Duluth Restaurant, Owners Convicted of Tax Crimes for Zapping Cash Transactions

Duluth Restaurant, Owners Convicted of Tax Crimes for Zapping Cash Transactions Photo: KSTP

May 02, 2018 12:07 PM

A Duluth restaurant and its owners have been ordered to pay more than $292,000 in restitution after installing "zapper" computer software that deleted parts of cash transactions from its books.

According to the Minnesota Department of Revenue, the owners of Osaka Sushi Hibachi Steak House used a software called "Happy World," which allowed the business to create a second set of books removing parts of cash transactions.

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This allowed the business to underreport its sales, avoiding paying city and state taxes.

“These are first-of-their-kind convictions in Minnesota and highlight our investigators’ efforts to combat the growing use of sales suppression software,” said Revenue Commissioner Cynthia Bauerly. “These convictions demonstrate our determination to level the playing field so that businesses who report and pay their fair share of tax don’t have to compete with those who break the law.”

"Deliberately failing to turn over sales taxes collected increases the tax burden on all residents. We hope this case sends a message to others engaging in this kind of behavior that it will not be tolerated, and you will be prosecuted when caught," said St. Louis County Attorney Mark Rubin.

Dan Xu pleaded guilty to a felony count of aiding in filing of false tax returns, and Zhong Wei Lin pleaded guilty to a felony count of failing to pay sales tax. Both prison sentences were stayed if restitution was paid in full and one year of probation served. 

Osaka Duluth, Inc., pleaded guilty to two felony counts of aiding in the filing of false tax returns and 15 counts of failing to pay sales tax. The corporation must pay restitution. 

The case of a third person was stayed in lieu of a year of probation.

In all, $292,760 total will be paid by all parties. 

Credits

Theresa Malloy

Copyright 2018 - KSTP-TV, LLC A Hubbard Broadcasting Company

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