Two local business owners pled guilty Aug. 21 to charges of income tax fraud, according to federal court documents.
Hyungirl Lee was charged with a felony for filing a false income tax return for 2005. His wife, Jongyean Lee, was charged with a misdemeanor of submitting false documents to an IRS agent.
The couple owns local businesses Riley’s Wines of the World, Churchkey Bar and Grill, Badger Liquor and Vineyard Liquor.
Jongyean Lee also owns Samba Brazilian Grill on West Gilman Street.
According to federal court documents, Hyungirl Lee knowingly underreported his gross income in 2005, resulting in a criminal tax loss of a little less than $200,000. He was previously convicted of fraudulent tax practices in 2002 and served a year and a half in prison, with a fine of $71,000.
In 2007, Jongyean Lee submitted a 2004 purchase journal inflating purchase amounts for her businesses, according to court documents. She has no previous convictions.
The couple entered a plea agreement with prosecutors Aug. 21. According to the agreement, the couple will plead guilty in exchange for the court to “give the defendant the maximum available reduction for acceptance of responsibility.”
The plea agreement also stipulates if both the defendants are given a prison sentence, the two prison terms would be staggered. Hyungirl Lee would serve his sentence first, followed immediately by Jongyean Lee at the end of his term.
Hyungirl Lee faces up to three years in prison, a one-year supervised release and a $250,000 fine. Jongyean Lee could receive one year in prison, a year of supervised release and a $100,000 fine.
Alcohol License Review Committee member Ald. Mike Verveer, District 4, said Wisconsin law dictates someone convicted of a felony cannot hold a liquor license, but no law restricts someone convicted of a misdemeanor from holding a license.
Verveer said just before Hyungirl Lee’s previous imprisonment, Jongyean Lee changed all of the liquor licenses to her name.
“Because all liquor licenses are in her name and assuming that my understanding of the plea deal is correct — that she will be convicted of a misdemeanor — then I believe legally the license can remain in her name,” Verveer said.
So far, no one in City Hall believes the tax evasion charges are sufficient to bring the city’s prosecution of the Lees and their liquor licenses before the ALRC, Verveer added.
“What is still unknown is whether or not the federal judge will sentence her to incarceration or not, and that’s another question: who will be running the operations if she’s in prison?” Verveer said.
Jongyean Lee declined to comment, and both Hyungirl and Jongyean Lee’s lawyers were unavailable for comment.
Both Hyungirl and Jongyean Lee are currently on release. Hyungirl Lee is scheduled to be sentenced Oct. 30, and Jongyean Lee’s sentencing is Oct. 28.
