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Orlando Criminal Lawyer > Media > Co-owners of Louisiana’s largest convenience store chain, Brothers Food Mart, escape liability on a cascade of federal tax and immigration charges

Co-owners of Louisiana’s largest convenience store chain, Brothers Food Mart, escape liability on a cascade of federal tax and immigration charges

Brothers Food Mart, escape liabilityOn September 21, 2022, Imad “Eddie” Hamdan and his business partner, Ziad “Z” Mousa, sat in a federal district courtroom while anxiously awaiting to hear the fate of their American Dream. After three days of deliberations, the federal jury found the co-owners of Brothers Food Mart were not guilty of an array of felony charges, which included mail fraud, criminal tax-related charges, and the harboring of illegal aliens. Finally, after three years of uncertainty and distress, Hamdan and Mousa could at last return to a life of normality with their families.

In 2019, the Government charged Hamdan and Mousa each with one count of conspiracy to harbor illegal aliens, two counts of mail fraud, and seventy counts of tax-related charges, which included 47 counts of failure to withhold, account for, and pay over to the IRS taxes due and owed on behalf of employees of Brothers Food Mart, and 21 counts of aiding and assisting in the preparation and presentation of false federal tax returns. Both men faced maximum prison sentences on more than 70 counts if convicted.

The Government’s Case:

During a two-week trial, the Government presented overwhelming evidence against Hamdan and Mousa. To convict the brothers-in-law, the Government needed to prove that Hamdan and Mousa were guilty of the charges beyond a reasonable doubt.

The evidence presented by the United States Government included:

  • Testimony from: Brothers Food Mart’s financial executives, office personnel, store managers, and undocumented employees; agents from the Office of Workers’ Compensation Programs; financial experts from the Internal Revenue Service, Paychex, and E-Verify; and special agents from the Department of Homeland Security
  • Testimony relating to the alleged hiring of undocumented workers in over 30 stores across Louisiana
  • Testimony from undocumented workers who received cash wages and internal reports tracking the cash payments Brothers Food Mart made to them
  • Internal reports showing that store managers’ salaries were paid in part by check, in part through cash funds, and the employer’s failure to report the latter to the IRS
  • Testimony from store managers confirming receipt of partial cash payments and the employer’s failure to withhold or report such wages
  • W-2 forms issued to store managers and filed with the IRS, failing to report cash proceeds used to pay the store manager’s salaries

The Defense:

Despite the complex immigration and tax-related issues involved in the case and the Government’s compelling evidence against Hamdan and Mousa, the Defense was able to secure not guilty verdicts for Hamdan. Specifically, The Baez Law Firm maintained Hamdan’s innocence on all charges brought against him by demonstrating that:

