West Hartford Restaurateur Pleads Guilty To Tax Fraud: Feds

BRIDGEPORT/WEST HARTFORD, CT — A West Hartford restaurateur has pleaded guilty in federal court regarding his role in a tax fraud scheme involving multiple establishments he owns, authorities said.

Vanessa Roberts Avery, U.S. Attorney for Connecticut, and Joleen D. Simpson, special agent in charge of IRS criminal investigation in New England, said Friday that William Chen, 49, of West Hartford, waived his right to be indicted and pleaded guilty Friday in Bridgeport federal court to offenses stemming from an extensive tax fraud scheme involving Connecticut and Massachusetts restaurants he owns and operates.

According to court documents and statements made in court, Chen is a part owner of several restaurants, including Ginza Japanese Restaurant in Bloomfield, Ginza Japanese Cuisine in Wethersfield, Kaliubon Ramen in Wethersfield and West Hartford, and Feng Asian Bistro in Hartford, Canton and Millbury, Mass.

Federal officials said Chen was responsible for purchasing and using the "Point-of-Sale" (POS) system for restaurant orders and for training staff on the use of the POS system.

In connection with the POS system, Chen paid an additional fee to activate “zapper” software, which is a commercial computer program designed to deliberately delete transactions from the POS system to create fraudulent sales records, federal authorities said.

From approximately 2013 to 2020, Chen and others who worked at the restaurants deleted cash transactions with the intent to reduce the gross receipts and the amount of sales tax collected reported by the POS, federal officials said.

As a result, Chen intentionally suppressed the restaurants’ taxable income that he disclosed to his accountant who prepared his and his restaurants’ income tax returns, federal officials said.

Chen was also responsible for the accounting and financial records at the restaurants, for the collection and withholding of employment taxes for the restaurants at which he worked, and for signing the restaurants’ tax returns.

Authorities said for the 2013 through 2020 tax years, Chen failed to withhold, account for, and pay to the IRS federal income taxes, Federal Insurance Contributions Act taxes (“FICA”), and federal unemployment taxes for multiple employees that he paid, or that he knew were paid, in cash, federal authorities said.

The tax loss attributable to Chen’s criminal conduct is $2,092,927, according to prosecutors.

Chen pleaded guilty to two counts of filing a false tax return, an offense that carries a maximum term of imprisonment of three years on each count.

He is scheduled to be sentenced by U.S. District Judge Sarah A. L. Merriam Oct. 21.