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09/09/2011

Owners of Bay Area restaurant chain plead guilty to employing illegal aliens and tax fraud

OAKLAND, Calif. — A Bay Area couple who own a chain of local Mexican restaurants pleaded guilty Wednesday to federal immigration and tax fraud charges after a multi-agency probe revealed the chain underreported its payroll taxes and employed dozens of aliens who were not authorized to work in the United States.

Marino Sandoval, 58, and his wife, Nicole Sandoval, 50, of Pleasanton, Calif., owners of El Balazo restaurants, were charged last year in a criminal information with harboring and employing illegal aliens, knowingly misusing employees' Social Security numbers and tax fraud. The charges are the result of a lengthy investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI); the Internal Revenue Service (IRS) Criminal Investigation; and the Social Security Administration, Office of Inspector General.

In pleading guilty, the Sandovals acknowledged they were responsible for withholding federal taxes, including employment and unemployment taxes, for El Balazo's employees. Nicole Sandoval admitted she underreported employees' correct wages to the company the defendants used to prepare El Balazo's tax returns. As a result, the Sandovals acknowledged the amount of employment taxes paid to the IRS was understated.

In addition to the tax charge, Nicole Sandoval also pleaded guilty to misusing El Balazo employees' Social Security numbers. From 2002 through 2007, she was responsible for submitting El Balazo's quarterly contribution and wage reports to the Social Security Administration. The reports included the names of undocumented alien employees who were receiving wages from their employment. In court, Nicole Sandoval admitted she was aware the Social Security numbers she submitted on behalf of those employees did not belong to them.

Marino Sandoval also admitted hiring employees he knew were not authorized to work in the United States. According to the plea agreement, between August 2007 and August 2008, Marino Sandoval employed more than 100 illegal aliens. In May 2008, ICE HSI agents conducted searches at several El Balazo locations and encountered 63 employees who were working without authorization. After being informed by ICE HSI in writing about the identities of those workers, Marino Sandoval rehired more than 10 of them.

In August 2010, Marino Sandoval's 55-year-old brother and business partner, Francisco, pleaded guilty to tax fraud and immigration charges. Francisco Sandoval managed two of El Balazo's San Francisco locations. The Alameda, Calif., resident was sentenced in December 2010 to three years of probation for tax fraud and harboring illegal aliens for financial gain. Francisco Sandoval was also ordered to pay the IRS $50,000 in restitution.

Marino and Nicole Sandoval are scheduled to be sentenced Dec. 14. Each of the charges carries a maximum penalty of five years in prison.

The case was prosecuted by Assistant U.S. Attorneys Thomas Newman and Stephen Corrigan with the assistance of Kathleen Turner.