Grocery Owner Charged With Evading Taxes
In a major sales-tax evasion case, the Los Angeles District Attorney has charged the owner of a large Asian supermarket chain of underreporting more than $4 million in taxes.
Nine counts of felony tax evasion and one count of grand theft charges were filed against Richard Rhee, the controversial operator of the California Market chain. The criminal complaint is the latest in a string of legal and labor problems that have dogged Rhee, who built a multimillion-dollar business catering to the fast-growing Asian community.
Rhee, 61, also faces separate criminal charges of failing to pay unemployment insurance taxes. And last spring, state labor officials filed a civil action and tried to shut down four of his six supermarkets on allegations that he operated without workers’ compensation.
Rhee, who lives in Hollywood, pleaded not guilty to the latest charges, which were filed last month without any publicity. He was arraigned in late February, and a preliminary hearing has been set for March 13.
Richard A. Lowenstein, the deputy district attorney who brought the latest and previous criminal charges against Rhee, said Monday: “I want the [sales] taxes, the interest, the fine and investigatory costs, and I want some kind of penalty.”
Lowenstein said Rhee faces a maximum of 12 years of jail time for both criminal cases, which are expected to be consolidated. Lowenstein said he believes Rhee is more than financially capable of paying the unpaid sales taxes.
Curt Livesay, Rhee’s attorney, said the latest criminal complaint “exaggerates by a great deal any amount owed.” Livesay said Monday he could not estimate how much, if any, sales taxes Rhee owes.
Rhee could not be reached Monday. Managers at the California Market at 450 S. Western Ave.--Rhee’s flagship store--declined to comment.
The tax evasion charges culminate a yearlong investigation by the attorney general and the Board of Equalization, which last spring seized more than 300 boxes of records and receipts, plus cash, from several of Rhee’s supermarkets, warehouses and his home.
Dave Genens, special agent in charge at the attorney general’s bureau of investigation, said 50 to 60 agents and auditors and tax specialists reviewed the records.
“It’s one of the larger ones,” he said of Rhee’s case.
Lowenstein said the tax evasion charges cover financial transactions from 1988 to 1996 at principally two California Market stores--the one at Western Avenue in Koreatown and another at Garden Grove Boulevard in the heart of Orange County’s Korean American business district.
Rhee is well-known in the Korean American community as one of the most successful business operators. A UCLA exchange student dropout, he swept floors for a while before he began investing in real estate in the 1970s. He bought his first California Market in 1986 and has since added five more throughout the Southland. One of them, in the San Fernando Valley, is no longer operating.
But Rhee’s legal troubles surfaced in 1994 when authorities charged him with multiple counts of failing to file and report unemployment insurance taxes. He pleaded not guilty to that, and the case is still pending.
In 1995, the state Division of Labor Standards Enforcement cited Rhee for almost 6,000 violations involving regulations on cash pay, overtime, minimum wages, record-keeping and demanding wage kickbacks. Rhee has denied those charges as well.
Rhee’s store managers have alleged in interviews that government authorities have conducted something of a witch hunt against Rhee because he is a successful minority, a claim investigators have denied.
