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October 29, 2003
The United States Attorney's Office for the Northern District of California announced that Mr. Mohammad Yousuf Chaudhry, 53, of Los Altos, and Mr. Ali H. Khan, 56, of San Jose, were arraigned yesterday on one count of conspiring to structure transactions to evade reporting requirements in violation of Title 18, United States Code, Section 371, and Title 31, United States Code, Section 5324(a)(3). In addition, Mr. Chaudhry and Mr. Khan are each charged with multiple counts of structuring transactions for the purpose of evading a reporting requirement, in violation of Title 31, United States Code, Section 5324(a)(3). Mr. Chaudhry is also charged with five counts of subscribing to a false corporate income tax return filed with the Internal Revenue Service, in violation of Title 26, United States Code, Section 7206(1). The two were indicted October 23, 2003, by a federal grand jury in Oakland, California.
According to the indictment, Mr. Chaudhry owned and operated RT Computers, Inc. ("RT"), and Alternative Energy Systems, Inc. ("AES"), both located at 1673 Rogers Avenue, San Jose, California, while Mr. Khan was an employee of RT and AES and was responsible for cashing and negotiating RT and AES checks provided to him by Mr. Chaudhry. The indictment alleges that between January 2000 and April 2001, Mr. Chaudhry and Mr. Khan conspired to structure transactions to avoid federal reporting requirements by having
Mr. Khan cash approximately 33 checks payable to RT or AES in amounts ranging from $7,125 to $9,800.
In addition to the conspiracy charge, Mr. Chaudhry and Mr. Khan are also charged with structuring and attempting to structure approximately 85 checks, which range in amount from $2,700 to $9,900 and total approximately $769,155.
Mr. Chaudhry is also charged with subscribing to five false U. S. Corporation Income Tax Returns, Forms 1120, and filing each with the Internal Revenue Service. He is alleged to have underreported the gross receipts of RT for the fiscal years April 1, 1998 through March 31, 1999; April 1, 1999 through March 31, 2000; and April 1, 2000 through March 31, 2001; as well as those for AES for the tax years 1999 and 2000. Documents filed with the court allege that from in or about 1998 to in or about 2001, RT and AES received at least $7.1 million in gross receipts from numerous software businesses. The aggregate gross receipts claimed on all five Forms 1120 allegedly total less than $1.8 million.
The maximum statutory penalty for the conspiracy charge is five years in prison and a fine of $250,000. The maximum statutory penalty for each count in violation of Title 26 Section 7206(1) is up to 3 years in prison and a fine of $100,000, plus restitution. The maximum statutory penalty for each count of structuring is five years in prison and a fine of $250,000. However, any sentence following conviction would be dictated by federal sentencing guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court. An indictment simply contains allegations against an individual and, as with all defendants, Mr. Chaudhry and Mr. Khan are presumed innocent unless and until convicted.
The defendants remain free on bond until their next appearance in federal court on November 17, 2003, before United States District Court Judge Claudia Wilken.
The prosecution is the result of a lengthy investigation by the Internal Revenue Service, Criminal Investigation Division; Federal Bureau of Investigation; the Santa Clara Rapid Enforcement Allied Computer Team (REACT) Task Force; and the United States Attorney's office. Douglas Sprague and Christopher Sonderby are the Assistant U.S. Attorneys prosecuting the case.
A copy of this press release and related court documents may be found on the U.S. Attorney's website at www.usdoj.gov/usao/can. All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.
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