Former Restaurateur Pleads Guilty to Stealing More Than $585,000 in Withheld Employees' Taxes

United States Attorney Andrew M. Luger announced the guilty plea of KELLY LOUISE JAEDIKE, 46, for failing to pay taxes that she withheld from her employees. JAEDIKE pleaded guilty yesterday to conspiracy and attempting to evade or defeat tax and for failing to hold in trust and pay over to the IRS, employee money for which she was responsible. JAEDIKE’s brother, DAVID AHERN, 49, pleaded guilty on October 13, 2015, to conspiracy.

“The defendants used their restaurant as a personal piggy bank,” said Assistant United States Attorney Tracy L. Perzel. “What should have been an extremely profitable restaurant bounced employee paychecks, issued IOUs to servers for tips, and couldn’t get deliveries from vendors because of rampant overspending. Employees and the vendors who serviced this restaurant deserved better.”

 “Kelly Jaedike and David Ahern cheated their employees by failing to hold in trust and pay over the employees’ taxes, as required by law,” said IRS Criminal Investigation Special Agent in Charge Shea Jones. “In these situations, employees suffer. Their social security statements may not match their actual work histories. And, if those employees do not contact the Social Security Administration to correct this, it will have a lifelong effect on their social security payments. IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves on the backs of hardworking people.”

According to the defendants’ guilty pleas and documents filed in court, from at least 2006 through 2012, the defendants, who are siblings, operated a Melting Pot restaurant franchise in Minneapolis, Minn. As employers, the defendants were responsible for withholding taxes from their employees and paying those withheld taxes to the IRS. In 2006, the IRS imposed a penalty on JAEDIKE for $266,000 because she had failed to pay over taxes withheld from her employees’ paychecks. Instead of working to pay off the debt, JAEDIKE, AHERN, and others worked to hide JAEDIKE’s income and assets to prevent the IRS from seizing them to repay the debt. Among other methods of deception, JAEDIKE and others transferred the restaurant to a nominee entity and issued paychecks that falsely made her wages appear to be wages of her husband, with the intent to hide JAEDIKE’S income and assets.

According to the defendants’ guilty pleas and documents filed in court, from 2009 to 2011, JAEDIKE and AHERN again failed to pay over employment taxes totaling $680,000, including more than $404,000 that was withheld from employee paychecks. JAEDIKE, AHERN and members of their family received more than $1.29 million in personal payments from the restaurant between 2007 and 2011.

According to the defendant’s guilty plea and documents filed in court, JAEDIKE and AHERN used the proceeds of their crime to pay mortgage loans on three family residences, vehicle leases and loans, and expenses for unrelated business ventures like Ahern’s Irish Pub, a restaurant JAEDIKE sought to open in Minneapolis.

JAEDIKE pleaded guilty yesterday before U.S. District Judge Donovan W. Frank in U.S. District Court in St. Paul, Minn. 

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS.

This case is being prosecuted by Assistant United States Attorney Tracy L. Perzel.

Defendant Information:

KELLY LOUISE JAEDIKE, 46
Eagan, Minn.

Convicted:

• Conspiracy to defraud the United States, 1 count
• Attempt to evade or defeat tax, 1 count

DAVID DALE AHERN, 49
Eau Claire, Wisc.

Convicted:

• Conspiracy to defraud the United States, 1 count