7-Eleven Says Franchisee Had Sticky Fingers

CENTRAL ISLIP, N.Y. (CN) - A 7-Eleven franchisee siphoned hundreds of thousands of dollars from his five stores on Long Island, and won't surrender the stores even though the company terminated him, 7-Eleven claims in court.

7-Eleven seeks at least $1 million in damages from Tariq Khan and his "lieutenants," in Federal Court. It claims Khan failed to report "multiple hundreds of thousands of dollars of merchandise sales" at his stores by "manipulation of the cash registers and working from 'open drawers.'"

"Tariq intentionally caused inventory shortages to be created artificially, and thus falsely underreported his net income to the federal and state governments," the complaint states. "Tariq also failed to report to 7-Eleven all of the hours worked by his employees at certain of the stores."

The corporation claims Khan directed his clerks and managers to bypass the cash registers or use certain keys, such as the "cancel age verification" key, which is used to cancel the sale of age-restricted products "but which was used at the franchised stores to cancel out actual sales of such products while pocketing cash from such sales."

"In essence, Tariq operated a business within a business in each of the stores," the complaint states. The diverted cash was used to buy inventory from suppliers, but those invoices were never reported, 7-Eleven claims. It says the money also was used to pay employees in cash, avoiding payroll taxes.

"The balance of the cash was simply put into Tariq's pocket," the lawsuit states.

7-Eleven claims that it has terminated Khan's franchises, but he refuses to abandon the properties.

Khan is the former head of the National Coalition of Associations of 7-Eleven Franchisees.

Also named as defendants are Senita Khan, Farouq Khan, Rajesh M. Ajmeri, Iram M. Khan, Mohammed Tariq Wattoo, Asaid Sohail, Ansarul H. Rana, Mohammed Tanveer, Faith E. Camacho, and Shahid F. Khan.

7-Eleven is represented by Stephen Sussman with Duane Morris.

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