Bai Tong owners plead guilty in $1M ‘cash suppression’ scheme

(Image: Bai Tong)

12th and Pike’s Bai Tong Street Cafe remained open and busy Thursday as the Department of Justice announced two of the restaurant chain’s owners had pleaded guilty to using point of sales software in “a multi-year scheme to hide cash sales” totaling more than $1 million in income.

Kent residents Pornchai Chaiseeha, 41, and Chadillada Lapangkura, 40, pleaded guilty Wednesday to conspiracy to defraud the government.

Bai Tong opened at 12th and Pike in spring of 2017 in the space left empty when Boom Noodle closed last summer after a decade of shifting concepts by its tech-powered investors behind the Blue C sushi restaurants. Noi Lapangkura told CHS at the time the business had come a long way since her family started on Pacific Highway S in 1989. “Bai Tong has always been a family place,” she told CHS. “We think, with the demographics on Capitol Hill, this one will be different.”

According to U.S. District Court documents in the whirlwind case opened and wrapped up in mere weeks this summer, the Internal Revenue Service Criminal Investigation and Homeland Security Investigations found that point of sales software used to hide the cash transactions was installed at Bai Tong restaurants off the Hill since at least 2010. The chain has operated restaurants in Washington, Oregon, and Hawaii, including four Bai Tong around Seattle and the Eastside.

Prosecutors say the point of sales SmilePOS software had an added “cash suppression” or “Zapper” program that “modifies the sales records by removing cash sales from the business records.”

“The two had the ‘Zapper’ software operating at their Redmond and Tukwila, Washington, restaurants and at their Bend, Oregon, restaurant,” the DOJ announcement reads.

The restaurants earned $1,034,750 in cash income that was never reported on state or federal tax returns, resulting in an agreed tax loss of $299,806, according to the DOJ. Prosecutors say the pair also used the unreported cash to pay employees under the table and some of the cash proceeds were “siphoned off” to bank accounts in Thailand.

Founded in 2006, SmilePOS was noted in 2017 for helping “the Thai restaurant community work more efficiently and profitably.” The company is not part of any charges related to the Bai Tong scheme.

As part of the plea deal, the Bai Tong owners have agreed to pay $299,806 in state and federal taxes as part of the criminal case. “The IRS may also assess other taxes, penalties, and interest through its civil processes,” the DOJ notes.

Prosecutors have agreed to recommend sentences of no more than two years in prison for Lapangkura and no more than 18 months in prison for Chaiseeha. The business partners are scheduled for sentencing by U.S. District Judge James L. Robart in November.

Under the plea deal, the DOJ has said it will not bring further charges related to the investigation.

 

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9 thoughts on “Bai Tong owners plead guilty in $1M ‘cash suppression’ scheme

    • Gravity is a credit card processor. The Point is Sale software is in the terminals that one sees servers enter orders in etc. by definition Gravity would not be relevant to a cash payment.

    • lol, why the hell would Gravity, a CC processor, have anything to do with cash payments?

      So they basically stole 300K in taxes, illegally paid workers and they are recommended no more than 2 years in prison and restitution?

      What a joke white collar enforcement and penalties are.

      • They do not own SmilePOS. SmilePOS is listed as its own LLC out of Lynnwood.

        Gravity has partnered with SmilePOS to help streamline operations for Thai restaurants in the area. It’s a business partnership between two distinct entities.

        Also, from the article, the DOJ did not charge SmilePOS with any wrong doing. The “back door” software installed on the POS must have been determined to have been added via 3rd party. Or at least their was no evidence of SmilePOS’ involvement in the scheme.

        Again, the lede here is the slap on the wrist given to the restaurant owners.

  1. They should have just called it ‘reinvesting in the business’ like Amazon does, then they wouldn’t have to pay any taxes. Oh, and then they could also file for a rebate to boot – so you could be paying them to not pay any taxes.

  2. This place was garbage from day 1.

    6 bucks for 5 “gourmet” tots. I lost it when they came in a plastic basket. I found this to be more criminal than the crimes in the article.

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