U.S. Attorney: Auburn coffee shop owner failed to report millions in income

The owner of a string of coffee stands pleaded guilty Thursday in U.S. District Court in Seattle to making and submitting a false tax return, announced U.S. Attorney Tessa M. Gorman in a news release.

Gorman said Assad Baragzai, 47, of Auburn, Washington, admits that between 2016 and 2020 he failed to report as much as $6 million in income on his tax returns. Baragzai faces up to three years in prison when sentenced on November 18, 2024.

According to the plea agreement, Baragzai significantly underreported his income when he provided information to his tax accountant.

The government believes that the tax loss over the five years that Baragzai underreported his income is more than $1.7 million.

The tax loss in 2017 alone is more than $687,000. Baragzai disputes the government figures and believes the tax loss is $1.3 million.

According to the release, Baragzai is the second defendant to enter a guilty plea in this investigation. In March 2024, Baragzai’s brother-in-law, 45-year-old Rajesh Mathew, of Auburn, pleaded guilty to making and submitting to a false tax return. In his plea agreement Mathew, who also owns a string of coffee stands, admits that he too underreported a substantial amount of income over a period of several years. Mathew is scheduled for sentencing on October 9, 2024.

Both Baragzai and Mathew have agreed to make restitution to the Internal Revenue Service. Both may also face additional civil penalties, fines, and interest for the tax loss.