Manhattan Construction Business Operator Sentenced To 19 Months In Prison For Tax Fraud

 

 Audrey Strauss, United States Attorney for the Southern District of New York, announced today that BILAL SALAJ was sentenced in Manhattan federal court to 19 months in prison for perpetrating tax fraud.  SALAJ previously pled guilty before U.S. Magistrate Judge Ona T. Wang to conspiracy to defraud the Internal Revenue Service (“IRS”), tax evasion, and failure to pay over payroll taxes.  U.S. District Judge P. Kevin Castel, who accepted SALAJ’s guilty plea, imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Bilal Salaj failed to pay his tax obligations to the IRS and maintained a cash payroll for his business while cheating the government out of almost $1 million. Our self-assessment system of tax reporting is not synonymous with ‘forthrightness optional.’ The government — and especially our law enforcement partners — won’t miss, overlook, or ignore those who misreport on their tax returns. In the competitive small business world, being dishonest and underreporting tax obligations might be tempting. But Salaj’s sentence is a reminder that tax fraud is a serious federal crime and not worth the risk.”

According to the allegations contained in the Information to which SALAJ pled guilty, court filings, and statements made in public court proceedings:    

At all relevant times, BILAL SALAJ, a citizen and resident of the United States, operated a construction business in Manhattan.  Initially, SALAJ was the record owner of the business, but in approximately July 2014, SALAJ began operating the business under a new entity that, on paper, was wholly owned by a third party (“Individual-1”), who worked for SALAJ in the construction business.  Despite this purported change in ownership, SALAJ continued to exercise principal control and decision-making authority over the business and its financial affairs.  In particular, SALAJ was a responsible person under federal law for collecting, truthfully accounting for, and paying over payroll taxes for the business to the IRS.

Between at least in or about 2014 and in or about June 2019, SALAJ devised and perpetrated a scheme to evade a substantial portion of both the payroll taxes for the construction business and SALAJ’s personal income taxes for the period 2014 through 2018.  During this period, SALAJ cashed, and caused Individual-1 to cash, approximately $3.2 million in business checks payable to the construction company at check cashing facilities in Manhattan, instead of depositing them into the company’s operating bank account.  SALAJ and Individual-1 used a portion of the proceeds from the cashed checks to pay cash wages to employees of the construction business, and spent most of the rest on personal expenses.  SALAJ did not withhold or pay over to the IRS any payroll taxes on the cash wages paid to the employees, and did not report to the IRS or pay any personal income taxes on the cash income he realized through the cashed checks.  As part of the tax evasion scheme, SALAJ fraudulently withheld from his accountant any records relating to the cashed business checks, and thereby caused false tax returns to be filed with the IRS.  The tax evasion scheme, including relevant conduct, resulted in a tax loss to the IRS of approximately $952,778.

In addition to the prison term, Judge Castel ordered SALAJ, 56, of Morganville, New Jersey, to pay restitution to the IRS in the amount of $952,778.  SALAJ was also ordered to serve three years of supervised release.

Ms. Strauss praised the outstanding work of the Internal Revenue Service, Criminal Investigation, in this case. 

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Olga I. Zverovich is in charge of the prosecution.