A.G. Schneiderman and U.S. Department of Labor Announce Jail Time For Bronx Papa John’s Franchisee Convicted of Wage Theft

Franchisee Sentenced To 60 Days In Jail And Payment Of $230,000 In Restitution To Workers For Unpaid Wages; Restitution Is In Addition To $280,000 In Damages And Penalties Pursuant To Prior USDOL Settlement

Schneiderman: Wage Theft Is A Crime And A Papa John’s Franchisee Is Now Going To Jail For Cheating His Employees

NEW YORK – Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Abdul Jamil Khokhar and BMY Foods, Inc., which together owned and operated nine Papa John’s franchises throughout the Bronx.  Khokhar pled guilty to failure to pay wages under the New York Labor Law, a misdemeanor, and BMY Foods pled guilty to falsifying business records in the first degree, an E felony.  Khokhar was sentenced to spend 60 days in jail and to pay $230,000 in restitution to underpaid workers at his Papa John’s franchises.

“Wage theft is a crime and a Papa John’s franchisee is now going to jail for cheating his employees and trying to cover it up,” said Attorney General Schneiderman.  “My office will do everything in its power to protect the rights of New York’s workers and make sure that all employers – including fast food restaurants – follow the law.”

“The Attorney General’s successful criminal prosecution of this employer, together with the Department of Labor’s civil consent judgment against the enterprise, show that employers will not get away with covering up violations of state and federal wage laws,” said Mark H. Watson, Jr., Regional Administrator for the Wage and Hour Division at the U.S. Department of Labor.  “We will continue to work together to prevent such law-breaking and obtain proper compensation for workers.”

Both New York and federal law require employers to pay workers at least the minimum wage for all hours worked and overtime at one-and-one-half times their regular rate of pay for hours worked in excess of forty in any given workweek.  New York’s current minimum wage is $8.75 per hour, and the federal minimum wage is currently $7.25 per hour; employers in New York must pay the higher rate.  In addition, employers must report all wages paid to employees on tax returns on a quarterly basis and must make contributions to the State Unemployment Insurance Fund based upon the reported wages.

Khokhar and BMY Foods, Inc. failed to pay overtime to their workers.  Instead, they paid workers the same, “straight time” regular rate of pay for all hours worked, including hours in excess of forty and they created fictitious names for employees to use in their computerized timekeeping system to hide this practice.  In a further attempt to conceal this scheme, the defendants filed fraudulent tax returns with the State of New York that omitted the cash payments made under fictitious names.  Khokhar created the dual name scheme after becoming aware that he was under investigation by the U.S. Department of Labor for wage violations. 

The U.S. Department of Labor secured a civil settlement in July 2015 requiring Khokhar to pay $230,000 in liquidated damages and $50,000 in civil monetary penalties, in addition to the $230,000 in restitution for unpaid wages paid to the Attorney General’s Office upon the Order of the Court at sentencing. Pursuant to the consent judgment filed by the U.S. Department of Labor, Khokhar’s Papa John’s franchises also will be required to designate and create procedures for an internal compliance officer and will be subject to independent auditing of the franchises’ practices.

The investigation was handled for the Attorney General’s Office by Investigators Edward Ortiz, Elsa Rojas, Sixto Santiago, and Michael Yun, Investigator Luis Martinez of the Special Operations Unit, Senior Investigators Lawrence Riccio and Salvatore Ventola, Supervising Investigator Luis Carter, Deputy Chief Investigator John McManus, and Chief Dominick Zarrella.

The case was prosecuted by Assistant Attorney General Benjamin Holt, Section Chief Richard Balletta of the Labor Bureau, and Deputy Bureau Chief Stephanie Swenton of the Criminal Enforcement and Financial Crimes Bureau and the Auto Insurance Fraud Unit.  Terri Gerstein is the Labor Bureau Chief, Alvin Bragg is the Executive Deputy Attorney General for Social Justice and Kelly Donovan is the Executive Deputy Attorney General for Criminal Justice.

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