Categories: Hospitality

By:  Robert S. Groban, Jr.

On December 6, 2010, the U.S. Attorney's Office in San Francisco announced that the owners of the El Balazo restaurant chain in the Bay Area had been charged in a 20-count criminal Information with tax fraud and harboring illegal aliens.  These charges arise out of a raid made by federal agents in May 2008 that resulted in the arrest of 64 illegal aliens at several of these restaurants.  The Information charges the owners with conspiracy to commit tax evasion, tax evasion, harboring illegal aliens for financial gain, and submitting false Social Security numbers for undocumented workers at the restaurants.  The defendants were arraigned on December 6, 2010 and each remain free on $100,000 bond.

According to the criminal Information, the defendants concealed the restaurants' daily register sales and then under-reported the income they generated.  The defendants also are charged with willfully employing at least 10 undocumented aliens by ignoring numerous "no match" letters they received from the Social Security Administration advising them about discrepancies between the employees' names and social security numbers.  Each defendant faces a substantial prison term as well as fines in excess of $250,000.

This is the latest in a growing trend of criminal prosecutions of restaurateurs for knowingly employing illegal aliens.  It underscores the importance for these and other organizations in the hospitality industry to manage their workforce risks by ensuring strict compliance with the Form I-9 and related requirements.  In this regard, the Department of Homeland Security has published a list of "Best Practices" in connection with its IMAGE program that can serve as a useful guide. 


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