Thread: Owners may have housed illegal workers

http://www.record-eagle.com/2006/aug/06chinese.htm




08/06/2006
Owners may have housed illegal workers
By CRAIG McCOOL

mccoolrecordeagle@sbcglobal.net

CHARLEVOIX — The various owners of four regional Chinese restaurants suspected of tax fraud may have had illegal employees staying in their homes.

Court records describe a scheme in which illegal immigrants were allegedly paid in cash, traded among restaurants and made to live in groups within the restaurant owners' residences.

A probe of China One restaurants in Charlevoix, Cheboygan, Gaylord and Traverse City has so far resulted in charges against two people, Yong Sheng Dong, 37, and his wife, Yu Zhen Chen, 34, who own the Charlevoix location.

Both face multiple felony charges for not paying enough employee taxes and for not reporting to the state all of the business's cash sales. The couple has been in federal custody since a July 12 raid that targeted all four restaurants.

The restaurants have different owners, though police and prosecutors say many are related by blood or marriage.

Officials may pursue cases against the other owners, though when is unknown, said Charlevoix Assistant Prosecutor Shaynee Fanara.

Some employees were arrested as well, Fanara said, but she did not know how many or from which restaurants.

An investigation began in May 2005 when a male illegal immigrant told a U.S. Customs agent he worked off and on for five years at the Chen's China One restaurant in Gaylord, owned by Zhen Xiang Chen.

The man "advised that he was housed in a basement of a house owned by Chen with other illegal aliens ... who also worked at Chen's restaurant," Michigan State Police Detective Gwen White-Erickson wrote in an affidavit.

Officials followed up in September with a stakeout. After the restaurant closed, they watched as 10 people piled into a van and drove to the Chen's home.

This June, investigators conducted surveillance with similar results in Charlevoix and Cheboygan. Court records show no sign of stakeouts in Traverse City, but four employees there were found to have state driver's licenses listing the restaurant as their residential address.

None of the restaurant owners could be reached for comment. Phone calls to the Charlevoix and Gaylord restaurants went unanswered. The Traverse City and Cheboygan locations remain open, though owners could not be reached.

A woman who answered the phone at the Cheboygan restaurant told a reporter the owner was "on vacation" in China and was not expected to return for "a couple months."

Records show that Cui Min Chen, co-owner of the Cheboygan restaurant, told investigators last month that members of her family also own the China One locations in Charlevoix and Cheboygan and that the three restaurants share employees.

Fanara said she believes the Traverse City restaurant is connected, too, though it may not be owned by immediate family members.

"They're related by organization. They do business the exact same way," Fanara said. "They have the same suppliers and distributors."

All four restaurants use the same New York accountant, records show.

From all four restaurants, investigators compared the owners' bank records with recent tax information and found that deposits far outpaced reported incomes.

Little or no employee withholding tax was paid, and the cash sales reported were abnormally low compared to charge sales. Investigators think it, likely that some of unreported cash was used to pay employees.

"It is the hallmark of a business skimming cash off the top of its receipts to make a corresponding reduction in its claimed expenses to avoid imbalance in any presented books," White-Erickson concluded.

See related story:

Restaurant owners face tax fraud charges - July 28, 2006


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You know? Foreigners have really found easy ways to con our system!

Just like those Asian nail salons, they say they get a tax free loan for $80,000 to open up a business, then after the tax exemption is up, they shut down and go home for 3 to 4 months, then come back again and open a place just for the length of the tax exemption period.

Foreigners are laughing their butts off at us!