Jury finds gas stations owners guilty of federal tax violations.

November 9, 2006

Glenn T. Suddaby, United States Attorney for the Northern District of New York; Anne Marie Coons, Special-Agent-in-Charge of the Buffalo Field Office of the Internal Revenue Service Criminal Investigation Division; John F. Pikus, Special-Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation; and Wayne E. Bennett, Superintendent of the New York State Police today announced that a jury in the Northern District of New York found USA Gas stations owners ZIYA OZBAY, age 59, of Schenectady, New York and YALCIN OZBAY, age 38, of Saratoga Springs, New York guilty of federal tax violations including 1) Obstructing and Impeding the Internal Revenue Service, in violation of Title 26, United States Code, Section 7212(a); 2) Failing to Pay Employee Withholding Taxes, in violation of Title 26, United States Code, Section 7202; 3) Failing to File Income Tax Returns, in violation of Title 26, United States Code, Section 7203; and 4) Structuring cash deposits to avoid the reporting of the transactions to the Internal Revenue Service, in violation of Title 31, United States Code, Section 5324(a)(3). Two other defendants - MUSTAFA OZBAY, age 56, of Schenectady, New York and BIROL OZBAY, age 29, of Schenectady, New York - pled guilty to these charges on November 2, 2006 during the trial.

Defendants were found guilty of obstructing and impeding the Internal Revenue Service ("IRS") by preventing the IRS from accurately calculating the taxes due from them personally and from their corporations. Specifically, the indictment alleged that the defendants: 1) failed to maintain corporate books and records accurately reflecting corporate revenues and expenses for several corporations; 2) did not provide their accountant with adequate books and records to prepare income tax returns for several of their corporations; 3) failed to keep their corporate operations separate and distinct; 4) failed to file and filed inaccurate corporate and personal tax returns; 5) failed to pay federal withholding taxes and Federal Insurance Contribution Act taxes for some USA Gas employees; and 6) hid the total amount of their cash deposits from the IRS by making cash deposits of less than $10,000 to avoid having the cash deposits to the IRS.

Defendants were also found guilty of several charges involving the operation of the USA Gas station at 1605 Broadway in Schenectady, New York. Specifically, defendant ZIYA OZBAY was found guilty of five counts of Failing to File Income Tax Returns for Ozbay Service Center, Inc. - the corporation which owns that USA Gas station - for tax years 1999, 2000, 2001, 2002, and 2003 and six counts of Failing to Pay Employee Withholding Taxes for USA Gas employees for quarters ending from 1999 through 2003. Defendant YALCIN OZBAY was found guilty of one count of Failing to Pay Employee Withholding Taxes for USA Gas employees at 1605 Broadway, Schenectady for the quarter ending December 31, 1999.

The jury also found defendants guilty of three counts of structuring, that is making cash deposits less than $10,000 to evade federal reporting requirements for cash deposits more than $10,000. The total amount structured by all of the USA Gas stations was approximately $21 million.

In addition, defendant YALCIN OZBAY was found guilty of nineteen counts of Failing to Pay Employee Withholding Taxes for USA Gas employees working for two of his corporations. Defendant YALCIN OZBAY was also found guilty of Subscribing to a False Return, in violation of Title 26, United States Code, Section 7206(1). Specifically, YALCIN OZBAY did not report more than $400,000 of revenue earned by one of his corporation during tax year 2002 which also affected his 2002 personal tax return because the calculations from the corporate return were carried over to his personal return.

The tax investigation was conducted by the Albany Office of the Internal Revenue Service Criminal Investigation Division, which participated in the broader investigation with the Federal Bureau of Investigation; the New York State Police; the U.S. Department of State; the U.S. Department of Homeland Security, Immigration and Customs Enforcement; the U.S. Transportation Security Administration; the United States Marshals Service; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Troy Police Department; the Schenectady Police Department; the Albany Police Department; the New York State Department of Taxation and Finance; the Rotterdam Police Department; the Niskayuna Police Department; the New York State Office of Inspector General; and the Colonie Police Department. The U.S. Drug Enforcement Administration and the U.S. Postal Inspectors Service also provided assistance. The case is being prosecuted by Assistant United States Attorneys Elizabeth C. Coombe and William C. Pericak.

United States Attorney Suddaby thanked all the agencies for their teamwork and dedication, and expressed particular gratitude to Special-Agent-in-Charge Coons and the Special Agents of the Internal Revenue Service Criminal Investigation Division for their leadership and diligence in gathering and analyzing the evidence which led to the guilty verdicts.

Inquiries may be directed to Assistant U.S. Attorney Elizabeth C. Coombe at (518) 431- 0247.