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03/31/2009

Restaurant owners guilty in tax, hiring fraud

BENTON, Ill. - The owners of two Chinese restaurants in southern Illinois were sentenced in federal court Tuesday following their convictions for tax evasion and immigration offenses, including hiring and harboring illegal aliens to work at the restaurants. The sentences resulted from an investigation conducted by U.S. Immigration and Customs Enforcement (ICE), the Internal Revenue Service, and the U.S. Department of Labor's Office of Inspector General.

Duo Chen, 37, and Justin Qiu, 37, both of Herrin, Ill., were sentenced in U.S. District Court, Southern District of Illinois, after pleading guilty to the charges in October. Chen was sentenced to 16 months in prison, fined $6,000, and ordered to pay $228,238 in restitution to the United States. Chen was also ordered to forfeit $78,000 to the United States and will serve three years supervised release. Qiu was sentenced to five years probation and 10 weekends in jail. He was fined $10,000 and ordered to pay restitution to the United States in the amount of $16,310. Qiu was also ordered to forfeit $45,000 to the United States.

According to a stipulation filed at the time of the plea, Chen owned and operated Kew Gardens Chinese Restaurant, located in Herrin. Chen skimmed significant amounts of funds from Kew Gardens for his personal use, and failed to report the income on his personal tax returns. He maintained a "black book" that documented the cash skim that occurred between November 2002 and January 2006. The investigation started in January 2006 when a manager employed by Chen at Kew Gardens stole the black book and attempted to extort money from Chen in exchange for the book. Following his arrest, the manager also told authorities that Chen knowingly employed illegal aliens and provided housing for them at various locations. Knowing that the manager was an illegal alien, Chen harbored the manager by providing him housing and utilities, representing partial payment of the manager's wages.

In addition, Chen shared in the ownership of Wok N' Roll, a buffet-style restaurant in Marion, Ill., with his brother-in-law, Justin Qiu. From March 2004 through April 2006, Chen and Qiu conspired to defraud the United States by evading taxes. Chen and Qiu had an agreement that they would skim large sums of cash from the operation of Wok N' Roll, while concealing the cash receipts from the IRS and their accountants. They also agreed to conceal the correct dollar total of sales from their accountant and the IRS. Chen and Qiu recorded the correct dollar total of sales in handwritten journals; they met at the end of the month to divide the diverted cash. For the 2004 and 2005tax years, Chen and Qiu caused others to prepare and file false tax returns with the IRS on behalf of Southern Grill Inc., a subsidiary company.

On Jan. 23, 2007, federal agents executed search warrants at Kew Gardens, Wok N' Roll, Chen's residence, Qiu's residence, and 1217 South 14th St. ICE agents arrested three illegal aliens at an apartment rented by Chen. Two were employed at Kew Gardens and one worked at Wok N' Roll. Eight illegal aliens were also arrested by ICE at a house owned by Chen. Six worked at Kew Gardens and two worked at Wok N' Roll.

Between March 2004 and January 2006, Chen and Qiu conspired to harbor illegal aliens. As partial compensation for employment, they harbored these illegal aliens, paid their utilities and often arranged to transport them to Wok N' Roll for work.

According to U.S. Attorney A. Courtney Cox, "The United States Attorney's Office remains diligent in vigorously prosecuting those who violate the immigration and employment laws of this country. During these difficult economic times, it is more important than ever to assure that law-abiding American citizens are not denied jobs by employers who hire illegal immigrants in violation of our laws. We will continue to work closely with the United States Immigration and Customs Enforcement to assure that these goals are achieved."

The investigation was initiated on a lead provided by the Herrin Police Department. The case was successfully prosecuted by Assistant U.S. Attorney Suzanne M. Garrison. Assistant U.S. Attorney Michael Thompson handled the forfeiture aspects of the case.