TOLEDO, OH (Toledo News Now) - The investigation into 7 IHOP restaurants began more than three years ago based on a tip to the FBI culminated in the arrests of 18 people early Wednesday morning, and the release of a 64-count federal indictment.
"It went pretty much according to plan. It was one of the smoothest operations I've been involved in. I think before 9 o'clock we had all the individuals in custody. There were no issues, no concerns, it went very well," said FBI Assistant Special Agent in Charge George Crouch.
The local IHOP restaurants were raided in September. The indictment spells out a massive conspiracy, and centers on the owner of 5 northwestern Ohio restaurants, Tarik "Terry" Elkafrawi.
"Elkafrawi's restaurants served up more than just breakfast. They had a menu of various criminal schemes," said Carole Rendon, first assistant U.S. Attorney.
Among the counts: money laundering, conspiracy to harbor aliens, identity theft and fraud. In all, the defendants stole more than $3 million from IHOP's corporate owner, the government, insurers and taxpayers.
"The victims of these various schemes of fraud are almost as numerous as the different fraud schemes," said Rendon.
The indictment says Elkafrawi and his associates under-reported sales to collect extra money from IHOP's corporate owner Dine equity.
Calls seeking comment from Dine equity have gone unreturned.
The indictment also lays out a plan to hide worker income through the use of multiple identities for the same person, all to reduce payments to the Ohio Bureau of Worker's Compensation. Federal agents say some workers even collected government assistance through the scheme.
The indictment spells out everything, saying Elkafrawi and other defendants manipulated sales figures, salaries and payrolls. It says they did so to avoid paying taxes, royalties, and to divert money from the restaurants to themselves.
The indictment also says Elkafrawi and three others hired 200 illegal aliens, and provided them with fraudulent identities, in some cases providing the names and social security numbers of former IHOP employees.
The indictment says the crime was covered up by an IHOP franchise consultant named Autumn Lee Tangas, who hid what was happening from IHOP's corporate owner.
"She gained financially from looking the other way," said Immigrations and Customs Enforcement Agent in Charge Tom Harter.
An arson at the Findlay I-hop was also part of the fraud. The indictment says Elkafrawi intentionally ordered a man to start the fire, then submitted $1.4 million in fraudulent insurance claims for damage.
"Some of the subjects of this indictment were basically cooking the books as well as cooking pancakes," said Crouch.
All of this was masked by tampering with the restaurants' payroll systems, and through shoddy book-keeping.
The feds say the money was spent on homes, cars, and some of it was sent overseas to places like Egypt.
Among the purchases made with the money: Elkafrawi's Middleton township home, which we visited after the raids. At the time, his wife- also named in the indictment- said Elkafrawi had a "heart of gold."
Through the indictment, the federal government is seeking ownership of property tied to the investigation. That means they will take over all 7 IHOP restaurants, cars, homes, and bank accounts.
"It is our aim to make sure this group gets their next helping of pancakes from behind a counter of a federal prison cafeteria," explained Harter.
While this indictment makes no connection to any sort of terror organizations, that is something investigators are looking into.