Texas Restaurant Owner Gets 3 Years in Prison for $1.7 Million Tax Fraud

The owner of two San Angelo, Texas, restaurants has been sentenced to three years in prison and ordered to pay $1,767,566.46 in restitution to the Internal Revenue Service, according to the U.S. Attorney for the Northern District of Texas.

Ai Shu Cheng, 52, who is shown in state records as president and director of the Bonsai Garden and China Garden restaurants, pleaded guilty in federal court in December to filing false income tax returns and was sentenced by Senior U.S. Judge Sam Cummings on Wednesday, April 25, as part of a plea agreement. Cheng also is listed in state records as owner of the Bonzai Japanese Steakhouse on Clack Street in Abilene.

In the plea agreement, Cheng pleaded guilty to filing false personal income tax returns for the tax years 2010 and 2012. In his 2010 filing, Cheng reported income of $208,652, when his actual income was $696,148.68; in his 2012 filing, Cheng reported $186,486, when his actual income was "approximately $600,976.82," the U.S. Attorney said.

Although Cheng pleaded guilty to two counts of filing false returns, in the agreement he acknowledged filing false personal returns for 2008, 2009 and 2011, and false employment tax returns for his restaurant business for 2008, 2009, 2010, 2011 and 2012. The IRS calculated the taxation loss from the false business returns to be approximately $1,140,819.

In addition to the restitution amount, according to the agreement, Cheng also agreed to pay any applicable penalties and interest for late payment.

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