More details: Breaking down the IHOP indictment (money laundering, illegal immigrants and more)

The 65 page indictment unsealed Wednesday outlines a massive conspiracy to defraud employees, IHOP corporate, investors, the Internal Revenue Service and federal, state and local law enforcement.

Prior to 2003, Tarek Elkafrawi owned and operated two IHOP franchises; one in Decatur, Illinois and the other in Evansville, Indiana. During his time in Decatur, the indictment alleges, Elkafrowi began a social friendship with Autumn Lee Tangas, an employee of IHOP Corporate in Decatur.

Between 2003 and 2006 Elkafrawi purchased, either entirely or in partnership with other investors, 6 other IHOP franchises. Those stores are located in Toledo (2), Holland, Findlay, Perrysburg and Lima. In 2007 Elkafrawi sold his stake in the Decatur, Illinois IHOP.

The indictment alleges Elkafrawi, with the help of Carlos Gamboa, Jose Leon-Gonzalez and others, worked to recruit and hire 200 illegal aliens to work in the restaurants.

NOTE The following text is a quote:

www.fbi.gov/cleveland/press-releases/2012/eighteen-people-indicted-for-roles-in-3-million-schemes-involving-seven-ihop-restaurants

Eighteen People Indicted for Roles in $3 Million Schemes Involving Seven IHOP Restaurants

U.S. Attorney’s Office
May 23, 2012

Northern District of Ohio

Eighteen people were indicted for their roles in a series of criminal schemes, including money laundering, identity theft, alien harboring, and arson, centered around seven IHOP restaurants in northwest Ohio and Indiana that resulted in losses of more than $3 million, law enforcement officials announced today.

“These defendants turned pancakes houses into crime dens,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “This indictment lays out a menu of crimes ranging from harboring undocumented workers to identity theft to money laundering to insurance fraud.”

Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office, said, “Today’s arrests are the culmination of years of joint investigative work by the FBI and its partners to root out the corporate fraud outlined in the indictment. The investigation of fraudsters who chose to operate their businesses through the manipulation of financial reporting, money laundering, and other illegal methods will continue to be a top FBI priority.”

“Collaboration with law enforcement at all levels is a powerful tool in the fight against organized criminal groups,” said Brian M. Moskowitz, Special Agent in Charge for ICE-HSI in Ohio and Michigan. “HSI is committed to leveraging its unique statutory authorities and investigative expertise to bring down groups involved a myriad of criminal activities as have been alleged in this case.”

Among those indicted are Tarek “Terry” Elkafrawi, who, from December 2003 through the present, owned seven IHOP restaurants in Evansville, Indiana; and Holland, Toledo (two locations), Findlay, Perrysburg, and Lima, Ohio.

Elkafrawi, along with Autumn Lee Tangas and others, used their control of the restaurants to execute various criminal activities to fraudulently manipulate sales figures, salaries, and payrolls to evade taxes, avoid paying royalties, and illegally divert money from the IHOP franchises to themselves, according to the 64-count indictment.

Elkafrawi employed about 200 illegal immigrants to work at his restaurants, most of whom used fraudulent or stolen identities while working. He and others employed several people to arrange for the arrival of the workers. If the worker had false paperwork or documentation, the manager would accept it without verification; if they did not have documentation, Elkafrawi and others would arrange for Carlos Gamboa, Jose Leon-Gonzales, and others to obtain fraudulent documentation for the workers, according to the indictment.

Elkafrawi also arranged for managers to cash payroll checks for the illegal workers. Elkafrawi and others assigned second identities to workers to avoid paying overtime wages and reduce the restaurants’ payments to the Ohio Bureau of Workers Compensation. They were also able to underpay the undocumented workers because they knew the workers would not complain or report them to law enforcement, according to the indictment.

Overall, Elkafrawi and others were able to generate $1.2 million in unreported income by manipulating wages and underreporting income of undocumented workers, according to the indictment.

In 2008, the Findlay IHOP burned as the result of arson. The fire was started by Jose Leon-Gonzales at the direction of Elkafrawi and a person identified as M.K. to facilitate an insurance fraud scheme. Elkafrawi claimed approximately $1.3 million in fraudulent insurance claims, based in part on inflated payroll claims, lost income, and invoices, according to the indictment.

M.K., not charged herein, used two identities to split his salary from the restaurants between two paychecks, creating lower reportable income for both. Using those identities, he claimed approximately $140,000 in Medicaid payments and $35,000 in food stamps and welfare benefits from the state of Ohio. M.K. and Elkafrawi created a false property company to which M.K. paid “rent” to Elkafrawi to show a lower income. Elkafrawi and M.K. sanctioned and encouraged employees to file fraudulent claims, according to the indictment.

Elkafrawi, Kelly Elkafrawi, M.K., and Tarek Eid Omar also engaged in a series of real estate transactions to hide and conceal the source of the funds derived from their schemes. Elkafrawi purchased homes at 10400 Tecumseh Drive, Newburgh, Indiana; and 14745 Prairie Lake Drive, Toledo, using laundered assets, according to the indictment.

Prosecutors are seeking to seize the Indiana home as well as more than $37,000 in currency, the seven IHOP franchises, a dozen bank accounts, and several vehicles, according to the indictment.

This case is being prosecuted by Assistant United States Attorneys Duncan T. Brown and Gary D. Arbeznik following an investigation by the Federal Bureau of Investigation, Immigration and Customs Enforcement-Homeland Security Investigations, Internal Revenue Service, the Ohio Bureau of Worker’s Compensation, and Toledo Police.

An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.