New York Supermarket Chain Settles Allegations of Tax Avoidance

  • New York AG Letitia James reached a settlement with supermarket chain owner Hi Jong Lee and his chain of supermarkets (collectively “Food World”) to resolve allegations of fraudulent tax avoidance in violation of the New York False Claims Act, New York Tax Act, and Executive Law.
  • According to the stipulation and settlement agreement, which stems from a whistleblower lawsuit, Food World allegedly avoided paying taxes by using lottery cash registers that were not connected to the store’s sales system to process purchases of supermarket items that were not declared for income tax or sales tax purposes at the time. In addition, Food World allegedly avoided taxes by generating fake merchandise returns receipts and by paying the majority of Food World employees in cash and off the books in order to avoid tax deductions.
  • Under the terms of the settlement, Food World will pay $4.7 million, of which approximately $3.7 million will be paid to the state and $1 million to the whistleblower. In addition, Food World will pay $110,000 for the whistleblower’s attorneys’ fees and costs.