A California restaurant owner pleaded guilty Oct. 8 to multiple felony charges related to a workers’ comp insurance scheme involving failure to report $4.5 million in wages to insurance carriers.
The owner has to repay more than $2 million in restitution and may be sentenced to 16 months in prison in accordance with the terms of his plea agreement.
Thomas Cheung, owner of multiple Sam Woo restaurants in California, pleaded guilty to multiple felonies relating to an almost eight-year long tax fraud scheme.
Cheung’s scheme involved failure to report more than:
- $7.6 million in sales to the California Department of Tax and Fee Administration
- $3.5 million in taxable income to the state Franchise Tax Board
- $4.5 million in wages to the state Employment Development Department, and
- $4.5 million in wages to insurance carriers.
An investigation revealed Thomas Cheung and his brother, Gary Cheung, ran the scheme from December 2011 to March 2019, evading $397,145 in workers’ comp insurance premiums and $1,364,538 in sales, income and payroll taxes.
Thomas Cheung repaid $2,353,058 before being arraigned and is expected to be sentenced to 16 months in prison in January 2021, according to a news release from the California’s Office of the Attorney General.
Gary Cheung paid back $549,606 of his required $2,964,375 in restitution and is expected to be sentenced to prison in August 2021.
New workers’ comp requirements
Beyond injury reporting requirements under normal circumstances, California has enacted a new law which adds employer responsibilities during the coronavirus pandemic.
SB-1159 requires California employers to report positive COVID-19 tests to their workers’ compensation claim administrator, whether the exposure is believed to be related or work or not.