Mankato restaurant and restaurant managers charged with multiple tax crimes
ST. PAUL, Minn. – The Minnesota Department of Revenue announced that the Ramsey County Attorney’s Office recently charged Fang Chen, of Mankato, with two counts of knowingly aiding in the preparation of tax returns that were fraudulent or false, and Jian Chen, of Mankato, with one count of knowingly aiding in the preparation of tax returns that were fraudulent or false. Shogun Mankato, Inc. is also charged with 33 counts of filing false tax returns.
According to the complaints, the Chens managed Shogun Mankato, Inc., with Fang Chen being part owner of the restaurant. The complaints allege that Fang and Jian Chen intentionally used their Point of Sale (POS) system logins to underreport taxable sales by cancelling thousands of cash transactions from March 2016 through June 2016. Investigators also found evidence of nearly 50,000 lines of transactions that had been deleted from the restaurant’s POS system, according to the complaint. While no sales suppression software or ‘zapper’ was found, investigators did find anti-forensic software installed on their POS system that could be used to remove sales suppression software, according to the complaint.
Through their actions, the defendants allegedly deprived the state of over $200,000 in sales tax revenue.
“When a business intentionally uses illegal tactics to reduce their tax bill, it not only hurts law abiding businesses who pay the correct amount, it breaches the trust of taxpayers who expect a business to pay the sales tax to the state on their behalf,” said Revenue Commissioner Cynthia Bauerly.
“Tax fraud not only impacts our state coffers, but it cheats our residents. This case evidences a longstanding effort to defraud our government and avoid paying taxes on millions of dollars in sales over the course of multiple years,” said Ramsey County Attorney John Choi. “The Minnesota Department of Revenue deserves credit for its investigation that uncovered this scheme. We look forward to holding the people who committed this fraud accountable on behalf of Minnesota taxpayers.”
Each tax-related felony charge carries a maximum penalty of five years in prison, a $10,000 fine, or both. Defendants are presumed innocent unless and until proven guilty.
Although most taxpayers comply with tax laws voluntarily, the department takes enforcement action against noncompliant taxpayers to ensure that tax laws are administered fairly.
Many of the department’s criminal case referrals come from citizen tips. There is a 24-hour tip line for anyone who suspects that a person or business is violating Minnesota tax laws. Local callers may dial 651-297-5195 or call toll-free by dialing 1-800-657-3500. Tips can also be submitted to the department by email at tax.fraud@state.mn.us. Tipsters may choose to remain anonymous.
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