IRS: UVM student improperly sold $1M in cars

Authorities raided a University of Vermont office and a Colchester apartment as part of a criminal investigation into allegations a doctoral student sold more than $1 million in motor vehicles in the Burlington area, federal court records show.

The investigation centers on possible tax evasion and filing false tax returns from Jan. 1, 2008, to Dec. 31, 2014, according to Special Agent Michael Cobb, a criminal investigator with the Internal Revenue Service.

Nezar Qaseem Mohammad Al Bataineh is the primary target of the criminal investigation, according to the search warrant the IRS obtained for the UVM Married Student Housing in Fort Ethan Allen in Colchester. No charges have been filed.

Eric Miller, the U.S. Attorney for Vermont said Friday he could say little about the case.

“I can confirm that we have an open investigation.”

Investigators also raided the Cook Physical Science Building on University Place in Burlington. University of Vermont police, as part of an undercover investigation, indicated Al Bataineh kept motor vehicle records at his office in room 336 at Cook, records show.

Al Bataineh, 38, told the Burlington Free Press he considers the case a misunderstanding of American laws. Al Bataineh said he was attempting to make money to help support him, his wife and their three young children while he obtains his doctorate at UVM.

He said he never thought selling motor vehicles was considered income under Vermont law.

“I was not familiar with the laws,” Al Bataineh said during one of two interviews at his residence during a two-month investigation by the Burlington Free Press.

“It was a hobby,” Al Bataineh said.

His wife made the same claim when approached by an undercover IRS agent pretending to be a customer responding to her husband’s advertisement in June 2014, court records show. She said her husband used the nickname “Nick.”

Al Bataineh said he was trying to balance his school work and his home life, while also trying to buy and sell cars.

When first interviewed by the Free Press, Al Bataineh said he had received a warning from UVM officials that the newspaper was investigating his case.

There are close to 400 vehicle sales the Vermont Department of Motor Vehicles has been able to trace in the case. Al Bataineh told the Free Press he has paid purchase and use taxes but not taxes on any profits from the sales.

Under Vermont law, people are allowed to sell 11 vehicles per year without applying to be a licensed dealer, court records show.

Licensed dealers in Vermont “are required to have titles transferred into their name for vehicles held in inventory and to pay fees and taxes in connection with the purchase of these vehicles,” IRS agent Cobb wrote.

Al Bataineh arrived with his wife and a daughter in Vermont from Jordan in January 2008. He is registered at UVM to obtain a doctorate in medicinal organic chemistry, records show. He said he hopes to complete his degree by the end of the year.

Al Bataineh said he was awarded a fellowship for almost $20,000 a year from UVM, but he was unaware until after his family arrived in Vermont that taxes would be deducted. He also had various fees and insurance taken out by UVM.

He said his family pays $980 a month for UVM student housing. He said he also needs to pay for heat, electricity and other expenses out of his fellowship.

Al Bataineh has retained South Burlington lawyer Rick Goldsborough, who told the Free Press he believes there is little he can say while the case remains under investigation.

“Mr. Al Bataineh has not been arrested. He has not been charged with a crime. He is cooperating with the government’s investigation,” Goldsborough said. “He is a legitimate scientist seeking his Ph.D.”

His Jordanian passport is due to expire Sept. 3, 2017.

Feds move in

The secret raids were conducted simultaneously June 18, but a federal judge agreed all records in the case would be sealed while the confidential investigation proceeded.

Magistrate Judge John M. Conroy eventually agreed to unseal the records when  Miller, the prosecutor, filed a motion saying there was no more need for secrecy.

Federal authorities asked for the extra secrecy because they were still trying to determine who was involved and the scope of their actions. Investigators also had questions whether people in car dealing, banking and possibly the Department of Motor Vehicles might have been involved, records show.

“Due to the sensitivity of the investigation at this stage and a possible relationship between Al Bataineh and bank employees, records from TD Bank, Merchants Bank or any other financial institutions utilized by Al Bataineh have yet to be secured or analyzed,” Cobb wrote while applying for the two search warrants earlier this year.

Cobb said the IRS at that time also had yet to approach the nearly 400 identified car customers.

