The owners of a St. Louis Park sushi and hibachi restaurant are accused of orchestrating a "sophisticated" tax fraud scheme that cost the state more than $200,000 in sales tax revenue from 2016-2017.
Su Qian, 43, of Plymouth, and Xu Sheng Wang, 45, of Plymouth, as well as their restaurant, Raku Sushi and Lounge, are charged in Hennepin County District Court with 46 counts of tax fraud.
They're accused of underreporting their sales and basing their sales tax returns on the fake sales numbers, the Hennepin County Attorney's Office announced Thursday.
“We intend to prove that this was a highly sophisticated scheme that ran for many years which cost the state more than $200,000 in tax revenue,” Hennepin County Attorney Mike Freeman said in the release. “The revenue department’s investigators did an excellent job of conducting a long, difficult investigation and these crimes occurred prior to the pandemic during robust economic times.”
According to the criminal complaint, an audit by the Department of Revenue uncovered signs of sale suppression activity, so investigators in March 2018 began looking into Qian, Wang and their St. Louis Park restaurant, as well as their other restaurant in Edina.
Investigators found they used a sales suppression device to delete and alter their sales records and vastly under-reported their sales for most months from March 2016-May 2017, charges say. Under-reported sales totaled thousands of dollars most months, including $25,527 in May 2017.
In a 15-month span, the restaurants underpaid sales taxes by nearly $240,000, the complaint states.
“The use of sales suppression devices harms the vast majority of Minnesota restaurants that follow the law,” Revenue Commissioner Robert Doty said in the release. “Sales tax is a trust tax and when a restaurant breaks that trust, the department will take action to make sure Minnesotans can have confidence that the tax laws are being applied and enforced fairly for all businesses.”
Qian is charged with 16 counts of tax fraud and two counts of using an automated sales suppression device. Wang is charged with 14 counts of tax fraud. Raku Sushi and Lounge in St. Louis Park's West End is charged with 14 counts of failure to pay or collect sales taxes.
Qian and Wang are not in custody. They are scheduled to make their first court appearance at 1:30 p.m. on May 24.