Area Subway franchise owner pleads guilty to federal income tax fraud

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A Middletown businessman who owned seven area Subway restaurant franchises has pleaded guilty to filing a false income tax return.

Mohammed Mike Bassini, 48, of Middletown, entered the guilty plea today relative to underreporting the income earned by the Subway franchises he owned. Bassini entered the plea in U.S. District Court in Cincinnati.

Filing a false income tax return with the IRS carries a maximum penalty of three years in prison and a fine of up to $250,000, according to the U.S. Attorney’s Office for the Southern District of Ohio.

“Bassini took extensive measures to underreport his income, but at the end of the day those measures were not enough to keep him from being convicted of committing income tax fraud,” said Ryan L. Korner, special agent in charge, IRS Criminal Investigation, Cincinnati Field Office.

Bassini remains free on a recognizance bond pending a sentencing hearing. A presentence investigation was ordered and is expected to be completed by April 15, according to court records.

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According to court documents, Bassini is the sole owner and operator of seven Subway restaurant franchises located in the Greater Cincinnati-Dayton area. In December 2005, Bassini formed SIMA, an S-Corporation, under which he operated his seven Subway restaurants. In January 2011, Bassini dissolved SIMA Corporation, splitting his franchises among three newly formed S-Corporations, Monroe Trades Corporation, Mason Trades Corporation, and Dayton Trades Corporation. Bassini operated two Subway franchises under Mason Trades Corporation.

As of 2015, Bassini was delinquent with several of his income tax return filings. Bassini had not filed an individual tax return since the 2010 income tax year, and he had never filed a corporate income tax return on behalf of Monroe Trades Corporation, Mason Trades Corporation, or Dayton Trades Corporation.

In April 2015, Bassini hired a CPA firm to prepare his delinquent individual and corporate income tax returns and provided records he received from Subway concerning the actual gross receipts or sales of the two Subway franchises for 2011.

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As a result of Bassini’s fraudulent representations, in January 2016 the CPA firm prepared a false corporate income tax return for Mason Trades Corporation for the 2011 income tax year, which resulted in a substantial understatement of Bassini’s ordinary business income, according to officials.

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