The owner of a chain of bikini barista coffee stands, Assad Baragzai, was sentenced to 10 months in prison and fined $75,000 for filing a false tax return. The sentencing took place in U.S. District Court in Seattle, as announced by U.S. Attorney Tessa M. Gorman. Between 2016 and 2020, Baragzai failed to report up to $6 million in income on his tax returns.
At the hearing, U.S. District Judge Tana Lin stated that the tax system is based on honor and criticized Baragzai for his actions: "There was absolutely no reason for you to be cheating on your taxes except for pure greed."
U.S. Attorney Gorman emphasized the importance of paying taxes, stating, "Our government relies on the 85 percent of Americans who each year pay the taxes they owe to keep communities safe and provide all the other important services we need." She added that despite Baragzai's business success, he failed to support the community that contributed to it.
Court records indicate that Baragzai under-reported his income when providing information to his tax accountant. The government estimates a tax loss of over $1.7 million over five years, with more than $687,000 lost in 2017 alone. Baragzai contested these figures but Judge Lin determined the tax loss was $1,348,154.
Assistant United States Attorney Mike Dion argued for a two-year prison term, stating that "Assad Baragzai reaped the benefits of American society but somehow convinced himself that he did not need to pay his share of the costs that support that society." Dion noted that Baragzai's fraud could have cost the government an equivalent of 462,000 school lunches.
Adam Jobes from IRS Criminal Investigation's Seattle Field Office commented on Baragzai's lifestyle: "Instead of paying his fair share toward public resources as every law-abiding American does, Mr. Baragzai misrepresented his income to furnish an already-lavish lifestyle."
Baragzai is not alone in this investigation; his brother-in-law Rajesh Mathew was previously sentenced for similar charges.
Baragzai has agreed to pay restitution to the IRS and may face further civil penalties.
The case is being investigated by IRS Criminal Investigation and prosecuted by Assistant United States Attorney Michael Dion.