Two Kent residents, part owners of the popular Bai Tong restaurant chain, pleaded guilty Wednesday in U.S. District Court in Seattle to conspiracy to defraud the government by hiding more than $1 million in income.
Pornchai Chaiseeha, 41, and Chadillada Lapangkura, 40, used a multi-year scheme to hide cash sales and reduce the taxes owed at the restaurant chain, according to a U.S. Department of Justice news release.
According to records filed in the case, Chaiseeha and Lapangkura were part owners of the chain that has Thai restaurants in Washington, Oregon and Hawaii. Some of the restaurants operated under the name Bai Tong, and some were called Noi. The restaurants used a point-of-sale computer system that included a “cash suppression” or “Zapper” software program that modifies the sales records by removing cash sales from the business records.
The two had the “Zapper” software operating at their Redmond and Tukwila restaurants and at their Bend, Oregon, restaurant. The restaurants earned $1,034,750 in cash income that was never reported on state or federal tax returns, resulting in an agreed tax loss of $299,806.
The pair also used the unreported cash to pay employees under the table, avoiding state and federal employment taxes. Finally, some of the cash proceeds were siphoned off to bank accounts in Thailand, and the existence of the accounts was not reported on their income tax returns.
The defendants have agreed to pay $299,806 in state and federal taxes as part of the criminal case. The IRS may also assess other taxes, penalties and interest through its civil processes.
The two are scheduled to be sentenced Nov. 4 by U.S. District Judge James L. Robart.
Prosecutors agreed to recommend sentences of no more than two years in prison for Lapangkura and no more than 18 months in prison for Chaiseeha. The judge is not bound by the recommendation. The sentence will be determined by the judge based on the advisory sentencing guidelines and other statutory factors.
The Internal Revenue Service Criminal Investigation and Homeland Security Investigations handled the case.
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