Attorney General Becerra Cracks Down on Alleged Multimillion Dollar Los Angeles-Area Tax Evasion Scheme
SACRAMENTO – California Attorney General Xavier Becerra today announced the arraignments of Yan Lu and William Lu, a sibling duo, charged with allegedly underreporting millions of dollars in sales and evading sales tax for the Mama Lu restaurants they own in Monterey Park, California. Both Yan Lu and William Lu pleaded not guilty today in Los Angeles County Superior Court.
“There will always be consequences when you rip off California’s taxpayers,” said Attorney General Becerra. “Blatantly flouting the law in order to avoid paying taxes takes money away from California’s communities. Through the TRUE Task Force, the California Department of Justice works with other agencies to bring bad actors to account.”
In 2018, investigators with the California Department of Tax and Fee Administration (CDTFA), Investigations Bureau began a sales tax evasion investigation on Mama’s Lu Dumpling House Corp., HY Gourmet, Inc., Mama Lu Dumpling House Monterey Park, Inc. and Mama Lu Dumpling House, Inc. (restaurants). The investigation revealed, a ten-year scheme, starting in 2008 in which Yan and William allegedly underreported over $11 million in sales and evaded over $1 million in state sales tax by falsifying monthly sales reports for their restaurants. An investigation by the California Franchise Tax Board (FTB) also revealed that by allegedly underreporting their sales, William and Yan evaded over $650,000 in state income tax.
In January, both William Lu and Yan Lu were charged with 17 counts, including conspiracy to file false sales tax returns, filing false sale tax returns, and filing false income tax returns.
Today’s arraignment was the result of investigations by the CDTFA and the FTB. Both agencies are a part of the multiagency Tax Recovery in the Underground Economy (TRUE) Task Force, which also includes the California Department of Justice (DOJ) and the California Employment Development Department. DOJ’s TRUE attorneys will handle the prosecution of William Lu and Yan Lu. The TRUE Task Force was created to ensure multiagency collaboration and to combat wage theft, tax evasion, and other crimes in the underground economy. The task force consists of attorneys, investigators, and special agents from the member agencies.
It is important to note that every defendant is presumed innocent until proven guilty.
A copy of the complaint is available here.