Restaurant Owner Pleads Guilty To $400,000 Tax Fraud Scheme
United States Attorney Andrew M. Luger today announced the guilty plea of DEXI ZHENG, 33, to filing a false federal income tax return. ZHENG was charged on July 6, 2015, by felony information, with one count of filing a false individual tax return. He pleaded guilty on August 21, 2015, before U.S. District Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minn. A sentencing date has not yet been determined.
“Individuals who corruptly violate the tax law to further their business interests and intentionally falsify their tax returns undermine public confidence in our tax system and unfairly disadvantage businesses that play by the rules,” stated Special Agent in Charge Shea Jones of the IRS Criminal Investigation Division. “The IRS Criminal Investigation Division, together with the U.S. Attorney’s Office, will investigate and prosecute those who violate our tax system.”
According to his guilty plea and documents filed in court, from at least 2009 to 2013, ZHENG was the owner of two restaurants located in St. Michael and Big Lake, Minn. As owner of the restaurants, the defendant was responsible for reporting the profit or loss from the two restaurants on his federal individual income tax returns.
According to his guilty plea and documents filed in court, from at least 2009 to 2013, ZHENG avoided paying taxes on the full amount of the restaurants’ revenue in at least two ways. First, ZHENG intentionally failed to deposit any of the cash receipts into the restaurants’ bank accounts and failed to report the restaurants’ cash receipts on his Schedule C. Second, ZHENG recruited his father, G.Z., to act as a nominee and include the profits from the St. Michael restaurant on G.Z.’s individual income tax returns even though he was not the actual owner of the restaurant. In doing so, ZHENG caused G.Z. to exclude the St. Michael restaurant’s cash receipts from G.Z’s Schedule C. The total loss caused by ZHENG is approximately $420,000.
ZHENG faces up to three years in prison.
This case is the result of an investigation conducted by the Internal Revenue Service – Criminal Investigation Division.
This case is being prosecuted by Assistant U.S. Attorney Kimberly A. Svendsen.
DEXI ZHENG, 33
St. Michael, Minn.
- Filing a False Individual Tax Return, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600