Al Bataineh owes an estimated $111,101 in understated taxes from his auto sales from 2008-13, Cobb wrote. Cobb added there is no evidence Al Bataineh filed a 2014 federal tax return.

His wife, Duha Abu Anzeh, is mentioned as playing a role as an assistant to her husband’s car business, the affidavit noted.

Al Bataineh, his wife and their three young children, along with some made-up names, were used on sale documents in Vermont for at least 392 vehicles from 2009 to April 25 of this year, the IRS stated.

Al Bataineh sold 226 vehicles in his own name “and another 166 vehicles in the names of nominees,” Cobb wrote in court papers.

The family might have sold more cars. Any vehicles sold and registered out of state would be unknown to Vermont authorities, the Department of Motor Vehicles said.

Al Bataineh, his wife and their oldest child had $1,036,459 in bank deposits from 2008-13, but Al Bataineh during that same time claimed about $20,000 each year for income on his federal tax returns, according to court records.

Chittenden/Peoples United Bank accounts for Al Bataineh, his wife and their oldest daughter showed deposits of more than $835,000 for “gross proceeds from the sales of vehicles” from May 2011 to January 2013, Cobb wrote. Checks frequently mentioned vehicles in the “memo” section, court papers noted.

During the same period, checks and other debits for almost $395,000 showed for purchase, repair and maintenance of vehicles, Cobb wrote.

The state of Vermont never received any known purchase and use taxes from those car sales, the DMV reported.

“We are not trying to live a fancy life,” Al Bataineh said in a recent interview with the Burlington Free Press. He said he just wants his children, including two born in Vermont, to have the same things other children have at their homes.

Registering and selling

A DMV report dated Feb. 15 stated Al Bataineh had 57 vehicles registered in his name, Cobb, the IRS agent, wrote in court records.

Cobb’s 21-page single-spaced affidavit describes an elaborate effort to buy and sell cars without paying taxes or declaring any income from the work.

Al Bataineh usually sold high-mileage foreign vehicles, listed the sale location as Colchester or Essex, and digitally obscured the license plates when posting on the Craigslist website, Cobb wrote.

“I was at the car wash until 1 a.m.,” Al Bataineh said during the Free Press interview, noting he took considerable time to clean, wash, wax and otherwise prepare cars for sale.

Al Bataineh seemed surprised when told federal court papers indicated he had made almost $1.1 million in deposits from his sales.

He said he was not the best at keeping records, especially early on. During a visit by one of the undercover IRS agents posing as a potential buyer, Al Bataineh said he kept maintenance records at his office at UVM.

Al Bataineh told the Free Press he lost money on some car sales, especially early. He said he also had a car stolen, but the vehicle later was recovered in Lamoille County, and the man who took the car for a test drive was arrested.

Colchester police records, obtained by the Free Press through a public records request, confirmed Al Bataineh had a Volkswagen Passat stolen during a test drive in January 2013. Stowe police later recovered the car with about 300 extra miles on it and arrested the suspect, Sgt. Francis Gonyeau wrote.

Various Colchester police reports also show a wide range of complaints involving Al Bataineh. Some complaints were filed about his parking too many vehicles and hogging the parking spaces. In other cases he filed complaints, including about losing an envelope with $4,700 and another about finding a snake in the engine compartment of one of his cars.

As recently as Jan. 19, a complaint was filed about parking cars he was selling in the lots near his residence, making it difficult for snowplows to operate, Officer Jack Lehneman wrote.

The DMV Investigation

The Vermont Department of Motor Vehicles started one of its investigations into Al Bataineh in January 2014 following complaints from two licensed car dealerships who asked investigators to keep their names anonymous, according to records obtained through a public records request. The names of the dealerships are absent from the records.

“Both advised that Nezar was disrupting vehicle sale price points in the local market because he was operating outside of DMV regulation and likely not paying tax and fees on the cars he is selling,” DMV Investigator Michael Morris wrote in one report.

Al Bataineh used his name and those of his wife and their three children to list the purchases. He also made up or used four names of friends to help in the vehicle transactions, records state.

DMV Investigator Cynthia Legault said she developed information in 2012 that Al Bataineh was operating as a car dealer as early as 2011 but failed to obtain the required license, court record show.

