Pizza Store Owners Skim $1.34 Million in Tax Fraud Scheme

Thair Alwan and his son Saill Fadhil, owners of I Love NY Pizza in Raleigh, pleaded guilty to willfully filing false tax returns for the tax years 2008 and 2009, resulting in substantial tax underpayments.

According to court documents, Alwan and Fadhil skimmed almost all of the company’s cash receipts from their various stores, estimated at $1.34 million, and used the money for personal expenditures or deposited it into their personal bank accounts. The defendants structured the cash deposits under $10,000 to avoid the filing of Currency Transaction Reports.

The IRS investigation revealed that I Love NY Pizza had multiple locations in the Raleigh area, including two stores in Raleigh, one in Knightdale, and another in Apex. Despite employees claiming the business was at least 40 percent cash sales, cash deposits into the corporate bank account were only 1.3 percent in 2008 and 2.3 percent in 2009.

Between 2007 and 2010, Alwan made or caused 73 currency deposits into his personal accounts. Of the 73 deposits, 50 were at least $9,000, and the majority of these were in the amount of $9,980. None of the deposits were more than $10,000.

Alwan and Fadhil each face a statutory maximum sentence of three years in prison, one year of supervised release, and a maximum fine of $250,000 per count. They have also agreed to pay restitution to the IRS.

The case was investigated by special agents from IRS-Criminal Investigation and prosecuted by Trial Attorney Todd Ellinwood of the Justice Department’s Tax Division and Assistant U.S. Attorney Adam Hulbig of the Eastern District of North Carolina.

Alwan and Fadhil’s scheme highlights the importance of tax compliance and the consequences of willfully filing false tax returns. The IRS encourages taxpayers to report any suspicious activity and to cooperate with investigations.