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Officials Charge Mama's Lu Dumpling House With Falsifying $11 Million In Sales — And Avoiding $1 Million In Sales Taxes

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Xiao long bao aka soup dumplings. (<A HREF="https://flickr.com/photos/haynes/3559018110/">Charles Haynes/Flickr Creative Commons</A>)
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UPDATE: This story has been updated since it was published to include a quote from Anna Tang, who owns one of the Mama Lu's restaurants in Monterey Park.

California is cracking down on Mama's Lu Dumpling House, a popular San Gabriel Valley restaurant known for its xiao long bao (soup dumplings). In January, siblings Yan Lu and William Lu were charged with underreporting millions of dollars in sales and not paying the related sales taxes. Last week, the pair pleaded not guilty in Los Angeles County Superior Court.

In 2018, the California Department of Tax and Fee Administration began investigating Mama Lu's (how the restaurants are commonly known) as well as several associated companies — Mama's Lu Dumpling House Corp., HY Gourmet, Inc. and Mama Lu Dumpling House Monterey Park, Inc.

That investigation revealed a 10-year scheme, starting in 2008, in which the Lu siblings allegedly 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, according to a press release issued by the California Attorney General's office.

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An investigation by the California Franchise Tax Board also revealed that by allegedly underreporting their sales, William and Yan evaded paying more than $650,000 in state income tax.

There are multiple Mama Lu's locations, including two in Monterey Park.

After this story was published, Anna Tang, who in 2015 bought the Mama Lu's at 501 W. Garvey Ave. in Monterey Park, reached out to us and wanted to make it clear that she has no connection to the Lus or the charges against them.

In an emailed statement, Tang said:

"These charges are in no way associated with the current operations of this particular location. I purchased one of the two Monterey Park locations of Mama Lu's in November of 2015 and have been operating the business independently of all other Mama Lu's locations. We have no other business affiliations with the Lus.

I purchased the restaurant because I've been a longtime fan of Mama Lu's revered dumplings and wanted to continue to carry on Mama Lu's legacy as a beloved dumpling institution for over a decade here in San Gabriel Valley. I hope I've been able to provide some clarity to the situation and want to assure our customers that I am a responsible business owner and only hope to continue delivering the same quality dumplings that everyone has come to know and love."

Tang owns and operates another restaurant,
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Mama's Dumpling House in San Gabriel, which also is not affiliated with Mama Lu's.

As for the Lu siblings, they face 17 counts including conspiracy to file false sales tax returns, filing false sale tax returns and filing false income tax returns.

"There will always be consequences when you rip off California's taxpayers," said California Attorney General Xavier Becerra in the press release. "Blatantly flouting the law in order to avoid paying taxes takes money away from California's communities."

You can read a the full complaint here.

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