California state officials said Abolghassem “Abe” Alizadeh, 52, deliberately failed to pay more than $7 million in sales and payroll taxes money he is believed to have made from his restaurants and withheld from employees’ paychecks but didn’t forward on to the state. The Iranian immigrant is currently being held in northern California’s Placer County on $1 million bail.
According to a criminal complaint filed by Attorney General Kamala Harris, Alizadeh used the tax money to keep other creditors at bay as his debts accumulated following the real estate crash of 2008.
According to a court filing by investigator Sandra Gutierrez of the Board of Equalization, which collects sales taxes, Alizadeh previously testified in US Bankruptcy Court that he used tax dollars to pay other, more “important,” expenses. “Food is more important than sales tax,” he told one underling, Karen Rushing, according to Gutierrez.
Alizadeh’s businesses include 71 Jack-in-the-Box fast food franchises. But, according to The Sacramento Bee, most of his companies filed for bankruptcy protection in 2008 and 2009, owing a combined $390 million. In January 2010, a US bankruptcy court auction reportedly brought in $6.8 million by selling some of Alizadeh’s former properties, including five Jack-in-the-Box locations and a vacant tract in Roseville, which sold for $325,000.
The Board of Equalization identified the Iranian immigrant last spring as one of California’s biggest tax delinquents. According to a May 2010 Board of Equalization news release, Alizadeh owed the state about $1.5 million in taxes.
The state only occasionally pursues criminal charges in tax cases, but they decided to do so in this case because of the alleged deliberateness of Alizadeh’s actions. Spokeswoman Anita Gore said, “You have to have knowledge and intent.”
Alizadeh came to the United States in 1977 as a teenager. He earned two degrees from Chico State and worked his way up within the fast food industry, starting out by making tacos at a Jack-in-the-Box. From there, he moved on to become manager and in 1986 began buying franchises. Alizadeh became a noted franchisee, earning awards from corporate headquarters. In addition to the Jack-in-the-Box franchises, he also owned a number of TGI Friday restaurants.
Alizadeh and his sister also moved into commercial real estate with Kobra Enterprises, developing dozens of office buildings and shopping centers and employing more than 2,000 workers. Most of his business was in Placer County, but he also owned property as far away as Indiana. For awhile, he also co-owned the Portland Beavers minor league baseball team.
But when the real estate market crashed, Alizadeh’s funds began running thin and he started struggling to pay his creditors. As a result, he began using money from his Jack-in-the-Box restaurants to keep his less profitable real estate business afloat.
According to Gutierrez, “While Alizadeh was unable to pay his employment and sales taxes, he was able to pay himself and complete construction of his 13,196-square-foot home in Granite Bay.” The home was lost to foreclosure in 2009, she told The Sacramento Bee.
After his restaurant and real estate business filed for bankruptcy protection, Alizadeh reportedly testified that “if he had to loan tax money to his other entities to survive, he did that and then paid the taxing authorities what he could,” Gutierrez said.
The bankruptcies dismantled Alizadeh’s empire; several of his Jack-in-the-Box franchises closed, the rest were sold and he abandoned at least 30 real estate projects.
If convicted on all counts, Alizadeh could potentially receive a sentence of up to 844 years in prison, though any sentence would likely be considerably less.