Restaurant Owner Sentenced In Fraud

Oct. 22--Though he had faced up to 40 years behind bars, the former owner of seven IHOP restaurants in northwest Ohio and Indiana was sentenced Tuesday to eight years in prison.

Tarek Elkafrawi, 57, of Middleton Township near Perrysburg pleaded guilty July 3 to 53 counts contained in a federal indictment charging him with a series of criminal schemes between 2003 and 2012 intended to defraud the government, corporate IHOP, an insurance company, and his own employees of millions of dollars.

He admitted to hiring in excess of 200 undocumented workers, giving some of them multiple identities so that they could work extra hours without being paid overtime and could make claims for Medicaid and other public assistance.

"This is not just a case involving the hiring of illegal aliens," Duncan Brown, an assistant U.S. Attorney, told the court. "The hiring of illegal aliens was the base of the pyramid that led to a tip of money laundering."

In between, Mr. Brown contended, were "deliberate and knowing" acts of identity fraud, identity theft, mail fraud, health-care fraud, and arson. Elkafrawi directed his managers to manipulate sales figures, salaries, and payroll to avoid paying taxes and lessen workers' compensation premiums -- all done for personal gain.

Sitting between his attorneys, Rick Kerger and Stephen Hartman, Elkafrawi told the court he was sorry.

"I was sick in 2004. I had an operation. I was not really well and I took on too much," he said. "I trusted the wrong people."

While Elkafrawi said he took responsibility for his misdeeds, Mr. Kerger told the court his client maintained he was not involved with the arson that destroyed the Findlay IHOP in 2008.

Still, U.S. District Court Judge David Katz ordered that Elkafrawi pay $1.36 million to Farmers Insurance for the fraudulent insurance claims paid after the fire as well as $5,042 to the Findlay Fire Department for extinguishing the blaze.

He also ordered a forfeiture of property, including proceeds from the sale of the seven restaurants, cash, and vehicles.

During the lengthy sentencing hearing, two physicians who treat Elkafrawi testified by telephone that their patient suffered from severe heart disease, hypertension, diabetes, and other issues that could be exacerbated by stress such as prison could present.

"I don't want to sound callous but the Bureau of Prisons will provide better care than he provided to many of his employees," Mr. Brown told the court.

Judge Katz noted that Elkafrawi had no criminal history, that he suffered from serious health issues, and that he had sustained considerable financial losses in the aftermath of the raids on his restaurants in 2011 and the subsequent indictments in 2012. Still, he said, a prison sentence was appropriate.

"I believe one of the important messages that can be sent is that the hiring and exploitation of undocumented aliens and money laundering will not be tolerated," Judge Katz said.

Sixteen co-defendants have entered guilty pleas in the case, including Elkafrawi's wife, Kelly Elkafrawi, 51, who was sentenced last week to two years of probation. She pleaded guilty July 3 to one count each of money laundering and alien harboring.

While she was considered a minor player in the conspiracy, her husband was labeled "the mastermind" by FBI Special Agent Phillip Dieble, who took the stand to outline Elkafrawi's crimes before the sentence was imposed.

Noting that he had not violated the terms of his bond for the past 22 months, Judge Katz permitted Elkafrawi to remain on house arrest until he is ordered to begin serving his prison sentence.

Contact Jennifer Feehan at: [email protected] or 419-213-2134.

___

(c)2014 The Blade (Toledo, Ohio)

Visit The Blade (Toledo, Ohio) at www.toledoblade.com

Distributed by MCT Information Services