Al Bataineh admitted he did not have a license to sell cars but was doing so to pay the educational and living expenses for him and his family, Legault’s report noted in 2012. He agreed during a May 10, 2013, interview with Legault to discontinue selling cars, IRS agent Cobb wrote.

Morris, the DMV inspector, said Al Bataineh was warned again about following Vermont law, but continued to sell cars, Cobb stated.

Morris, while conducting surveillance in Al Bataineh’s neighborhood Nov. 1, 2013, noticed the doctoral student’s wife conducting a car transaction, Cobb noted.

Morris reported he confronted her, and she explained the couple still had a few cars to sell. Morris indicated he also noticed eight-10 expired license plates on cars in the parking lot. Abu Anzeh said the expired license plates were placed on cars to stop UVM parking authorities from towing the cars, Morris stated.

The DMV sent her a written warning that further sales would result in court action for failure to pay tax and title fees and for operating as an unlicensed dealer.

A DMV report stated that from Jan. 1 to Dec. 31, 2013, Al Bataineh sold 34 vehicles under his name or an assumed names. There were reports of 20 other vehicles he purchased, but it was unclear if they had been disposed of out of state, Morris wrote in his investigation report.

Morris and DMV Investigator Peter Bottino returned on Jan. 23, 2014, to Al Bataineh’s residence and combed the area for possible cars owned by him and his wife, according to a DMV report.

Morris reported the investigators found 17 cars parked in a lot next to the residence or nearby in a parking lot for the Islamic Society of Vermont off Hegeman Avenue. All had been cleaned, detailed and were free of personal belongings, causing investigators to believe the vehicles were for sale, Morris wrote.

When confronted, Al Bataineh admitted he owned the cars and suspected some of the area car dealers were watching him, because some had approached him at auctions and made general inquiries, Morris stated.

Al Bataineh also admitted he was using the names “Faud Mosanovic” and “Sadi Aljarrah” to purchase 10 or 11 cars within the previous six months, records state.

Because Al Bataineh had received two earlier warnings from the DMV, Morris issued him $3,600 in civil traffic tickets for violating Vermont laws regarding the sale of cars, DMV records show.

Help from a dealer

During the investigation, Morris, the DMV inspector, said it became clear Williston Economy Motors “either facilitated some of this illegal behavior or at a minimum was complicit in allowing false records of sales to be submitted” to the DMV.

Vadim Stirbate, owner of Williston Economy Motors, admitted the accusation when confronted by DMV investigators, Morris wrote.

Stirbate was told he could face criminal charges, but the DMV opted to issue him $2,000 in civil fines instead, Morris wrote.

Stirbate, in a Burlington Free Press interview, acknowledged Williston Economy Motors had been fined by the DMV. Stirbate also said he was familiar with Al Bataineh and his family.

“He bought cars from me and others. He is just a customer,” Stirbate said. “I’m selling cars. We welcome anyone. I don’t care what they do.”

He acknowledged to the Free Press that some paperwork his dealership filled out showed cars were purchased by Al Bataineh’s young children. He said he believed the car could be bought in their name and given to them when they turned 18.

Items seized

UVM police reported two unrelated investigations into possible threatening or harassing phone calls made to Al Bataineh in August 2013 and to his wife in July 2013.

During the search of the two-bedroom apartment in Colchester, IRS investigators seized various computer items, including a Samsung tablet, a Toshiba laptop, an iPad and various receipts, bills of sale, journals and DMV titles, according to Special Agent Lindsay Wilson.

During the search at UVM’s Cook Science Building, investigators impounded a Toshiba laptop, a Samsung phone, various DMV documents and repair invoices, Special Agent Greg Howe wrote.

They also seized from his UVM desk an IRS publication, files labeled “court docs re: vehicle litigation, tax folder, folder labeled ‘personal’ containing receipts, misc financial docs.” They also seized from a chair by his desk a backpack with ledgers, documents and a tax organizer.

Contact Mike Donoghue at 660-1845 or mdonoghue@freepressmedia.com. Follow Mike on Twitter atwww.twitter.com/FreepsMikeD.