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Four years ago, renowned Chicago restaurateur and chef Tony Hu boasted to the Tribune that his empire of Chinese restaurants would someday be big enough to earn a spot on the New York Stock Exchange.But in federal court Monday, the man nicknamed "Mayor...

Chinatown chef Tony Hu pleads guilty to fraud, money laundering charges

Four years ago, renowned Chicago restaurateur and chef Tony Hu boasted to the Tribune that his empire of Chinese restaurants would someday be big enough to earn a spot on the New York Stock Exchange.But in federal court Monday, the man nicknamed "Mayor...

Chinatown chef Tony Hu pleads guilty to fraud, money laundering charges

Four years ago, renowned Chicago restaurateur and chef Tony Hu boasted to the Tribune that his empire of Chinese restaurants would someday be big enough to earn a spot on the New York Stock Exchange.

But in federal court Monday, the man nicknamed "Mayor of Chinatown" for his business and political prowess saw his stock sink to an all-time low.

In a raspy voice, Hu, 48, whose given name is Hu Xiaojun, pleaded guilty to felony fraud and money laundering charges alleging he hid more than $10 million in cash receipts at nine of his restaurants to skirt paying $1.1 million in sales taxes to Illinois.

Hu faces from probation up to 51 months in prison when he is sentenced Aug. 22 by U.S. District Judge Amy St. Eve. He also agreed to pay restitution of $1,087,000 to Illinois.

The swift guilty plea came just three days after charges were announced and closes a federal investigation that dates to at least mid-2012, when authorities won court authorization to intercept and search messages on an email address connected to Hu's business.

As part of the probe, agents dined while undercover at two of Hu's restaurants to try to learn more about how a record of transactions was maintained, even questioning waiters on the subject, the court records show.

The probe became public in October 2014 when FBI and IRS agents raided eight of Hu's restaurants in Chicago and a ninth in suburban Downers Grove. The restaurants had to be shuttered for several hours as agents carted out boxes of records.

Prominent chef Tony Hu charged with underreporting cash receipts William Lee

Prominent chef Tony Hu, nicknamed "mayor of Chinatown" for his business and political prowess, was charged Friday in federal court with hiding cash receipts to substantially lower what he paid in state sales taxes.

Hu, who has owned numerous Chinese restaurants in Chicago and the suburbs, used...

Prominent chef Tony Hu, nicknamed "mayor of Chinatown" for his business and political prowess, was charged Friday in federal court with hiding cash receipts to substantially lower what he paid in state sales taxes.

Hu, who has owned numerous Chinese restaurants in Chicago and the suburbs, used...

(William Lee)

In court Monday, Hu stood at a lectern dressed in a dark suit and eye glasses, at times asking for a translation of the proceedings by a Mandarin interpreter. He told the judge he'd graduated from community college in China and taken English classes after moving to the United States in 1993.

When the judge asked him what he did for a living, Hu said "80 percent" of his time was spent doing community service work and the rest of the time he worked at his restaurants. Later, when St. Eve asked Hu how he pleaded to the charges of wire fraud and money laundering, he said "guilty, your honor," in a thick accent.

Hu declined to comment after court. His attorney, Sheldon Zenner, said that by pleading guilty and making restitution Hu hoped to restore faith in him "as an upstanding member of society who cares deeply about his family, his friends, his community and the city he loves, Chicago."

"He has had a career of community service and good works well before any of this ever happened," Zenner told reporters in the lobby of the Dirksen U.S. Courthouse. "We intend to bring all of that to the judge's attention (at sentencing)."

Chef Tony Hu plea agreement Chicago Tribune staff Chicago Tribune staff

In his 23-page plea agreement with prosecutors, Hu admitted he schemed to defraud the state revenue department for nearly five years, from January 2010 until at least September 2014.

According to the plea, Hu "modified" daily summaries of each day's sales at nine of his restaurants to conceal transactions conducted in cash. Hu, his managers and employees discarded "close-out reports" that detailed the cash transactions as well as most of the actual receipts for cash sales.

With the cash sales removed, Hu had the remaining receipts totaled and then reported those numbers as the restaurants' sales figure, authorities charged.

Hu admitted in the plea deal that he used cash generated from the restaurants' sales to pay restaurant employees and suppliers without recording the expenses in the restaurants' financial records. He also used the cash he saved in the scheme to pay for personal expenses.

The money laundering count stems from a $50,000 check he wrote in 2011 to buy his Lao Hunan restaurant in the 2200 block of South Wentworth Avenue, according to the plea agreement. Hu admitted he knew some of those funds had been derived from the false-reporting scheme.

It's unclear how many restaurants Hu now runs, but at one time his empire numbered as many as a dozen restaurants, the bulk of them concentrated within a half-square-mile area near the heart of Chinatown.

He was best known for the Lao Sze Chuan franchise, but he also owned restaurants in the north and west suburbs and even Connecticut and Las Vegas at one time.

A 2012 Tribune feature on Hu indicated he had ambitious plans for the next five years, including opening restaurants in New York, San Francisco and Los Angeles and even having his company, Tony Gourmet Group, traded publicly on the stock market.

Hu is a naturalized U.S. citizen and will not face deportation because of the felony conviction, Zenner said.

[email protected]

Twitter @jmetr22b

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