7-Eleven sues Tariq Khan

A Hewlett Harbor resident who owns five 7-Eleven stores, including ones in Lynbrook, Rockville Centre and Elmont, is being sued by the Dallas-based company for at least $1 million, accused of cheating the corporation out of hundreds of thousands of dollars for at least four years.

Tariq Khan, along with his wife, son and several other business associates and employees, siphoned off profits from 2009 to 2013, according to a federal lawsuit filed in Brooklyn on June 28. The other two stores involved are in Freeport.

Khan is a former chairman of the National Coalition of Associations of 7-Eleven Franchisees. He helped to revive the devastated Middle Bay Country Club in Oceanside. Damaged in Hurricane Sandy it declared bankruptcy and closed. It then reopened as the South Bay Country Club.

The lawsuit claims that Khan under-reported the stores’ profits and deprived 7-Eleven of its share. Franchisees like Khan usually lease their stores and equipment from 7-Eleven, and agree to split about half their profits with the company.

According to the suit, Khan, store managers and employees repeatedly collected money from purchases but then voided those sales so they wouldn’t be recorded on the cash register. In addition, sales were rung up incorrectly and the difference were pocketed. One of the examples showed Skoal Wintergreen chewing tobacco priced at $7.09 rung up as hot beverage refills at $1.36.

To hide the alleged activity, Khan’s stores used off-the-book suppliers and moved items between stores, the suit said.

Khan was seeking to renew one of his franchise agreements, and the subsequent audit by 7-Eleven uncovered these and other contract breaches, the company said in the suit. The audit included review of cash registers on videos.

The chain’s franchise agreement with Khan was terminated, according to the suit.