DISTRICT ATTORNEY - NEW YORK COUNTY

NEWS RELEASE
January 31, 2008

Contact: Barbara Thompson
212-335-9400

Manhattan District Attorney Robert M. Morgenthau announced today the indictment of the owner of a Chinatown restaurant on charges of stealing $763,650 in sales tax.

The defendant is KWOK MING CHAN.  He has been indicted on one count of Grand Larceny in the Second Degree for stealing $763,650 in sales tax over a seven year period – from December 1, 1999 through December 20, 2007.   The defendant is an owner of Cantoon Garden Inc., an all- cash Chinese restaurant located at 22 Elizabeth Street in Chinatown.  He also was one of the owners of Cantoon Garden’s predecessor restaurant, New Pearl River, at that same address.  The total tax liability, with fraud penalties and accrued interest through February 29 , 2008, is more than $ 1.9 million.  Kwok Ming Chan was arrested earlier this week and will appear later today in New York State Supreme Court.

The investigation began after the New York State Department of Taxation and Finance received a tip reporting the tax evasion.  Search warrants executed at Kwok Ming Chan’s home and at the restaurant recovered both the real sales records as well as an extensive set of fake records showing sales consistent with the restaurant’s underreported sales tax returns.  Cash register tapes and guest checks were found in garbage searches.

For example, cash register tapes, Guest Checks, and records recovered from Kwok Ming Chan’s home showed that the restaurant had taxable sales in the most recent sales tax quarter, for the period from September 1 through November 30, 2007, of $477,223.25.  However, in its sales tax return for that period, the restaurant reported only $141,870 in sales, and thereby stole $28,285 in sales tax collected but not remitted to State Tax for that quarter.  Some of the records gathered in the investigation reveal that Kwok Ming Chan hired individuals to create false sales records in an attempt to foil a civil sales tax audit of the restaurant.  In addition, more than $90,000 in cash was recovered from a safe and an office in the restaurant. 

The investigation leading to today’s indictment was conducted by Assistant District Attorney Mark Bini under the supervision of Gilda I. Mariani, Chief of the District Attorney’s Money Laundering and Tax Crimes Unit and assisted by
Senior Computer Forensics Analyst Avram Lanksy, and Senior Financial Investigator Loretta Mapp, and Charmine Raphael, Deputy Director of the MIS Investigative Support Service and her staff.

For their participation in the investigation, Mr. Morgenthau thanked the New York State Department of Taxation and Finance, Commissioner Robert L. Megna, Deputy Commissioner William J. Comiskey, Assistant Deputy Commissioner Peter Farrell, Revenue Crimes Bureau Director Bruce Kato, Chief Auditor Tommy Chan, Supervising Auditor Nicholas Capkovic, and Auditors Anella Johnson, Margaret Tsui, Hui-Qing Cheu, and Joseph Karrot. 

Mr. Morgenthau also thanked Commissioner Martha Stark of the New York City Department of Finance and her staff, including Auditor Gary Wong.

Grand Larceny in the Second Degree is a class C felony which is punishable by up to 15 years in prison.

Defendant Info: Kwok Ming Chan, 3/13/1950, 56-52 190th St., Fresh Meadows, NY