Five Chicago-area restaurateurs have been charged with tax evasion in what authorities say is an ongoing federal investigation into systematic underreporting of gross sales receipts.
The U.S. Justice Department said the five reported substantially lower taxable revenues to the Internal Revenue Service than what they actually collected. The focus of the investigation, it added, has been the use of “sales suppression software” and other back-of-house methods of shaving dollars from actual sales intakes.
“These charges send a clear message that restaurant owners who choose to illegally underreport gross receipts will be held accountable,” John Lausch, U.S. attorney for the Northern District of Illinois, said in a statement. “Recovering funds for the federal treasury is a top priority in our office.”
“This is only the beginning,” Gabriel L. Grchan, special agent-in-charge of the IRS Criminal Investigation Division in Chicago, said in the same statement. “I want to warn those restaurants, gas stations, convenience stores, and other establishments that are currently using or thinking of using sales suppression software, that we are on to you and your methods. If you steal from the federal government, there will be serious consequences.”
The alleged underreporting extends back as far as 2012, according to the DOJ. Charged with filing falsified tax returns were Shuli Zhao, 59, owner of Katy’s Dumpling House in Westmont, Ill.; Chun Xu Zhang, 42, owner of Sushi City in Downers Grove; Quan Shun Chen, 53, of Chicago, the proprietor of Hunan Spring in Evanston; Sandra Sanchez, 44, owner of Cesar’s Tacos on North Clark Street in Chicago; and Israel Sanchez, 43, owner of Cesar’s on Broadway on North Broadway in Chicago.
The five have yet to be arraigned, leaving open the possibility that settlements may be pursued by the DOJ and the IRS.