Of course there isn’t anybody really named Sam Woo running all those restaurants, though when they opened their first Orange County branch a local OC restaurant reviewer did refer to Sam, the man, as being in charge. And Sam Woo isn’t a monolithic chain, but rather various family members in a loose confederation under the Sam Woo banner, so not all branches are involved. With this clarification in place, one of the Sam’s is in big trouble, like paying $3 million and serving 3 to 9 years in the big house. Of course, we knew stuff like this was going on in the Chinese restaurant community and occasionally we heard a few details now and then. But this is the most information that has ever gone public.
As far as insurance fraud goes, I suspect that the same owner had been opening dim sum restaurants under different names at the spot where World Seafood Restaurant is in Alhambra. Over the past decade or two, there had been several fires that completely burned down the dim sum restaurants that are there. Then lo and behold, another dim sum restaurant under a different name would pop up at this very same spot. Rinse and repeat. I’m sure every claim involved tons of money for business income and business personal property.
Almost every single Asian-run garment factory in LA is involved in same sort of wage theft. They pay by the piece (mere cents per piece) instead of the required hourly wage by law. Their exploited workers, who work over 10 to 12 hours every damn day, earn as little as $20 a day…
I think the Chinese community’s initial thought upon hearing about a Chinese restaurant fire is always “fire insurance.” Serial restaurants at the same spot are actually more of a mark of sales tax fraud. Underreport your sales, collapse your legal entity, hope the statute of limitations runs and you’re home free. And of course, “cash only” is synonymous with income tax (and sales tax) evasion. However few people realize that the cash element in the Chinese restaurant business is driven partly by the demand of Chinese workers to be paid partly or completely in cash. (Ever try to hire a Chinese nanny and pay anything except cash only?) To pay employees in cash, the restaurant owner needs to have cash receipts sufficient to cover cash wage payments. The restaurant owner doesn’t report the cash receipt income, but neither can they deduct the corresponding cash payment. Employee demand for cash is driven by the desire to minimize their reported income to maximize their government benefits, such as MediCal. Meanwhile, larger, higher end Chinese restaurants are in a conundrum in that most of their receipts are via credit card, and they just don’t have the cash receipts to cover the cash wage payments that workers demand.
To me, it’s the indemnification of business income and business personal property which can easily top a million for a place like that.
I never saw that angle so I can appreciate your thoughts on this!
I don’t completely agree with this. As far as I know, many Chinese-run business, Far East Center and Wing Hop Fung storefront and their respective warehouses for instance, don’t give you any options…at least that was true back in the days but I don’t doubt that they’ve continued their practice. They paid workers a fixed monthly salary of $1,000 a month working 10 hours a day with 50% paid in cash and 50% in checks that was reported to the government and that’s it. There was never any option of choosing between cash or a check. This way, these places avoid paying a substantial amount of social security and medicare tax. Remember, this was when minimum wage was $6.75 an hour so it works out to be $1,755 a month at minimum so substantial wage theft was/is happening at all these places. To many of these exploited workers, they’re more than happy to give up government benefits if they were getting the minimum wage that they deserve.
No doubt that many Chinese restaurants and other businesses take advantage of workers, particularly non English speaking ones. However for decades canny Chinese restaurant and other industry workers have been gaming the benefits system to their own advantage, and the foundation to this is being paid off the books.
They driving s55’s with govt block cheese in the garage.
You don’t know how close to the truth you are, my friend.
To me, that goes back to whether workers were paid at least minimum wage to begin with in which many in LA aren’t. Then it becomes the question of whether minimum wage is set too low. Consider the fact that purchasing power of minimum wage peaked in 1968 which translates to $11.90 today while CA’s minimum wage wasn’t set at $12 until last year. So for 5 decades, minimum wage workers have been making less money even though productivity had gone up.
As far as people who are driving AMGs that are gaming the system goes, I completely agree that there are plenty like them exploiting any loopholes they can even though they have no need for government benefits to begin with.
Clearly there are employers ripping off employees, but there are also segments where workers have their own market power. I mentioned Chinese nannies once before–we never found one who would consider anything but cash, and some of them with specific skills make $5,000 a month, cash. I remember one restaurant owner complaining to me about how his waiters (they were all male) were usurping his management authority by stopping him from hiring additional servers even if they were short handed by freezing out any newly hired server and making them quit. (The existing waiters didn’t want to split tips with any additional newcomer.) And the restaurant owner who mentioned the conflict between not enough customers paying by cash, as opposed to credit card, and workers who wanted cash payments, as genuinely putting him between a rock and a hard place.
Understood and thanks for chiming in. My response was made as broad strokes so I understand there are exceptions.
It’s funny how you mentioned nannies because I have friends that hired them a while back with cash but paid them way below minimum wage. And come to think of it, my mother was also paid below minimum wage working as a nanny for a lawyer couple perhaps a decade ago… #ExploitationOfNonskilledImmigrants
That’s some BIG TIME fraud!!
And then there’s the other shoe. The IRS.
This is what happened to Chef Tony Hu of the Lao Sze Chuan empire in Chicago (there was an outpost in Glendale). He was supposed to have been sentenced to 1 year in prison back in 2016 but I never did see if/when he served it.
Enjoy your sites. I think what Chef Tony Hu did was likely small potatoes compared to Sam Woo. The mayor of Chicago Chinatown served his sentence and is back running his restaurant empire, sentenced to only 1 year in jail and $100,000 fine. Compare this to the 3 to 9 years in jail and $3 million payment in the Sam Woo case, with the word “egregious” used in the official release from the California Attorney General.
I heard from my sisters that Blue Ocean (wasn’t that the English name) went in flames was due to its competitor (not sure which), but then again, community gossip… After Blue Ocean burned and shuttered, it was years before Shi Hai came along. When one of the investors pulled out and opened a new place in the ESGV, only then did Shi Hai change to World Seafood.
I heard Yum Cha Cafe in its early years when dim sum was still around $1 to $1.50 per plate, the owner was fined for not paying his employees a proper hourly wage, nor over time, as he keeps them working excessive hours, taking advantage of them having recently immigrated to the States but speak no English and have a limited network to find employment.
You’re timeline is right, plus Blue Ocean was bargain basement dim sum, while Shi Hai was very upscale. I remember the force behind Shi Hai was a newcomer who had visions of opening the premier dim sum palace in the SGV, better than Sea Harbour or any of the others. Also as I noted, serial similar Chinese restaurants are tied to sales tax evasion. Best example is one unnamed restaurant which has operated under four different English language names but never changed the Chinese name or their method of operation. Plus you can only burn down your restaurant once and get away with it, and only if you’re lucky.
Does anyone know if all Sam Woo’s or just the the ones in China Town, Rosemead, Cerritos and Van Nuys are involved. Are the ones in San Gabriel and Monterey Park involved?
Should be all of them including Irvine, Alhambra, San Gabriel, etc. I believe Gary is the father who owns the all the restaurants. Each of his kids are co-owners, and each have been given one restaurant to run.
Interesting. Why then the whole family is not going to jail together? Super accountant tricks?