More subsidies for restaurateur accused of wage theft

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The  Niagara County Industrial Development Agency on Wednesday unanimously approved nearly $247,000 in tax breaks to a fast food operator being investigated on allegations of wage theft and other labor law violations.

The IDA board did not discuss the allegations before granting the subsidy to Muhammad Shoaib, whose other fast food operations previously have received subsidies totaling close to a half million dollars.

The latest round of assistance for Shoaib’s businesses comes as the state labor department probes allegations of wage theft made by several of his former employees. At least two have submitted complaints to the labor department that Shoaib failed to pay overtime or withheld tips. Other current and former workers said they planned to file similar complaints.

In recent weeks, Investigative Post has reported on allegations from nearly a dozen current and former employees that Shoaib failed to pay overtime rates when they worked more than 40 hours in a week and withheld tips from employees that were left via credit cards.

Shoaib’s latest project, a renovation of a two-story retail building located at the corner of Rainbow Boulevard and Old Falls Street, will replace a haunted house tourist attraction with a food court featuring a Carvel Ice Cream, a Cinnabon and an Auntie Anne’s Pretzel Place, along with a Mediterranean restaurant.

Shoaib purchased the property at 222 Rainbow Blvd. in 2023 for $1 million according to property records. He lists renovation costs at $1.55 million. 

With the property tax break approved Wednesday, Shoaib will make $117,000 in payments to local schools and governments and save $143,000 over the course of five years. The IDA also approved $84,000 in sales tax breaks.

That equates to about $83,000 in lost revenue for Niagara Falls over the five year abatement period. The city school district will lose out on about $40,000 over that time and the county around $20,000. 

The IDA, meanwhile, is set to earn $26,500 in fees from Shoaib, its commission for approving the tax breaks.

Mark Onesi, chairman of the IDA, defended Shoaib in an interview after Wednesday’s meeting. He said the agency was not concerned with the labor department’s investigation and praised Shoaib for bringing jobs to Niagara Falls.

“That’s the labor department’s issue, not mine,” he said. ‘We’re looking at an individual that is doing things for this city. They are bringing jobs. They might not be a lot of jobs but they’re jobs, and they’re businesses that people need, tourists need. He’s doing good things for the city.”

“We have no reason to investigate,” he continued. “That’s not our job, we’re not investigators. If it comes out, then that may be a different thing.”

Other board members said they may revisit Shoaib’s tax breaks if the labor department finds he violated the law.

“He should not [receive the subsidies] if the wage theft accusations are true,” board member Ryan Mahoney said Tuesday, prior to the vote.

Mahoney voted to approve the tax incentives Wednesday.

Board member William Ross also said he had some concerns but also voted in favor of the assistance.

“I can see where there are still some concerns,” Ross said. “If it goes further and if anything comes up, [IDA attorney Mark Gabriele] will put us on the right path.”

State Sen. Sean Ryan, chairman of the state senate’s Committee on Commerce, Economic Development, and Small Business, criticized the IDA awarding Shoaib tax breaks.

“It’s troubling that they would give a subsidy while there’s an active investigation going on for wage theft,” he said. “One thing for sure is that it’s a bad use of tax subsidies to subsidize national food chains to come into your economy.”

It’s the third time in two years the Niagara County IDA voted to subsidize the opening of Shoaib’s fast food restaurants in Niagara Falls.

The board in February 2023 approved $172,000 in tax breaks and two grants worth $261,750 for a Moe’s Southwest Grill and A&W Restaurant that Shoaib opened later that year. Employees of those two restaurants have said they were cheated out of wages and/or tips.

Those ventures were also supported by $50,000 worth of previously unreported grants from the Niagara Falls NFC Development Corp., according to records obtained by Investigative Post.

In total, city and county agencies have now subsidized Shoaib’s fast food ventures to the tune of $730,000. 

Shoaib owns some 20 fast food restaurants in New York and Ontario — including the Moe’s, the A&W, several Papa Johns and Church’s Texas Chicken franchises, and a Crumbl Cookies.

The $50,000 in city grants came from Niagara Falls’ share of the federal American Rescue Plan, intended to help cities and counties rebound from COVID-19. 

Photos posted on the city’s Facebook page show a smiling Shoaib receiving a physical check from Mayor Robert Restaino.

Niagara Falls Mayor Robert Restaino hands Muhammad Shoaib a check for $25,000. Photo via the Facebook page of Niagara Falls mayor’s office.

Restaino said $1 million of the city’s $57 million ARP funds was distributed to owners of minority- and women-owned businesses. The money was in the form of a reimbursable grant, meaning Shoaib had to spend his own cash up front before being reimbursed.

Records obtained by Investigative Post show Shoaib received $25,000 each for the Moe’s and A&W he opened in 2023. The records do not indicate what costs he was reimbursed for.

Restaino, in an interview, said the grant program was now closed and that there was nothing for the city to do in light of the labor department’s investigation.

“If there’s wrongdoing, that’ll be addressed through the parameters of whatever the labor department determines,” he said. “There isn’t much else for us, for NFC to do.”

Restaino defended the grants even though Shoaib’s businesses benefited from the pandemic-era program even though they opened after the pandemic. 

“The program was indeed ‘born’ out of that concern but was not restricted to [minority-owned businesses] impacted by the pandemic,” he said. “How could we restrict it if an entrepreneur post-pandemic wanted to start a business?”

Not all city leaders agree that Shoaib’s businesses should receive public assistance.

City Council Member Donta Myles spoke out against the first round of tax breaks Shoaib received in 2023. He said that once he learned of the alleged wage theft, he was “disturbed.”

“It goes to show that there should have been more vetting done if we’re going to give these subsidies away,” he told Investigative Post.

“To find this out and then he’s asking for more money? It’s mind-boggling.”

Shoaib has refused to comment on the allegations leveled by his employees. He attended Wednesday’s board meeting but refused to speak with reporters.

His attorney, Matthew Miller of the firm Rupp Pfalzgraf, previously defended his client’s business practices. “I can’t comment nor can the businesses on any specific personnel matters,” he told Investigative Post in January. “What I will say is that Mr. Shoaib and his wife and all of their businesses are outstanding individual and corporate citizens and comply with all state and federal laws.”

J. Dale Shoemaker