West Hartford Restaurant Owner Pleads Guilty in $2 Million Tax Fraud Scheme
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West Hartford resident William Chen, part owner of multiple restaurants in Connecticut and Massachusetts, pleaded guilty Friday in an extensive tax fraud scheme.
By Ronni Newton
Officials announced Friday that a West Hartford man pleaded guilty in federal court in Bridgeport to a tax fraud scheme that resulted in underpayment of more than $2 million in taxes by restaurants in Connecticut and Massachusetts that he owns and operates.
Vanessa Roberts Avery, United States Attorney for the District of Connecticut, and Joleen D. Simpson, Special Agent in Charge of IRS Criminal Investigation in New England, said Friday that William Chen, 49, waived his right to be indicted and pleaded guilty to multiple offenses. Chen is a resident of West Hartford and part owner of Kaliubon Ramen in West Hartford and Wethersfield, as well as part owner of Ginza Japanese Restaurant in Bloomfield, Ginza Japanese Cuisine in Wethersfield, and Feng Asian Bistro in Hartford, Canton, and Millbury, MA.
According to the U.S. Attorney’s Office, which referenced court documents and statements made in court, Chen purchased, used, and trained staff on the operation of a Point-of-Sale (POS) system for restaurant orders at the establishments he owned and operated, and he also paid a fee to activate “zapper” software that deliberately deletes transactions from the POS system.
Fraudulent records were created by Chen and others who worked at the restaurants through the use of the zapper software to delete cash transactions from the POS system from approximately 2013 until 2020, officials said.
Chen was also responsible for maintaining the accounting and financial records at the restaurants as well as for collecting and withholding employment taxes, and he presented the fraudulent records to the accountant who prepared the restaurants’ tax returns – which were then signed by Chen.
In addition, “For the 2013 through 2020 tax years, Chen failed to withhold, account for, and pay to the IRS federal income taxes, Federal Insurance Contributions Act taxes (‘FICA’), and federal unemployment taxes for multiple employees that he paid, or that he knew were paid, in cash,” officials said.
The total value of tax loss that has been attributed to Chen’s actions is $2,092,926.94.
On Friday he pleaded guilty to two counts of filing a false tax return and was released on his personal recognizance. He will be sentenced by U.S. District Judge Sarah A. L. Merriam on Oct. 21, 2022, and faces a maximum term of imprisonment on each count of three years.
The Internal Revenue Service – Criminal Investigation Division is continuing to investigate this case, which is being prosecuted by Assistant U.S. Attorney David T. Huang.
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I knew William. I worked at an Asian restaurant with him about 20 years ago. He was always kind to me. However, based on this article and the charges alleged — William was operating his restaurant like these restaurants operated 20 years ago. I know the people he learned the business from. It is an outdated and improper way of doing business. Basically the way it worked is this… all the cash money you take it, you don’t report it. Then you use that to pay all of your (got to use the right word here) “undocumented” employees. Multiple people were paid 500+ a week in the kitchen. Undocumented waiters would make 800 – 1000 a week in cash. The staff with SS# would be paid in formal W-2 pay checks to make it look legit. Sadly, this is still going on at far too many restaurants and now that IRS is getting so agressive, they need to watch out. Immigration is not going to around to restaurants and arresting people, not in CT anyway. At a minimum these restaurants must only hire people who have SS# even if they are undocumented. everyone is a W-2 employee. make it legit. I really hope some of our other favorite restaurants don’t get in trouble.