Hutt Valley restaurant owner gets home detention for tax fraud

7 April 2017

An award-winning Hutt Valley restaurateur has been sentenced to 10 months’ home detention for pocketing cash sales, money laundering and filing false GST and income tax returns.

Tao Li, also known as Adam Li or Adam Lee, operated Jacksons Café and Bistro in Petone. He pleaded guilty to 44 charges of aiding and abetting tax evasion by AD Hospitality Ltd and Ellen & Samuel Holdings Ltd. The total tax evaded amounted to $552,644.

Graham Tubb, Inland Revenue’s Group Tax Counsel, said Li vastly under-reported the amount of cash sales the business earned, inflated and falsified expenses, and laundered money through the bank accounts of his father and his chef.

“Mr Li, with the assistance of his tax agent, created an elaborate web of deceit to avoid paying his fair share of tax. He accumulated significant sums of money which should have gone towards providing services for the benefit of all New Zealanders. His actions were deliberate and cynical.”

On one visit to Li’s home by Inland Revenue investigators, cash in excess of $180,000 was located. Business records obtained showed an unusually small percentage of sales were paid for in cash.

Li went to significant lengths to move funds around and change the apparent ownership of them. But ultimately they were obtained by him and used for his own benefit, Mr Tubb said.

“Another disturbing feature of the offending was the active participation of Mr Li’s tax agent, who has already been dealt with by the Court. This is far from acceptable in a functioning tax system. However, this sentence should send a strong message to the minority who try to cheat the tax system that they will be caught.”

Li has made arrangements to pay back the outstanding tax to Inland Revenue.

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