Kennedy and Crown Fried Chicken places, mainly in Boston, and recruited Pakistani nationals to serve as the "owners," even as he maintained a hidden financial stake in them. Then, according to the US Attorney's office:
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, resulting in approximately $2.3 million in unpaid federal payroll and income taxes over a five-year period.
In August, the licensing board shut the New York Fried Chicken outlet on River Street in Hyde Park because of questions over its true ownership and the fact that the listed owner, Riaz Ali Shah, had himself pleaded guilty to participation in Khan's scheme.
Shah awaits sentencing. At his licensing hearing, his attorney, William Cintolo, who also represents several other listed owners of chicken places, said Shah had been duped into the scheme by Khan:
"He doesn't understand English well or the nature of how business is conducted in the United States," he said, adding Khan's method of business was to buy chicken places, put others up as front men, and then keep most of the profits."
The licensing board has postponed hearings on several other Khan-related chicken places. Among the places tied to Khan in Boston: New York Fried Chicken and Crown Fried Chicken on Blue Hill Avenue in Mattapan, Chili Hot Dog and Grill in Roxbury, New York Fried Chicken on Blue Hill Avenue in Dorchester and Columbus Avenue in Egleston Square and New York Chicken and Pizza on Columbia Road in Dorchester.
Two other men charged with Khan remain on the lam, possibly having fled back to Pakistan. Yet another man, a Watertown resident who owned a Kennedy Fried Chicken and a Crown Fried Chicken, was charged for his alleged participation in the scheme.