Owner of Seattle bikini barista coffee stands in hot water with IRS

The owner of Ladybug Espresso, a chain of Seattle-area bikini barista coffee stands, pleaded guilty Wednesday of underreporting as much as $6 million in income.

U.S. Attorney Tessa M. Gorman announced in a news release last week that Assad Baragzai of Auburn, admitted failing to report the money on his tax returns between 2016 and 2020. He faces up to three years in prison.

The government estimates the tax loss over the five years at more than $1.7 million, with $687,000 lost in 2017 alone.

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Baragzai, 47, is the second person to plead guilty in this investigation. In March 2024, his brother-in-law, Rajesh Mathew, 45, also of Auburn, pleaded guilty to making and subscribing a false tax return, the U.S. Attorney’s Office stated in its release.

Mathew, who also owns a chain of coffee stands, admitted to underreporting a substantial amount of income over several years. He is scheduled for sentencing on Oct. 9. Baragzai will be sentenced Nov. 18.

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Both Baragzai and Mathew have agreed to make restitution to the Internal Revenue Service and may face additional civil penalties, fines, and interest.

Filing or subscribing a false tax return is punishable by up to three years in prison and a $250,000 fine or twice the gain or loss from the offense, the U.S. Attorney’s Office explained.

The investigation into Baragzai began due to discrepancies in his reported income. He is said to have significantly under-reported his income to his tax accountant. This under-reporting led to a substantial tax loss, which caught the attention of the Internal Revenue Service Criminal Investigation department.

Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, here and email him here.