Criminal Justice News

Friday, July 10, 2015

Happy's Pizza Founder and Co-Conspirators Sentenced to Prison for Multi-Million Dollar Income and Employment Tax Fraud Scheme

A Detroit-area businessman and other co-conspirators were sentenced to prison this week for income and employment tax fraud in the U.S. District Court for the Eastern District of Michigan, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

“Fraudulent business owners who underreport their income and employment taxes cheat not only the IRS and U.S. taxpayers, but also other businesses that comply with their tax obligations and seek to compete on a level playing field,” said Acting Assistant Attorney General Ciraolo.  “Today’s sentencings of Happy Asker and his co-conspirators demonstrate that there is a heavy price for this conduct, and for obstructing and misleading IRS agents in the course of their investigation.”

Happy Asker, 38, of West Bloomfield, Michigan, was sentenced today to serve 50 months in prison, three years of supervised release and ordered to pay $2.5 million in restitution to the Internal Revenue Service (IRS) and a special assessment of $3,300 by U.S. District Court Chief Judge Denise Paige Hood.  According to court documents and statements made during a 10-day jury trial in November 2014, Happy Asker was the president, founder and public face of the Happy’s Pizza franchise, a pizza chain based in Farmington Hills, Michigan, that operated restaurants throughout Michigan, Ohio and Illinois.  Asker was convicted of three counts of filing false income tax returns for the years 2006 through 2008, 28 counts of aiding and assisting in the filing of false income and payroll tax returns for several of Happy’s Pizza franchise restaurants for the years 2006 through 2009, and corruptly endeavoring to obstruct and impede the administration of the Internal Revenue Code.

Asker’s co-conspirators and other individuals involved in the tax scheme, Maher Bashi, 47, Tom Yaldo, 42, and Tagrid Bashi, 47, all of West Bloomfield; and Arkan Summa, 42, of Walled Lake, Michigan, all pleaded guilty for their roles prior to Asker’s trial.  On Oct. 23, 2014, Maher Bashi and Yaldo pleaded guilty to conspiracy to defraud the United States.  On July 15, 2014, Summa pleaded guilty to obstruction of the IRS and Tagrid Bashi pleaded guilty to willfully delivering false documents to the IRS.

Maher Bashi, who served as Happy's Pizza's corporate chief operating officer, and Yaldo, an owner of numerous Happy's Pizza franchises, were also sentenced this week.  On July 7, Bashi was sentenced to serve two years in prison, three years of supervised release and ordered to pay $620,297 in restitution to the IRS.  Yaldo was sentenced to serve 18 months in prison, three years of supervised release and ordered to pay $314,078 in restitution to the IRS.

On April 1, Summa, an owner of numerous Happy’s Pizza franchises, was sentenced to serve 18 months in prison and ordered to pay $199,847 in restitution to the IRS.  Tagrid Bashi, a nominee Happy’s Pizza franchise owner, was sentenced to three years of supervised probation.

“The license to run a business is not a license to avoid paying taxes,” said Chief Richard Weber of IRS-Criminal Investigation.  “Mr. Asker and his co-defendants chose greed over legal business practices.  As business owners, they had a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service, as well as file timely individual and corporate tax returns.  Time and again, our special agents untangle the web of financial transactions to bring to justice those that would try to cheat the government and the American taxpayer.”

Evidence at trial established that from 2004 through 2011, Asker, along with certain franchise owners and employees, executed a systematic and pervasive tax fraud scheme to defraud the IRS.  Gross sales and payroll amounts were substantially underreported on numerous corporate income tax returns and payroll tax returns filed for nearly all 60 Happy’s Pizza franchise locations.  From 2008 to 2010, Asker and his co-conspirators diverted for personal use more than $6.1 million in cash gross receipts from approximately 35 different Happy’s Pizza stores in the Detroit area, Illinois and Ohio.  In total, Asker and certain employees and franchise owners failed to report approximately $3.84 million of gross income and approximately $2.39 million in payroll taxes from the various Happy’s Pizza franchises to the IRS.  A portion of the unreported income was shared among most of the franchise owners, including Asker, in a weekly cash “profit split.”  As a result of the scheme, the IRS is owed more than $6.2 million in income and employment taxes.  The evidence also established that Asker intentionally misled IRS-Criminal Investigation special agents during voluntary interviews conducted with him in 2010.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, the Drug Enforcement Administration and the FBI, who investigated the case, and Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division, who prosecuted the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Eastern District of Michigan for their substantial assistance.

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