Bikini barista coffee stand owner, who underreported income to commit tax fraud, sentenced to prison, fine, and community service

Press Release

First defendant sentenced in series of coffee stand tax fraud cases

Seattle - The owner of a string of bikini barista coffee stands was sentenced today in U.S. District Court in Seattle to 30 days in prison, a $5,000 fine, and 100 hours of community service for tax fraud, announced U.S. Attorney Tessa M. Gorman. Rajesh Mathew, 45, of Auburn, Washington, pleaded guilty to making and subscribing a false tax return. In his plea agreement Mathew, admitted he underreported a substantial amount of income over a period of several years. At today's sentencing hearing U.S. District Judge Tana Lin said, "Tax fraud is an enormous problem…. It is a serious crime…. There is no excuse for hiding half a million dollars in a life of privilege, except greed." Judge Lin rejected the defense request for a sentence of home confinement saying it would only be an inconvenience, and not reflective of the seriousness of the offense.

The sentencing today is the first in a series of cases involving one family whose various members own strings of coffee stands. Mathew's brother-in-law Assad Baragzai, 47, also of Auburn, admitted in August 2024, 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 Judge Lin on November 18, 2024.

In asking for a 4-month prison sentence for Mathew, Assistant United States Attorney Michael Dion wrote to the court, "…most Americans pay their taxes voluntarily and on time - as much as 85%, by IRS estimates. The root of the tax evasion problem is not widespread fraud, but rather a small minority of people and businesses who refuse to pay what they owe. Raj Mathew is one of those people. Mathew ran a successful business and earned a comfortable living. Nevertheless, year after year, he chose to cheat the government and, by extension, his fellow citizens. There is no sign of any excuse or extenuating circumstances. Mathew simply did not want to pay what he owed."

Mathew has already paid restitution to the Internal Revenue Service. He 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.

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Updated October 9, 2024