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Tax fraud scheme a boon for some unscrupulous businesses

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Published:   |   Updated: March 20, 2013 at 10:56 PM
TAMPA -

Some local businesses are profiting handsomely from an underground economy that has sprung up around a kind of tax fraud that has exploded in recent months, according to police.

Much of the money being stolen from taxpayers through the use of stolen identities and electronic tax filing is being filtered through establishments that cash fraudulently obtained U.S. Treasury checks, often charging high premiums, police say.

"It was basically money laundering," said Tampa police Sgt. Terry Goff, who is overseeing the department's tax fraud investigations.

Goff said when people file fraudulent tax returns, they have trouble cashing the "refund" checks.

"I couldn't go into a bank as Terry Goff and give you a check as John Doe and say, 'I want to cash this check.' So what the businesses would do is they would say, 'Hey, you know, I'll cash that check for ya,' and they literally were taking 80 percent and giving them back 20. That's how much money these people were making. They were willing to give up the 80 percent to get the 20 percent."

Federal and local authorities have searched at least five city businesses as part of their ongoing crackdown on tax fraud; so far, at least two local business owners are being prosecuted.

One business owner whose establishment has not been searched said he's had plenty of opportunities to profit from the fraud, but he refuses to participate.

"I could have made a fortune, but we knew it wasn't right," said Carl Hancock, who owns the Mr. Money pawn shop and check cashing business on Hillsborough Avenue. Hancock estimated he and his employees turned away 1,000 suspicious government checks in a three-month period.

"They wore our carpet out coming in and out of here," Hancock said. "We almost got to a point where we're going to put a sign on our door: 'No Fake Tax Checks.'''

The checks are usually in amounts in the range of $7,000 or $9,000, much higher than the typical refund he sees, and they come into the business every day of the year – not just tax season.

"Who waits to get a refund this time of the year," Hancock asked incredulously. "What blue collar worker gets a $9,500 return?"

People have offered to pay 30 to 50 percent of the face value of the check, Hancock said, even though he typically charges a 2 percent fee.

Federal charges have been brought against Riad Sulaiman, listed on an FBI affidavit filed in May as owner of Empire Street Wear, which has five stores. Although Sulaiman is also listed in state records as the registered agent for Empire, his attorney says he no longer owns the business, as of June 1. Sulaiman is charged with aggravated identity theft, mail fraud, conspiracy and forging endorsements on U.S. Treasury checks.

Raid Faria, owner of Palace Fashions, 2525 E. Hillsborough Ave., is facing 33 state charges each of identity theft and fraudulent use of a credit card.

And Russell B. Simmons Jr., owner of Simmons Auto Sales, 4615 N. 34th St., is facing state charges of grand theft by fraud and criminal use of personal identification. His attorney, Nicholas Matassini Jr., said his client has pleaded not guilty and is "planning a vigorous defense."

Sulaiman has pleaded not guilty in the federal case, which is being handled in Fort Lauderdale. Attorney Myles Malman said he represents Sulaiman in the Fort Lauderdale case, and he represents the stores, which he said are now owned by a company called Faisal's and Son Inc.

Investigators say when they searched the store at 1925 E. Fletcher Ave. on Sept. 1, they recovered more than $120,000 in U.S. Treasury checks. Sulaiman has not been charged in connection with that search.

"He's not charged with anything up there" in Tampa, Malman said

The South Florida federal case involves allegations Sulaiman cashed Treasury checks in May. Those checks, according to court documents, were in the names of deceased and incarcerated people.

The case began when the owner of a Broward County check-cashing store was contacted by Samir Massoud, Sulaiman's codefendant. Massoud told the Broward store owner, an informant, that he had a contact in Tampa, Sulaiman, from whom he was getting a large number of tax refund checks, according to an FBI affidavit.

Massoud, the affidavit states, proposed that the informant cash the checks. Sulaiman, Massoud and the informant met and Sulaiman agreed to give the informant a fee of 15 percent of the face value of the checks, while Massoud was to get 8 percent and Sulaiman would get the remainder of the proceeds, the affidavit states.

Massoud and Sulaiman, over the next few days, gave the informant more than $200,000 in fraudulent Treasury checks, according to the complaint.

Faria is accused of using a TurboTax prepaid debit card in the name of a homeless man.

According to a Tampa Police investigation report, police were alerted by the manager of a Sweetbay Supermarket where Faria was trying to use the debit card. Faria told police he knew that "what he was doing was wrong, but everyone is doing it," the report states.

Faria told detectives that people purchase suits in his store and give him the cards for more than the amount of the purchase, allowing him to keep the rest. He said he got $300 for each $1,000 on the cards, according to the report.

Approached by The Tampa Tribune and News Channel 8 in his store this week, Faria said the charges against him aren't true. "I didn't cash nothing," he said. "I have nothing to do with that. I think I was just put into the crowd."

Faria also said the charges against him are a "hate crime" brought because of his Arab heritage. "I heard them say something about terrorists and all that crazy stuff," he said, referring to law enforcement who searched his business. "They saw some writing in Arabic."

Hancock, the owner of Mr. Money, said he is incensed about the ongoing theft of taxpayer dollars and said the banks that take the checks from local businesses bear some responsibility for allowing this to continue.

But police say some banks have caught on and are trying to help.

Goff said one local bank official recently called and told investigators, "Every day, we see the same people coming in and putting money orders in their account and the next day taking that money out. We know this is money-laundering.''


News Channel 8 reporter Lauren Mayk contributed to this report. esilvestrini@tampatrib.com (813) 259-7837

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