Lakeville restaurant owner, wife charged with multiple tax crimes

Nick Ferraro, Pioneer Press
·2 min read

A Lakeville restaurant owner and his wife are accused of underreporting sales and therefore underpaying sales taxes to the tune of more than $231,000.

Linxiong Li, 37, and Wenzi Zeng, 39, have been charged in Dakota County District Court with four counts of felony aiding or assisting in the filing of false or fraudulent sales tax returns. Li is also charged with four felony counts of failure to pay sales taxes.

Li owns Sawa Japan Steakouse & Sushi at 18453 Orchard Trail and operates the business with Zeng, according to a search warrant affidavit.

Criminal charges allege that from May 2016 to December 2019 the couple used their point-of-sale system to conceal sales numbers by removing items from checks or by altering the price of items after the transactions were complete.

The couple ran a particular point-of-sale system that can be used to “suppress sales by allowing the owner to run multiple databases at a time” — an accurate book for the business and an altered book for tax reporting purposes, charges read.

Investigators with the Minnesota Department of Revenue collected tax records filed by Li dating back to May 2016, when he bought the restaurant, and found the monthly percentage of cash sales was less than 10 percent in 24 monthly filings, when comparable restaurants report between 20 to 30 percent cash sales. Bank records also showed little to no cash deposits into the restaurant’s account.

An auditor found 17,970 instances of items being deleted from order checks in the point-of-sale database, charges state. The $231,291 in underreported of sales resulted in underpayment of state sales tax of about $16,400. With penalties and interest, the amount owed now totals nearly $28,000, which Li has not paid, according to charges.

Each tax-related felony charge carries a maximum penalty of five years in prison and a $10,000 fine. The couple is due back in court Aug. 3.

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