CLEVELAND - A federal investigation led to the indictment of 18 people in connection with an alleged criminal enterprise that was run out seven IHOP restaurants in Ohio and Indiana.
The schemes included money laundering, identity theft, alien harboring and arson, according to the U.S. Attorney's Office.
"These defendants turned pancakes houses into crime dens," said Steven Dettelbach, United States Attorney for the Northern District of Ohio. "This indictment lays out a menu of crimes ranging from harboring undocumented workers to identity theft to money laundering to insurance fraud."
The indictment alleged that the owner of the seven IHOP restaurants, Tarek "Terry" Elkafrawi, and others, used their control of the restaurants to fraudulently manipulate sales figures, salaries and payrolls to evade taxes, avoid paying royalties and illegally divert money from the stores to themselves.
The IHOP restaurants owned by Elkafrawi and named in the indictment are in Holland, Toledo (two locations), Findlay, Perrysburg, Lima and Evansville, Ind.
According to the indictment, Elkafrawi employed about 200 illegal immigrants to work at his restaurants and arranged for managers to cash payroll checks for these workers.
As a result of the scheme, federal prosecutors said Elkafrawi and others generated $1.2 million in unreported income.
The arson charge is the result of a fire at the IHOP in Findlay in 2008. The indictment alleges Elkafrawi and another person ordered Jose Leon-Gonazalez to burn down the Findlay restaurant so they could submit an insurance claim. Elkafrawi collected $1.3 million in fraudulent insurance claims with regard to this fire, the indictment said.
Prosecutors are trying to seize a house they said Elkafrawi bought in Indiana using laundered assets.