Seller of software to help restaurants hide cash sales pleads guilty

An Everett man has admitted to fraud and conspiracy charges and agreed to pay more than $3.4 million in restitution after selling software that helped restaurants hide cash sales to reduce their tax payments.

John Yin pleaded guilty in U.S. District Court in Seattle on Friday to one count of wire fraud and one count of conspiracy to defraud the government.

Yin, 66, sold and supported software built by Profitek, a Canadian company that sells point-of-sale software for recording transactions by restaurants and other businesses. He also sold, according the U.S. Attorney’s Office, a tool that Profitek either built or commissioned from a Chinese affiliate to help customers to hide cash transactions to reduce tax payments.

Possession of such “tax zapper” software is illegal in Washington state.

One of Yin’s customers, Yu-Ling Wong of Bellevue’s Facing East restaurant, was charged in King County Superior Court with theft and falsifying tax returns in February.

That case began when auditors found irregularities in Facing East’s tax returns, including unusually low cash sales and tips that on some days exceeded the restaurant’s total cash sales.

Wong eventually admitted to keeping a separate set of books and using sales-suppression software, the complaint said.

State and federal authorities subsequently searched Yin’s Everett home.

According to Yin’s plea agreement, at least seven other restaurants audited by the Washington State Department of Revenue were found to be using zapper software sold by Yin. The cumulative unpaid state sales tax and federal income tax totalled $3,445,589.

Yin’s sentencing hearing is scheduled for Feb. 24. The charges carry a maximum punishment of a 25-year prison term and a $500,000 fine.

Kirk Davis, an attorney representing Yin, said his client had “accepted responsibility for his very small part in this scheme. We look forward to the other defendants, who are the ones who actually profited from this, also meeting their day in court.”

Spokespeople for the U.S Attorney’s Office and Washington state Attorney General declined to comment on potential cases related to Yin’s plea.

Canadian authorities had previously charged Profitek with tax evasion and fraud, Washington regulators said in a complaint earlier this year.

The tax-evasion charges were dismissed, the complaint said, and a fraud conviction was overturned on appeal in 2013. Separate Canadian cases against Profitek sales personnel and customers that use the software resulted in some guilty pleas and convictions.

An administrator at Profitek’s headquarters in Richmond, B.C., said she did not believe the company’s software was capable of the functions described by prosecutors in Seattle. The woman, who declined to give her name, said the company had a network of U.S. resellers, but no official employees.

She declined to comment further, and the company wouldn’t make Pius Chan, Profitek’s president, available for comment.