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Judge sentences bar co-owner for obstruction

July 13, 2017
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bar stools
Bar stools line the side of a bar. Photo via wikimedia.org

The co-owner of a Grand Rapids bar who was convicted of destroying sales records to conceal tax fraud has been sentenced to serve time in federal prison.

Acting U.S. Attorney Andrew Byerly Birge said yesterday that Michael Farah, of Grand Rapids, has been sentenced to 18 months in federal prison for obstructing an Internal Revenue Service audit of his tax returns after he and his son, Brian Farah, skimmed cash from bars they own and destroyed sales records to hide their crime.

In addition to the prison term, Farah was ordered to serve a year of supervised release, pay a fine of $5,000 and pay restitution of $221,730.25.

Farah and his son skimmed a total of $408,000 from their three Grand Rapids-area bars, Farah’s, Kuzzin’s and Drake’s, in 2013 and 2014, which they did not report on their business or individual tax returns.

When they received notice of an IRS audit in August 2015, they tried to conceal their tax fraud by destroying all of their computerized point of sale records, according to Byerly Birge. They were caught when the company that maintained their business’ computerized sales records provided the IRS with recordings of the Farahs’ phone calls seeking assistance with the deletion of those records.

Judge Maloney said Michael Farah “brazenly lied and destroyed records in an attempt to cover up his tax fraud.”

The restitution amount, which Michael Farah already has paid, included $126,703 in federal taxes that he owed for the cash he skimmed from the bars in 2013 and 2014, plus $95,027.25 in penalties and interest.

Brian Farah was sentenced in April to 13 months in federal prison for his role in the crime.

“Michael Farah intentionally destroyed his records to avoid an IRS audit,” said Manny Muriel, IRS criminal investigation special agent in charge. “This sentence should serve as a deterrent to those who might contemplate similar fraudulent actions.”

The IRS investigated the case, and Assistant U.S. Attorney Clay Stiffler prosecuted.

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