Restaurant owner charged with failing to pay sales tax

Wednesday, October 15, 2014

The owner of an Uptown restaurant was charged with numerous counts of failing to pay sales tax through underreporting sales by more than $1 million and underpaying the tax by $100,000, Hennepin County Attorney Mike Freeman announced Wednesday.

Michael Ralph Whitelaw, 46, of Eagan, was charged with 68 counts of failing to pay a sales tax and filing fraudulent and false tax returns. The charges were issued by summons and the date of his first court appearance has not yet been set.

“This thorough investigation by the Minnesota Department of Revenue and the charges we have filed show that Mr. Whitelaw knowingly took the money his customers rightly thought was going to the state government and kept it for his business,” Freeman said at a news conference. “He was cheating his competitiors. More significantly, he was cheating all of us taxpayers.”

The charges are the result of a months -long investigation by the Minnesota Department of Revenue into Whitelaw and his Food Group Holdings LLC, of Inver Grove Heights, where he is a corporate officer and managing member. The company owned Social House at 2919 Hennepin Ave. S., a Japanese/Asian fusion restaurant in Uptown that closed over the summer.

Whitelaw filed fraudulent sales tax information monthly with the revenue department in 2009, 2010 and 2011, according to the complaint. The evidence against Whitelaw and his company was obtained through revenue department records, records collected from banks where Food Group Holdings had its accounts and from three search warrants done on the company and its restaurant.

In addition, Whitelaw had been audited prior to 2009 by the revenue department for failing to file accurate state sales tax returns and pay the correct amount of sales taxes and had been told the right way to do it.

The current investigation found that, as of Feb. 11, the total amount due to the state by Whitelaw’s company for sales taxes, penalty and interest was $171,391.

"At a minimum, the first thing he has to do is pay back the money," Freeman said, adding that if he is convicted, the courts will decide what his sentence will be.

Criminal Complaint (PDF)