Two owners and operators of Shogun restaurant in Burnsville are each charged with eight felony tax crimes, according to The Minnesota Department of Revenue.
The criminal complaint states Kehui Yang and Qiuyun Huang, both of Eagan, intentionally used sales suppression software to remove thousands of line items from sales receipts and underpay sales tax between 2014 and 2017, tucking away roughly $43,000 that should have gone to the state.
“The use of sales suppression software harms all businesses that report and pay their fair share of taxes,” Revenue Commissioner Cynthia Bauerly said in a news release. “These charges represent the department’s growing ability to recognize when these illegal products are being used and hold those who use them accountable.”
A hearing has been set in Dakota County District Court on March 4. Phone messages left at the restaurant Wednesday and Thursday requesting comment weren't returned.
According to the criminal complaint, department auditors dined at the restaurant, paid cash for their meal and retained their receipts in 2016 — a process called observation buys. In January 2017, the restaurant's point of sales system data was downloaded during an on-site audit.
Observational purchases were missing, according to the complaint, indicating receipts were being deleted from the system.
Further analysis found roughly 3,000 receipts deleted from the system and roughly 422,500 missing line items, according to the revenue department. Investigators said they found automated sales suppression software known as zappers and referred the case to the Criminal Investigation Division.
According to the division, co-defendant's Yang and Huang are a married couple who operate the business day to day. There are three other co-owners of the business.
While executing search warrants of the co-defendant's home and Shogun, investigators seized several paper bags filled with daily sales receipts. They also seized items including boxes of business records, computer storage devices and roughly $5,800 in cash in the co-defendant's bedroom.
Investigators said they also found "pre-zapped" sales numbers in the residence and accused the co-defendants of sending their accountant only "post-zapped" numbers, resulting in underpayment.
Several employees told investigators they were required to find Huang or Yang whenever a customer paid cash because no employees had access to the cash register.
In an interview with investigators, Huang admitted sending the monthly sales reports to their accountant and said all the cash went to Yang at the end of the day.
“Violation of our state’s tax laws harms all Minnesotans," Dakota County Attorney James Backstrom said in a statement. "We are grateful for the work of investigators for the Minnesota Department of Revenue in this case."
Both defendants face up to 40 years in prison and $80,000 in fines if convicted of all charges.