DETROIT (WXYZ) - Happy's Pizza owner Happy Asker and four others in his company were indicted by a grand jury with tax fraud, obstruction and other charges in U.S. District Court on Tuesday afternoon.
Asker, Maher Bashi, and Tom J. Yaldo, who both work for Asker, are all accused of maintaining two sets of books and records, underreporting payroll expenses, paying employees in cash and failing to report income to the IRS.
The scheme was known within the Happy's Pizza franchises as the "Profit Split Scheme," according to the 62-count indictment; 40 of the counts are against Asker.
The indictment also says that that from 2004 to 2011, the Happy's Pizza franchises paid about $2.1 million in wages to shareholders and employees that were not reported to the IRS.
Arkan Summa and Tagrid Summa Bashi are also named defendants. Summa is charged with obstruction for concealing his role in the company, and Summa Bashi is charged with providing false information to Special Agents for the IRS.
Filing false tax returns and obstruction both carry a maximum penalty of three years in prison and a $250,000 fine for each count.
Asker, and the other men charged with conspiracy, face up to five years in prison and a $25,000 fine if convicted.
The charges come three years after the 7 Action News Investigators were first to report how federal agents raided Happy's Pizza's Farmington Hills-based offices, and left with boxes of company records.
Federal agents from the IRS criminal division and the Drug Enforcement Agency were at the 2010 raid. At the time, witnesses told 7 Action News that there were around 30 agents involved, and were inside the then newly-opened headquarters and training center for several hours.
When they left, witnesses say the agents had loaded up a rental van with boxes of company records.
Happy's Pizza is a local rags-to-riches success story. The owner, Happy Asker, started from nothing and built a huge chain of restaurants.
7 Action News Investigator Scott Lewis questioned Asker in 2010 about the raid.
"Could you just tell me why drug enforcement officers would be interested in records from a pizza company?" asked Lewis.
Asker didn't answer.
Asker started the pizza business at the age of 18 with one pizzeria at 7 Mile and Hoover in 1994, and the chain has since grown to more than 65 restaurants. They've even expanded into Ohio and Illinois. Asker was named businessperson of the year by the Chaldean news in 2010.
In the story Asker attributes his success to good customer service, and an extensive menu. He said every restaurant is built brand new from the ground up with top notch equipment and a decor that includes granite countertops.
A company spokesperson issued this statement to 7 Action News on July 17, a day after the men were indicted:
"In response to the Department of Justice's Press Release on July 16, 2013, Happy's Pizza Franchise, LLC, franchisor of approximately 100 independently owned and operated restaurants, has issued the following statement:
We are gratified that the speculation and innuendo that accompanied the federal government's raid of our corporate offices has ended. In August of 2010, nearly 30 DEA, ATF and IRS agents stormed the corporate offices of Happy's Pizza Franchise and seized all business and personal records to much hype and media speculation. Today, after nearly three years of investigation and with the full cooperation of our company, it was finally revealed that neither the DEA nor the ATF found any evidence of wrongdoing.
The present indictment of founder Happy Asker is premised solely on the alleged underreporting of income by 7 of our 100 independently owned and operated franchisee restaurants. Over 3 years, the IRS utilized its immense resources to exhaustively investigate all 100 of our franchisee restaurants in over 6 states as well as the supporting businesses and employees that make up the Happy's Pizza system to ultimately allege irregularities in tax reporting.
As stated by the Department of Justice in their press release on this case, all Americans, even those facing a seemingly imposing indictment, are presumed innocent. With the continued support of our franchisees, employees, business associates and, most importantly, our loyal customers, we look forward to continuing regular business operations while vigorously defending our founder against these baseless allegations."