April 27, 2016

Phoenix Restaurant Owner Pleads Guilty to Employment Tax Charge and Failure to Pay Minimum Wage

PHOENIX, Ariz. – On April 19, 2016, Isamary Diaz, 56, pleaded guilty to a two count information charging her with willful failure to collect or pay tax and failure to pay minimum wage. The defendant has agreed to pay restitution to the United States government in the amount of $288,291.33. Sentencing is scheduled for July 18, 2016.

According to the plea agreement, the defendant owned and operated five restaurants in the Phoenix, Arizona area under the name Armando's Mexican Food. The defendant employed a number of undocumented employees who were paid exclusively in cash and from whose wages taxes were not withheld or accounted for on filed Forms 941. Beginning in approximately 2009 and continuing until at least March 2013, the defendant provided incomplete payroll and wage information to her accountant in an attempt to conceal that she was paying undocumented employees in cash without withholding taxes. The defendant knowingly omitted cash employees from the payroll numbers in order to reduce her payroll tax expenses. The tax loss associated with defendant's conduct with respect to employment tax is $288,291.33.

Also according to the plea agreement, between March 1, 2011, and February 20, 2014, the defendant employed several undocumented individuals to work at Armando's Mexican Food and willfully did not pay each employee $7.25 for each hour that employee worked. The defendant knew that undocumented employees were unlikely to complain about substandard wages and working conditions. The total loss to the employees is $89,919.53.

The investigation in this case was conducted by the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Internal Revenue Service Criminal Investigation, and U.S. Department of Labor – Wage and Hour Division.