  1. Employing undocumented workers is NOT a crime. Although knowingly hiring or continuing to use persons who are unauthorized to work in the U.S. may result in civil penalties, doing so does not result in a criminal violation. At trial, the Government elicited testimony relating to Hamdan’s knowledge of Brothers Food Mart’s store managers’ hiring of undocumented workers; however, the Government’s strategy confounded and confused the jury about the actual crime charged. In response, the Defense made clear that Hamdan only allowed the hiring of undocumented workers after Hurricane Katrina hit New Orleans in 2005. The Government did not dispute their employment. The alleged criminal act was harboring these individuals from law enforcement’s detection by failing to submit the documents required for employment and tax purposes. During the trial, the Defense argued there was no evidence that Hamdan actually concealed the undocumented workers as prohibited by law. They all worked out in the open. No one was hidden or forced to run when law enforcement came around.
  2. Paying cash wages is NOT against the law. Employers must withhold federal income tax and FICA, account for and pay the IRS quarterly (trust fund taxes), make quarterly matching FICA payments (employment taxes), and file quarterly Forms 941. Consequently, employers must send Form W-2 to their employees and the IRS reporting the wages and taxes withheld. In its case, the Government alleged that Hamdan failed to uphold his duty as an employer by conspiring to impede the IRS in the ascertainment, computation, assessment, and collection of income and employment taxes. The Government argued that Hamdan intended to enrich himself and others by evading income and employment taxes by allegedly failing to report partial cash wages paid to managers and cash wages paid to undocumented workers. At trial, the Defense proved that Hamdan paid millions of dollars of taxes on cash wages. The IRS agreed. However, the Government tried to refute Hamdan’s payments by arguing that although he paid millions in taxes, he used the wrong tax forms. In response, the Defense argued that Hamdan could not be convicted of a felony for filing the incorrect tax forms. Instead, because government laws are so complex, in order to establish the criminal tax offense, the Government was required to prove that Hamdan knew exactly what the tax laws required him to do and his intent to violate the law. Simply put, Hamadan intended to and did pay taxes on the cash wages. Therefore, Hamdan did not intend to infringe on any tax law.
  3. The Government presented distracting issues surrounding overtime wages & personal injury claims. However, the crux of the case was and should have been the alleged mail fraud, tax-related charges, and harboring of illegal persons. Consequently, during trial, the Defense narrowed the prevailing issues for the jury and exposed the Government’s misleading tactics in their investigation and prosecution of the case.
  4. The laws governing employment eligibility include requirements to prepare and retain accurate documents. Employers are responsible for completing, maintaining, and filing I-9 Forms to verify that a person has permission to be in the U.S. and is legally authorized to work. The I-9 Form requires the employee to submit a valid social security number. The Government misled the jury by placing a legal duty upon Hamdan to fill out I-9 forms for every undocumented worker. The Defense, however, was able to elicit favorable testimony from government witness Lisa Washington, Brothers Food Mart’s long-time and existing Office Manager. Washington stated on cross-examination that she herself was solely responsible for handling the company’s employment verifications, and Hamdan was unaware of the related employment matters. Moreover, the Defense used expert witness Kathleen Gasparian, an immigration attorney, to break down the Government’s flawed argument. While on the stand, Gasparian reviewed the I-9 Form and its provisions. She explained that employers attest under penalty of perjury that the information provided on the form is true and correct. Consequently, an employer may be fined if the form is incomplete. However, as it relates to undocumented persons, employers lack the necessary documentation to complete the I-9 Form in the appropriate, required manner.
  5. The U.S. Department of Homeland Security (DHS) and the Internal Revenue Service (IRS) do not share information. The Government argued that Hamdan’s failure to complete employment tax returns for undocumented workers allowed them to fly below immigration enforcement’s radar. By far, this was the Government’s most disingenuous argument. Our country’s tax laws and the IRS’s confidentiality rules protect against immigration enforcement. For example, the IRS is prohibited, by law, from disclosing taxpayer information. If information from tax filings were shared with law enforcement agencies like DHS, that would create a massive disincentive for people to comply with tax laws in the first place. Because tax filings contain sensitive information, and in order to encourage public compliance with the tax system, federal law requires that tax information be kept strictly confidential.
  6. Uncle Sam got paid. At trial, the Government failed to inform the jury that Hamdan overpaid on his personal income taxes to account for any money his employees owed to the IRS. The Government’s lack of transparency was further magnified when they refused to disclose to the jury the overpayment amounts Hamdan made. The Defense argued that Hamdan’s overpayments proved his good faith intent to pay what was owed to the IRS. The Defense further argued and demonstrated that the overpayments were so substantial that the Government received a considerable amount more than if the taxes had been paid on the employees’ wages. It is uncommon for a defendant accused of tax evasion to owe the IRS zero money.

This case is a classic example of governmental overreaching, specifically on the tax charges. As the Defense exhibited throughout the trial, Hamdan’s good faith efforts were evident. The irrefutable evidence proved that the Government received a sizeable amount of money, grander than it would have received had Hamdan filed his taxes correctly.

Fortunately, the community came through for Hamdan, just as Brothers Food Mart always came through for its community. The verdicts made it clear that the jurors also considered the Government’s case a severe overreach and disapproved of such actions.

Lastly, on September 21, 2022, the great American Dream lived. The Defense, the jury, and the verdict proved that individuals like Hamdan and Mousa can immigrate to the United States in search of a greater life for their families and their constitutional rights will be protected and honored by the court system.

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