 Naveed Ahmed and his brother, Asif Waheed, entered guilty pleas to wire fraud,
mail fraud and preparing fraudulent Illinois sales and use tax returns on behalf
of eight gas station owners in a scheme to evade paying $5 million in state
sales tax. The brothers conspired with gas stations in Chicago, Cicero, Homewood
and Joliet to underreport their gasoline sales in order to lower their state
sales tax bills from December 2007 through February 2009.
The cases are the latest development in an ongoing joint investigation and
enforcement effort between the attorney general's office and the Department of
Revenue, which to date has resulted in the recovery of nearly $75 million in
unpaid state sales taxes.
"Our ongoing investigations and enforcement efforts have uncovered egregious
cases of fraud against the taxpayers of Illinois," Madigan said. "So far we have
successfully recovered nearly $75 million in unpaid taxes to the state, but our
efforts will not stop there. We will continue to hold dishonest business owners
accountable for illegally profiting at the expense of their customers and the
state."
In August 2010, Madigan and the Department of Revenue launched the criminal
enforcement operation to recoup millions of dollars in sales tax losses after
discovering hundreds of gas stations throughout Illinois underreported their
revenues to avoid paying state taxes.
"When we successfully investigate and prosecute tax fraud, we ensure that
honest businesses are not placed at an unfair competitive disadvantage. It is
important that all taxpayers live by the same rules," said Brian Hamer, director
of the Illinois Department of Revenue.
Ahmed, of Arlington Heights, is a certified public accountant and owner of
Midwest Financial Services, which has offices in Chicago and Arlington Heights.
Waheed, of Chicago, is an accountant who works for his brother's accounting
firm. The pair were arrested and indicted in 2011.
Midwest Financial has been in business since the 1990s and was known among
gas station owners for assisting clients in lowering sales taxes owed to the
state. As Midwest Financial's owner, Ahmed served as the accountant for several
of the most egregious tax evaders among those gas stations. The case against
Ahmed and Waheed revealed the brothers assisted the gas stations by falsifying
sales figures on their monthly state sales and use tax return forms. Some gas
station owners provided incomplete information to Midwest Financial, and Waheed
then fabricated sales numbers for them.
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The brothers were sentenced to two years of felony probation under
the condition they continue to cooperate with authorities in the
ongoing investigations and prosecutions of gas stations and other
clients that underreported sales to the state. The eight gas
stations that conspired to underreport sales with Ahmed and Waheed
cooperated with authorities in the brothers' prosecution. Those gas
station owners have previously pleaded guilty on other charges and
repaid the state more than $5 million.
The crackdown on gas station owners has led to a new law in
Illinois to penalize those who commit this type of fraud. The law,
which was an initiative of Madigan's office and took effect this
month, established stronger penalties and eliminated barriers to
prosecuting Illinois businesses and retailers that evade their sales
tax bills.
The law created the new crime of sales tax evasion and imposed
graduated penalties based on the amount of sales taxes that were
evaded: for amounts less than $500, a Class 4 felony punishable by
one to three years in prison; for amounts less than $10,000, a Class
3 felony punishable by two to five years; for amounts less than
$100,000, a Class 2 felony punishable by three to seven years; and
for more than $100,000, a Class 1 felony punishable by four to 15
years in prison.
Deputy Division Chief Vincenzo Chimera and Assistant Attorney
General Kristina Waldron are handling the cases for Madigan's
Criminal Enforcement Division.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan]
 |
