A brother and sister who once owned multiple Chinese restaurants in Monterey Park pleaded guilty Friday to underreporting millions of dollars in sales and evading related sales taxes, according to California Attorney General Rob Bonta.

Yan and William Lu pleaded guilty in Los Angeles County Superior Court to tax evasion charges and face sentencing on a date to be determined.

“For 10 years, the defendants in this case chose to disregard the law and put their bottom line ahead of the interests of California taxpayers,” Bonta said. “Successful multi-agency collaboration throughout the investigation and prosecution of this case led to the end of this scheme and brought to account a duo who chose to rip off Californians.”

In 2018, investigators with the California Department of Tax and Fee Administration began a sales tax evasion probe on Mama’s Lu Dumpling House Corp., HY Gourmet Inc., Mama Lu Dumpling House Monterey Park Inc., and Mama Lu Dumpling House Inc. The investigation revealed a scheme starting in 2008 in which the siblings underreported more than $11 million in sales and evaded more than $1 million in state sales tax by falsifying monthly sales reports for their restaurants.

An investigation by the California Franchise Tax Board also revealed that by underreporting their sales, the pair evaded over $650,000 in state income tax.

The Lus pleaded guilty to conspiracy to file a false sales tax return and filing a false sales tax return. Yan Lu also pleaded guilty to an additional charge of filing a false income tax return.

At sentencing, Yan Lu is expected to receive a three-year split sentence, serving one year in county jail and two years on mandatory supervision. Her brother will be placed on two years felony probation, and serve four months in county jail, the AG’s office said.

Together, the duo has paid the full $2.18 million owed in restitution, of which $1.6 million was paid to the CDTFA and $535,197 was paid to the FTB. The amounts represent the tax owed, the interest on the outstanding tax and the cost of the investigations, according to the AG.

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