Owner of Boston Cab Charged with Tax and Fraud Offenses

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Tuesday, August 2, 2016

Owner of Boston Cab Charged with Tax and Fraud Offenses

Owner and company agree to pay $2.3 million in restitution

BOSTON – Edward J. Tutunjian, who has owned and operated Boston Cab for more than four decades, was charged today in U.S. District Court with payroll tax evasion, employing illegal aliens and with failing to pay overtime wages.

Tutunjian’s company, EJT Management, Inc., through which he operated Boston Cab, also was charged with defrauding the U.S. Department of Housing and Urban Development (HUD) by enabling EJT employees to obtain federal housing subsidies to which they were not entitled.  Both Tutunjian and EJT have signed plea agreements in which they agree to make full restitution for their crimes, totaling more than $2.3 million.

Tutunjian, 66, of Belmont, was charged in an Information with five counts of tax evasion, one count of employing illegal aliens and one count of violating the Fair Labor Standards Act for failing to pay overtime wages.  EJT Management, Inc. was charged in the same Information with aiding and abetting the theft of public money.

Since approximately 1972, Tutunjian and EJT have operated the Boston Cab taxicab business in the greater Boston area.  By 2014, Tutunjian and EJT owned approximately 372 taxi medallions – a government license permitting a car to be used to transport passengers for hire – which they leased to drivers and for which Tutunjian and EJT received millions of dollars in gross revenues each year, mostly in cash.   Although the taxi drivers were self-employed, Tutunjian and EJT directly employed mechanics, dispatchers, office workers, and others.  It is alleged that a number of those employees were undocumented aliens who, because of that status, were not authorized to work in the United States.

Tutunjian allegedly concealed the size of the company payroll from the IRS, and thereby concealed the amount of federal employment taxes he and EJT would be responsible for paying.  He did this by paying employees entirely or partially in cash and keeping such cash payments off the books.  By doing this, he ensured there would be no record of cash payments that could be inspected by the IRS.  Employees who were illegal aliens, and therefore not authorized to work in the United States, were allegedly paid entirely in cash.  EJT did not issue W-2 forms to those employees and did not withhold or pay federal income tax, Social Security tax, or Medicare tax with regard to those illegal alien employees.

Other employees who were citizens or permanent resident aliens received their wages partly in cash and partly by check.  Tutunjian filed quarterly employment tax returns for EJT which did not include the amounts which had been paid in cash to EJT employees.  In this way, EJT evaded, and aided and abetted its employees in evading, approximately $739,204 in taxes from 2009 to 2013.

Tutunjian also allegedly did not pay the required overtime rate to employees who worked more than 40 hours a week.  To conceal this, Tutunjian required certain employees to punch in 40 or fewer hours per week on an electronic time clock whose information was sent to the outside payroll company that prepared the payroll checks and W-2s, even though those employees had actually worked more than 40 hours per week, in some instances 50 or 60 hours a week.  It is alleged that Tutunjian paid those workers in cash for their overtime hours, at the regular-time rate rather than the required time-and-a-half.

According to documents filed with the Court, a number of EJT’s employees were living in federally subsidized housing in Cambridge and elsewhere, some of which had waiting lists for prospective tenants.  The amount of the federal housing subsidy, as well as the eligibility to live in the units, depended on the tenant’s income.  HUD did not rely solely on a tenant’s statement of his/her income, but also compared it to the tenant’s W-2 wages and generally required employers such as EJT to provide written verification.  From January 2009 to about May 2013, EJT allegedly aided certain employees to receive housing benefits to which they were not entitled, by providing payroll information, including W-2s, which did not reflect the wages paid to these employees in cash.  Additionally, during the same period, EJT provided certifications to the state agency administering the housing subsidy program, which falsely reported the income of certain employees to be only the amounts paid by check but which did not include the wages paid to these employees in cash.  In this manner, EJT aided certain employees to obtain HUD housing subsidies to which they were not entitled.

According to the plea agreements also filed today, Tutunjian has agreed to pay $1,391,012 in restitution to the IRS for taxes, interest and penalties, and an additional $699,717 to employees in unpaid overtime wages.  EJT has agreed to pay restitution of $219,307 to HUD for the fraudulent housing subsidies.  Two of Tutunjian’s relatives, who also operate taxi companies, have agreed to pay $195,903 to the IRS in unpaid taxes for tax years 2009 through 2014.  These relatives have not been charged.

In a related case, EJT dispatcher Girma Tilahun, 60, and his wife, Wudnesh Wolde, 53, of Cambridge, have agreed to plead guilty to immigration fraud and pay $234,987 in unpaid federal income taxes and $62,340 to HUD.  Tilahun and Wolde allegedly arranged a sham marriage for one of Tilahun’s relatives to a U.S. citizen so that the relative could fraudulently gain legal status in the United States.

Another former EJT employee, Raffi Chapian, 44, of Waltham, has agreed to plead guilty to failing to pay income taxes from 2010 to 2014.  Chapian has agreed to serve six months in prison and pay $72,335 in unpaid taxes.

The charge of tax evasion provides a sentence of no greater than five years in prison, three years of supervised release, a fine of $250,000, or twice the gross gain or loss.  The charge of employment of unauthorized aliens provides for a sentence of no greater than six months in prison and a fine of $3,000 per alien.  The charge of violating the Fair Labor Standards Act provides for a sentence of no greater than one year of probation and a fine of $10,000.  The charge of aiding and abetting the theft of public money provides for a sentence of no greater than five years of probation and a fine of $500,000.  The charge of immigration fraud provides for a sentence of no greater than five years in prison and a fine of $250,000.  The charge of failing to pay income tax provides for a sentence of no greater than one year in prison and a fine of $100,000.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz; Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development; Office of Inspector General, Northeast Regional Office; Nikitas Splagounias, Assistant Special Agent in Charge of the U.S. Department of Labor, Office of Inspector General, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Boston Police Commissioner William Evans; and Cambridge Police Acting Commissioner Christopher Burke, made the announcement today.    The Wage and Hour Division and the Employee Benefits Security Administration of the Department of Labor also assisted with the investigation.  The case is being prosecuted by Assistant U.S. Attorneys Michael L. Tabak and Sandra S. Bower of Ortiz’s Criminal Division.

The details contained in the charging documents are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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