OAKLAND – Muzaffar Hussain pleaded guilty in federal court today to failing to account for and pay employment taxes to the United States, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
In pleading guilty, Hussain, 68, of Pleasanton, admitted that as CFO of Crossroads Home Health Care, Inc., he had the duty to file the Employer’s Quarterly Federal Tax Returns [Forms 941] with the Internal Revenue Service (“IRS”) and to pay over the employment taxes. Such taxes, referred to as trust fund taxes, include income tax, social security tax, and a hospital insurance (Medicare) tax collected from the wages of Crossroads’ employees. Hussain admitted he knew the trust fund taxes were required to be paid to the IRS and that the funds were not monies he could use or borrow. Further, Hussain acknowledged that during the relevant period, he had sole authority and control over Crossroads’ Bank of America account in which monies for the trust fund taxes were deposited. Nevertheless, for each pay period between July 1, 2004, and February 27, 2008, Hussain transferred funds in an amount equal to, or close to, the amount of employment taxes from the Bank of America account to other bank accounts. Hussain thereafter used the monies, including the trust fund taxes, to fund other business and personal interests. Hussain also admitted to knowingly causing the submission to the IRS of false Forms 1120 for Crossroads—the false forms underreported gross receipts received from Medicare. In sum, the total amount of taxes either underpaid or underreported was $495,000.
On July 30, 2015, a federal grand jury returned a superseding indictment charging Hussain with thirteen counts of making or subscribing a false tax return, in violation of 26 U.S.C. § 7206(1); seventeen counts of willful failure to truthfully account for an pay over taxes, in violation of 26 U.S.C. § 7202; and one count of structuring transactions to evade reporting requirements, in violation of 31 U.S.C. § 5324(a)(3). Under the plea agreement, Hussain pled guilty to one count of willful failure to truthfully account for and pay over taxes, in violation of 26 U.S.C. § 7202.
Hussain currently released on bond. His sentencing hearing is scheduled for January 20, 2017, at 9:30 a.m. before the Honorable Jon Tigar, U.S. District Court Judge, in Oakland. The maximum statutory penalty for a violation of 26 U.S.C. § 7202 is five years’ imprisonment and a fine of $250,000, plus restitution if appropriate. Additional fines and a term of supervised release also may be ordered, however, any sentence will be imposed only after consideration of the U.S. sentencing guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. s 3553.
Assistant U.S. Attorneys Cynthia Stier and Jose Olivera are prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.