SACRAMENTO, Calif. — The Internal Revenue Service has issued a summons for bank records tied to the family of disgraced fast-food magnate Abolghasseni “Abe” Alizadeh, released from prison in 2021 after serving two years for swindling banks out of $22 Million in excess loans with phony purchase contracts.
In a letter sent to Abe’s sister, Kobra, in late July, the legal process department at MUFG Union Bank said they received a summons for information on the family’s mortgage contracts, loan applications, and loan payment history, among other records. The IRS also seeks to examine the bank account of Sheryl Kranig, an Auburn real estate agent.
IRS officials declined to answer questions on the summons, but the inspection of the family’s accounts is apparently tied to several 1040 tax returns filed in the early 2000’s by Abe’s brother, Mike, according to the summons form.
It wasn’t immediately clear whether the summons is being used to collect money owed by the family in any previous matters, or whether the summons is in relation to any new developments. The family’s attorney, Paul Warner, didn’t answer an email seeking comment.
The letter, and a copy of the summons itself, was included in federal court records recently filed by the family in an effort to have the summons quashed. In the motion, Warner says the summons is overly broad and was issued “in bad faith” under a weak legal basis.
“The Summons was issued in bad faith, asserting an unpublished opinion to support its claim of not being subject to objection to Union,” Warner wrote in the motion. “It constitutes an improper fishing expedition against the plaintiffs.”
Warner seeks to block the bank from producing records in response to the summons and keep the IRS from reviewing them. He has also asked for an evidentiary hearing to establish the service’s purpose for issuing the summons if it is not quashed.
Abe, who once owned 90 Jack in the Box restaurants and over 4 million square feet of real estate, as well as restaurants Crush 29 and Suede Blue, was sentenced to over 4 years in prison for building a scheme to fraudulently purchase land he planned to develop.
According to prosecutors, Abe submitted phony purchase contracts that inflated the purchase price, causing the bank to loan money in excess of the true loan-to-value ratio. He received millions of dollars from the banks by the close of escrow and, prosecutors say, sometimes avoided making any down payment at all.
“The defendant used his reputation as a local business leader to perpetrate a complex fraud scheme to enrich himself at the expense of others,” then-US Attorney McGregor Scott said in a statement at the time.
Most of Abe’s restaurants were later closed, with his companies filing for bankruptcy protection and owing a combined $390 million, and he was sued by the government in 2014 for millions in unpaid payroll taxes.
In 2011, he pled no contest to a state charge of felony grand theft for failing to pay California sales tax and withholding taxes. He was kept out of prison after being ordered to pay the state $1.2 million across four years, according to The Sacramento Bee.