John Yin of Everett has admitted to fraud and conspiracy charges and agreed to pay more than $3.4 million in restitution after selling software that helped restaurants hide cash sales to reduce their tax payments.
He pleaded guilty in U.S. District Court in Seattle on Friday to one count of wire fraud and one count of conspiracy to defraud the government.
John Yin, 66, worked for Profitek, a British Columbia company that sells point of sales systems to businesses, including restaurants. The company, according to federal prosecutors, designed, marketed and sold revenue-suppression software as an add-on to its point of sale software.
The suppression software, “zapper” program, allows businesses to modify their point of sale database to underreport revenue. Yin sold the software to many customers over several years. Eight Seattle-area restaurants used the software and underpaid their state and federal taxes by hundreds of thousands of dollars, according to federal prosecutors.
“Revenue Suppression Software represents the modern iteration of old-fashioned skimming,” said Special Agent in Charge Darrell Waldon, of IRS Criminal Investigation, in a press release.
Possession of such “tax zapper” software is illegal in Washington state. In 2013, Washington state passed a law that made “automated sales suppression devices, phantom-ware, electronic cash registers or point of sale systems used with automated sales suppression devices or phantom-ware, and any property constituting proceeds traceable” illegal (RCW 82.32.290).
Yin, 66, will pay restitution of $3,445,589. Sentencing will be in February 2017. He faces up to 25 years behind bars.
An administrator at Profitek’s headquarters in Richmond, B.C., said Mr. Pius Chan, Profitek’s president, is not available to make any comments.
Separate Canadian cases against Profitek sales personnel and customers that use the software resulted in some guilty pleas and convictions. For example, the case against David Au, an InfoSpec salesperson, who pleaded guilty (December 16, 2010) to defrauding the public by selling Zappers to restaurant owners so that they could delete cash sales. Between 2000 and 2008 Mr. Au sold the Profitek system, along with the Zapper program to 23 known restaurant owners in Lower Mainland and elsewhere in British Columbia, who used it to delete cash sales for the purpose of evading income and sales taxes that were due to provincial and federal governments. On average, Mr. Au sold eight Zappers each year over an eight-year span. More here: https://ssrn.com/abstract=2848973
Read earlier posts related to this case: http://www.salesdatacontroller.com/5065-2/
