Owner of Dublin, Ohio restaurants guilty of tax fraud

 

Date: April 6, 2022

Contact: newsroom@ci.irs.gov

Ken Chen, of Powell, Ohio pleaded guilty in U.S. District Court to one count of tax evasion and one count of failure to account for and pay over withholding and security taxes. Chen was charged by bill of information on February 25, 2022.

According to court documents, from January 2015 through December 2018, Chen was the controlling owner of T & K Group Inc., doing business as Sushi.Com and MK Asian Group LLC, doing business as Sesame Sea Asian Bistro both in Dublin, Ohio. Both restaurants, utilized a point-of-sale systems to process customer sales. Chen additionally kept handwritten daily ledgers that recorded all gross receipts as well as cash payments to employees outside of payroll. Chen failed to provide the reports from the point-of-sale system and/or the handwritten ledgers which accurately reported income and expense to his accountant. Instead, Chen provided bank statements to his accountant which concealed the cash receipts not deposited and the nature of cash payroll.

As a result of the underreporting of cash sales and providing false information to his accountant, Chen caused false S Corporation tax returns and individual tax returns to be filed for tax years 2015 through 2018. In addition, Chen's payment of employees outside of payroll and providing false information to his return preparer caused false employment tax returns to be filed from the first quarter of 2015 through the fourth quarter of 2018. Finally, Chen's actions caused similar tax due and owing with the State of Ohio for personal income, employment, and sales taxes.

As a result of his actions, Chen's tax due and owing to the State of Ohio and Internal Revenue Service is $504,956.86.

Income tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. The willful failure to pay over employment taxes carries a maximum penalty of five years in prison and a fine of up to $250,000.

Kenneth L. Parker, United States Attorney for the Southern District of Ohio and Bryant Jackson, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office announced the plea entered before U.S. Magistrate Judge Norah McCann King.

The case is being prosecuted by Assistant United States Attorneys David J. Twombly and Brenda S. Shoemaker and was investigated by special agents of IRS-Criminal Investigation and the Ohio Department of Taxation – Criminal Investigations Division.