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Store owner fined $45K for contempt, perjury, witness tampering

October 29, 2018

The Indiana Tax Court dismissed a case and ordered sanctions when it found a store owner committed perjury and witness tampering by attempting to influence his employees’ testimony in an investigation against him.

In May 2016, after completing an audit, the Indiana Department of State Revenue determined that Bloomington grocery store owner Sahara Mart had underreported its taxable sales during 2013, 2014 and 2015 and failed to remit the proper amount of sales tax to the state. The department ultimately issued Proposed Assessments against Sahara Mart, including penalties and interest, in the amount of $1.5 million.

At deposition, Sahara Mart’s majority owner, Javad Noorihoseini, testified that Sahara Mart had no employees and occasionally paid for the services of independent contractors and consultants. Noorihoseini also testified that 40 percent of the beer and alcohol Sahara Mart purchased annually for resale was never sold because it went bad and had to be destroyed.

A department-led investigation found four individuals who worked for Sahara Mart between 2013 and 2015 who said they were paid per hour worked, mostly in cash.  They also said they knew of other workers like them and had never witnessed any destruction of alcohol.

The employees told investigators that after his deposition, Noorihoseini contacted them and attempted to secure their “cooperation” in the event they were contacted by the Department. One affiant said that Noorihoseini offered to pay her $1,000 “to cooperate.”

In May 2018, the Department filed a motion asserting that Sahara Mart and Noorihoseini were “engaged in a fraudulent scheme to avoid paying taxes” and had committed perjury and witness tampering. Sahara Mart did not deny, explain, or excuse the facts underlying the department’s contempt charge, but moved to dismiss the motion on the basis that the department violated Indiana Rule of Evidence 408. Sahara Mart also moved to strike Noorihoseini’s deposition, and strike the affidavits submitted by the department. 

The Tax Court denied Sahara Mart’s arguments in Sahara Mart, Incorporated v. Indiana Department of State Revenue, 49T10-1709-TA-17, finding the store “attempted to avoid the charges of perjury and witness tampering merely by making a series of poorly-developed — and ultimately unsuccessful — evidentiary objections.”

First, Sahara Mart contended that the Department violated the Rule 408 by twice referring in its written brief to a settlement conversation that occurred between the parties and by “using [the] settlement conference as a preliminary step to proving witness tampering.”

“This information does not fall within Rule 408’s evidentiary prohibition because the Department provided the references not to prove or disprove the validity of Sahara Mart’s claim, but to inform the Court that it had notified Sahara Mart of its recent discovery activities,” Judge Martha Wentworth wrote.

The Tax Court then denied the motion to strike Noorihoseini’s deposition when it found that neither Sahara Mart nor Noorishoseini moved to suppress the deposition with reasonable promptness or presented argument that there were inaccuracies in the transcribed testimony. The court further declined to strike the affidavits on the basis that their content was irrelevant.

“Noorihoseini testified that one of the affiants, Brooke Henry, was never paid for her services, but she testified that she was paid by Sahara Mart for her services as a full-time nutritional adviser and alcohol purchaser at Sahara Mart for approximately 17 years,” Wentworth continued. “Neither Noorihoseini nor Sahara Mart rebutted this evidence.”

“At the outset of the show cause hearing, Sahara Mart informed the Court that it took the charges against it seriously and that it ‘d[idn’t] come to th[e] courtroom throwing whatever [it] c[ould] at the wall to see what st[uck.]’ But as described throughout this opinion, that is exactly what Sahara Mart did,” Wentworth concluded.

The court thus dismissed the cause with prejudice and ordered Sahara Mart to pay the department’s attorney fees in the amount of $45,000.

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