Owner of chain of coffee stands plead guilty to multi million dollar tax avoidance scheme

Seattle - The owner of a string of coffee stands pleaded guilty today in U.S. District Court in Seattle to making and subscribing a false tax return, announced U.S. Attorney Tessa M. Gorman. Assad Baragzai, 47, of Auburn, Washington, admits that between 2016 and 2020 he failed to report as much as $6 million in income on his tax returns. Baragzai faces up to three years in prison when sentenced by U.S. District Judge John H. Chun on November 18, 2024.

According to the plea agreement, Baragzai significantly under-reported his income when he provided information to his tax accountant. The government believes that the tax loss over the five years that Baragzai underreported his income is more than $1.7 million. The tax loss in 2017 alone is more than $687,000. Baragzai disputes the government figures and believes the tax loss is $1.3 million. Judge Chun will determine the tax loss at the sentencing hearing.

Baragzai is the second defendant to enter a guilty plea in this investigation. In March 2024, Baragzai's brother-in-law, 45-year-old Rajesh Mathew, also of Auburn, pleaded guilty to making and subscribing a false tax return. In his plea agreement Mathew, who also owns a string of coffee stands, admits that he too underreported a substantial amount of income over a period of several years. Mathew is scheduled for sentencing on October 9, 2024.

Both Baragzai and Mathew have agreed to make restitution to the Internal Revenue Service. Both may also face additional civil penalties, fines, and interest for the tax loss.

Filing or subscribing a false tax return is punishable by up to three years in prison and a $250,000 fine or twice the gain or loss from the offense.

The case is being investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).

The case is being prosecuted by Assistant United States Attorney Michael Dion.