8th guilty plea ties another knot in a complicated web of family and fraud

Taleb Mohamed Wazwaz appeared in federal court Wednesday on his 41st birthday to plead guilty to conspiring with a dozen other men to cheat the state out of more than $2.5 million in sales taxes by concealing revenues from some Twin Cities tobacco stores.

He still may face charges in a mortgage fraud investigation that implicated him and at least seven of his co-defendants.

Wazwaz was the eighth defendant to plead guilty thus far in the tax-fraud conspiracy, and another is expected to plead guilty next week.

Most of the defendants belong to four groups of brothers identified by their names: Othman, Mohamed, Yassin and Mahmoud. They owned tobacco stores in the Twin Cities and concealed the revenue and expenses of those stores or the identities of the people deriving economic benefit from their operation, according to the indictment.

Plea agreements made public thus far reveal that federal agents are also investigating the defendants for crimes related to mortgage fraud. In exchange for pleading guilty in the tax-fraud case, the government agreed not to bring mortgage fraud charges against most of the men.

One exception was Sabry Mohammed Wazwaz, 30. He pleaded guilty Tuesday to conspiracy in the tax-fraud case, and also to a new charge of conspiring to commit mortgage fraud. He admitted to buying two duplexes in St. Paul in 2005, then fraudulently reselling them as condominiums to straw buyers with the use of inflated appraisals and other falsified documents.

The plea agreement puts the loss from Sabry Wazwaz's crimes between $1 million and $1.3 million. It calls for a sentence of 37 to 46 months in prison, a fine up to $75,000, restitution and up to three years of supervised release.

On Wednesday, Assistant U.S. Attorney David MacLaughlin told Taleb Wazwaz that he could settle pending mortgage fraud charges. But he refused the government's offer without comment. He faces from 12 to 21 months in prison, a fine of up to $30,000 and restitution in the tax-fraud conspiracy.

Case will probably wind down

MacLaughlin told U.S. District Judge Ann Montgomery Tuesday that the tax-fraud case would probably wind down with the expected guilty plea of Kennedy Mohamed Wazwaz, which is scheduled for next Wednesday. He said three other defendants -- Fares Othman Wazwaz, Anthony Stallone and Othman Majed Wazwaz -- remain at-large overseas. "And I don't think any of those three guys are coming back."

The last remaining defendant, Kamil Madfoun Al-Esawi, was the "most minor player by far" in the alleged tax-fraud conspiracy, and the government expects to go to trial on a simpler charge stemming from lies he allegedly told authorities, MacLaughlin said.

The other defendants who have pleaded guilty in the tax fraud case are Houd Othman Wazwaz, Ziad Mahmoud Wazwaz, Raed Yassin Wazwaz, Tawfiq Othman Wazwaz, Yousef Mahmoud Wazwaz and Adel Salem.

Previous convictions

Some of the defendants had previously pleaded guilty to federal charges in connection with cigarette sales. Stallone, also known as Zuhair Wazwaz, pleaded guilty in 2004 to mail and wire fraud. Salem pleaded guilty that same year to mail fraud. They pleaded guilty to ordering nearly $1 million in cigarettes with no intention of paying for them.

MacLaughlin, who heads the U.S. Attorney's Office's white-collar crime division in Minneapolis, declined to discuss the origin of the mortgage fraud investigation. But it likely started from an investigation into another Wazwaz family member.

Court records show that the government charged Fawaz Mahmoud Wazwaz, also known as Mike Wazwaz, in a December complaint with scheming to defraud Countrywide Home Loans out of $367,533.

Investigators allege that Fawaz Wazwaz colluded with appraisers, straw buyers and deal closers in "dozens of transactions."

His cousin Tawfiq Wazwaz, a brother of Houd Othman Wazwaz, was charged in February 2006 with aiding and abetting mortgage fraud related to that investigation while out on bond in a separate case. In that case, he had pleaded guilty to conspiring to commit mail fraud to cheat R.J. Reynolds Tobacco Co. out of more than $600,000. The government agreed to drop the mortgage fraud complaint to get him to pay restitution in the tobacco case.

Dan Browning • 612-673-4493

Dan Browning • dbrowning@startribune.com