TGI Fridays business manager indicted for tax fraud

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TGI Friday’s senior manager allegedly under-reported tips in the hundreds of thousands of dollars.
Guam – A TGI Friday’s business manager in some hot water over corruption charges in federal court. Lerma Aquino was indicted in District Court for allegedly cheating the IRS by under-reporting tips and wages to avoid paying hundreds of thousands of dollars in taxes.

A federal grand jury handed down the indictment Monday, charging Watami USA Guam’s Business Director Lerma G. Aquino with corrupt endeavor to obstruct or impede the due administration of the internal revenue laws. Watami also does business on Guam as TGI Fridays, an American franchise restaurant.

According to the indictment, Aquino lied about the amount in service charges and tips received by TGI Fridays employees by the hundreds of thousands. For example, in the fourth quarter of 2010, Aquino allegedly reported that TGI Fridays employees received about $30,800 in tips when they actually received over $167,000 in tips and service charges. In the first quarter of 2011, federal authorities say Aquino reported tips received at $33,600 but the amount was actually significantly more at $216,600. Again, in the second quarter of 2011, Aquino reported $34,300 in tips received when TGI Fridays employees actually received $157,000 in tips and service charges, according to the indictment.

“Aquino willfully failed to collect, truthfully account for and pay over to the IRS employment taxes on the total amount of service charges and tips earned in that quarter that were due and owed to the United States and caused a total loss of at least approximately $225,000,” the indictment states.

Furthermore, Aquino allegedly directed certain employees to report a flat $1 an hour or $2 an hour tip as income rather than reporting the actual tips the employees received. Authorities also say Aquino allowed employees to use a standing flat tip amount regardless of the amount of hours worked or tips received. She also reportedly modified tip reports or refused to accept truthful tip reports, all in an effort to minimize the amount of taxes the company would have to fork over to the IRS and Department of Revenue and Taxation, according to authorities.