Mohanbhai “Mohan” Ramchandani, a sharply-dressed, self-marketed tailor to the stars, pled guilty to felony tax fraud charges involving a ten-year scheme to evade paying New York State sales and income taxes. Mohan underreported his retail earnings and falsified his taxes to comport with his faith in numerology – the belief that numbers have a special significance or symbolism. Rather than bring him greater success, however, numerology left a trail that gave the scheme away. For nearly all of his quarterly tax filings, he manipulated the numbers so that they added up to multiples of ten. In one quarter, he manipulated the figure for sales tax due so it appeared to be $13,484, the individual numbers of which add up to 20. Investigators found that the multiples of ten in his tax filings could not have occurred by chance.
Mohan, an immigrant from India, has been working for over three decades as a professional tailor. He is the founder of Mohan’s Custom Tailors in Manhattan, whose roster of past and present clientele includes the towering Wilt Chamberlin and Patrick Ewing and New York Mayors Rudy Giuliani and Ed Koch. When he started his business, he was happily outfitting Manhattan’s bankers and lawyers, until the day Patrick Ewing’s mother commissioned him to make a new suit for her son. Ewing was then a basketball player for Georgetown University who needed a new suit for his internship with Senator Bob Dole. Despite not following basketball, Mohan took a cheap-fare bus to Georgetown to measure Ewing, stitched up a sharp suit and began a professional relationship that lasted years. Once Ewing began to play for the Knicks, he became the face of Mohan’s brand. Other athletes quickly flocked to Mohan for similar style treatment, including Walter “Clyde” Frazier, well-known for his flamboyant style, who reportedly owns 500 suits, all made by Mohan.
The tax fraud claims against Mohan were first raised by a former employee under the New York State False Claims Act. The Attorney General’s investigation revealed that Mohan knowingly failed to pay at least $1.7 million in state and local sales tax and at least $256,000 in state and local personal income taxes. Mohan and his business have agreed to pay $5.5 million dollars in damages and penalties as part of the settlement. The whistleblower will receive $1.1 million for his information.
This is the first win for a tax fraud case filed under the New York State False Claims Act, which was amended in 2010 to allow whistleblowers to come forward with claims about substantial violations of the tax laws. Attorney General Schneiderman said in a statement that “[t]here are no excuses for tax cheats – regardless of how prominent they are. Mr. Ramchandani’s conviction for orchestrating this multi-million dollar scheme to defraud taxpayers sends a clear message that those who rip off the public will be held accountable for their crimes.” Mohan faces up to three years in prison as well as federal tax fraud charges.
“As an immigrant to the United States, I have worked hard all my life to build a good business, support my family and contribute to the community,” Mohan said in a heartfelt statement released following his guilty plea. “I made several mistakes with regard to the payment of taxes and I take full responsibility for my actions. I have told authorities of my intent to pay all monies owed and the penalties through an agreed upon schedule. Indeed, I have already paid a substantial portion of what I owe. I apologize to my family, employees and customers for this mistake and will take all steps to rectify this matter.”
* * *If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click here.