Attorney General Bonta Announces Guilty Pleas in Multimillion Dollar Tax Evasion Scheme in Los Angeles

Friday, August 20, 2021
Contact: (916) 210-6000,

OAKLAND – California Attorney General Rob Bonta today announced that Yan Lu, the former owner of multiple Los Angeles-based restaurants, and her brother William Lu, pleaded guilty in Los Angeles Superior Court to conspiracy to file a false sales tax return and filing a false sales tax return. Yan Lu also pleaded guilty to an additional charge of filing a false income tax return. Sentencing will occur at a later date. Yan Lu will receive a three-year split sentence, serving one year in county jail and two years on mandatory supervision. William Lu will be placed on two years felony probation, and serve four months in county jail. Together, the duo has paid the full $2,184,696 owed in restitution, of which $1,649,499 was paid to the California Department of Tax and Fee Administration (CDTFA) and $535,197 was paid to the California Franchise Tax Board (FTB). The amounts represent the tax owed, the interest on the outstanding tax, and the cost of the investigations.

“For ten years, the defendants in this case chose to disregard the law and put their bottom line ahead of the interests of California taxpayers,” said Attorney General Bonta. “Successful multiagency collaboration throughout the investigation and prosecution of this case led to the end of this scheme and brought to account a duo who chose to rip off Californians. I’m thankful for the partnership we have with the California Department of Tax and Fee Administration, California Franchise Tax Board, and the other member agencies of the TRUE Task Force.”

In 2018, investigators with the CDTFA Investigations Bureau began a sales tax evasion investigation of Mama’s Lu Dumpling House Corp., HY Gourmet, Inc., Mama Lu Dumpling House Monterey Park, Inc., and Mama Lu Dumpling House, Inc. The investigation revealed a ten-year scheme, starting in 2008, in which the duo underreported over $11 million in sales and evaded $1,065,642 in state sales tax by falsifying monthly sales reports for their restaurants. An investigation by the FTB also uncovered that by underreporting sales, Yan Lu evaded $343,240 in state income tax.

In January, both William Lu and Yan Lu were charged with 17 counts, including conspiracy to file a false sales tax return in violation of Penal Code section 182(a)(1), filing a false sales tax return in violation of Revenue and Taxation Code sections 7152(b) and 7153.5, and filing a false income tax return in violation of Revenue and Taxation Code sections 19705(a)(2) and 19706.

Today’s guilty pleas were the result of investigations by the CDTFA and the FTB, and prosecution by the California Department of Justice. The three agencies are a part of the multiagency Tax Recovery in the Underground Economy (TRUE) Task Force, which also includes the California Employment Development Department. 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. 

A copy of the complaint is available here.

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