EVERETT — A downtown store owner is now facing criminal and civil sanctions based on allegations that he was running a food stamp fraud ring out of his business.
Fraz “Tony” Mushtaq recently pleaded not guilty to a trio of felony charges stemming from a 17-month investigation by Everett police into A-1 Smoke and Grocery. Meanwhile, federal authorities have moved to take possession of Mushtaq’s Everett home and the more than $410,000 that detectives seized as part of their investigation.
Authorities believe the assets are proceeds from a criminal enterprise.
Mushtaq, 34, continues to run the small grocery store in the 2600 block of Colby Avenue. He is no longer allowed to accept EBT cards after his machine was seized by the U.S. Department of Agriculture’s Office of Inspector General. Everett police continue to monitor the convenience store, which the city has deemed a chronic nuisance.
The business must comply with conditions established by the city or risk being closed down.
Mushtaq was arrested in February during a raid of his store. Prosecutors allege that he was buying food stamp benefit cards for cents on the dollar and using the cards to purchase inventory for his store.
Court documents say that a confidential informant working with police accompanied Mushtaq to big grocery stores where he directed the informant to purchase dozens of cases soda pop with his EBT card. Mushtaq later paid the man in cash, about half the price of what the informant was charged at the grocery store.
In one instance, Mushtaq became nervous after a cashier made a comment about the informant buying $132 worth of Pepsi “using government food stamps,” according to court papers.
Prosecutors allege that Mushtaq bought what he believed was stolen cigarettes and energy drinks for a fraction of the fair market value and reselling the goods at his store, court papers said.
Theft investigators at an Everett Safeway and QFC also reported that shoplifters said that they were stealing from the stores to sell the merchandise to Mushtaq for a fraction of the price, court papers said.
Mushtaq is suspected of storing his inventory inside the garage at his home.
Prosecutors also allege that Mushtaq was selling illegal “spice,” a synthetic drug. He reportedly accepted cash and EBT cards.
Investigators suspect that Mushtaq was making hundreds of thousands of dollars off of his scheme and laundering the money through his business. They also suspect that he under-reported his earnings to the Internal Revenue Service.
For example, Mushtaq reportedly paid off a $230,000 home loan in the span of 3½ years while only reporting income of about $128,000 during that same period, according to the forfeiture documents filed in federal court.
Mushtaq is originally from Pakistan but has lived in the U.S. for years. He was required to surrender his passport and is prohibited from leaving the state pending his trial, scheduled for Oct. 31.