Thread: Restaurant owner pleads guilty to tax fraud

11/11/2006
Restaurant owner pleads guilty to tax fraud
Charges against wife dismissed per agreement
By CRAIG McCOOL
Record-Eagle staff writer

CHARLEVOIX — A Traverse City restaurateur pleaded guilty to felony tax fraud and owners of similar eateries Cheboygan and Gaylord are expected to follow suit next week, Charlevoix prosecutors said.

Wen Bing Wang, 39, who owns the China One restaurant on Munson Avenue, pleaded guilty Thursday in Charlevoix Circuit Court to three counts of tax fraud, said Charlevoix chief assistant prosecutor Shaynee Fanara. Each charge carries a maximum of five years in prison.

Wang's wife, Hui, was charged, too, but the plea agreement called for her case to be dismissed, Fanara said.

The owners of the China One restaurants in Cheboygan and Gaylord are scheduled to appear in court Nov. 14 to enter pleas on similar charges, Fanara said.

The owners of a fourth China One restaurant in Charlevoix pleaded guilty in August to attempted racketeering and tax fraud.

All four restaurants used the same New York City accountant, and the owners all were accused of not paying employee taxes on illegal and undocumented workers. The Michigan State Police executed search warrants on the restaurants in July.

Only the Charlevoix owners, Yong Sheng Dong and his wife Yu Zhen Chen, were taken into custody at that time. The couple spent much of the summer in the custody of immigration officials, and prosecutors expected them to be deported, but Dong recently was released back to the community, Fanara said.

"He's back," she said. "I don't have the specifics of why."

A hand-printed sign on the door of his restaurant on M-66 in Charlevoix promises the restaurant will reopen soon.

Todd Wyett, property manager for the strip mall where the restaurant was located, said Dong has been in contact with the property owners as recently as this week. The Southfield property management company has seized many of the assets inside the restaurant.

http://www.record-eagle.com/2006/nov/11chinaone.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.

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

Penalize these people heavily and use it to set an example to others who are playing the same game. Something has to be done to stop it and this would be a great start.