WILLMAR — The owners of a downtown Willmar grocery store have been charged with 16 felony counts for allegedly failing to file state income tax returns, filing false income tax returns and allegedly not paying income or sales taxes from 2008 to 2011 and are believed to owe more than $290,000 in unpaid state income and sales taxes.
Juan Carlos Mejia, 43, and Martha A. Mejia, 42, of Sauk Centre, owners of the La Michoacana store, are both scheduled to make their first appearances April 16 in Kandiyohi County District Court.
According to the charges against the couple, they operate grocery, restaurant and money transfer businesses in Willmar and Long Prairie, have been in business for at least 10 years and had a third location in Melrose that closed in 2009.
The investigation by the State Department of Revenue began a tipster reported to the department that several grocery stores, including the La Michoacana store, were suspected of not following tax and business regulations. The tip led to a review of the Mejias’ income tax history, which showed that their business generated more than $1 million in revenue per year, but they paid little or no taxes because little or no taxable income was reported.
In addition, the couple didn’t file an income tax return for 2011. A sales tax audit showed they consistently underreported taxable sales by not reporting the revenue from selling phone cards.
The state’s investigation, including evaluation of the tax returns that were filed by the couple, cash register tapes, bank and lending documents and documents from the couple’s financial representative, showed that the couple owes allegedly more than $238,000 in income taxes and $52,000 in sales tax for the 2008 to 2011 years.
The credit applications discovered in the investigation showed the couple claimed take home pay of $2,250 per week and that they failed to keep adequate books and records, operated on cash and didn’t deposit cash and phone card receipts into their bank accounts.
Juan Mejia was interviewed and allegedly admitted that he knew he needed to file tax returns, but that he needed help and no one would help him and because he is Hispanic and he operates in a racist area.
He also allegedly admitted that the numbers on his tax returns should have been higher and that his sales were higher than reported. He also admitted that the Willmar store does $10,000 to $11,000 in cash sales per week and that cash sales were not deposited into the bank.
He also confirmed with investigators that he would purchase phone cards, sell for a 10-percent profit, and not ring up the purchases on the cash register. He also allegedly admitted to not charging or paying sales tax on the cards, because his competition didn’t charge any sales tax.