Mama's Lu Dumpling Duo Pleads Guilty To $2 Million Tax Fraud

Brother and sister duo Yan and William Lu, the former owners of multiple San Gabriel Valley restaurants, most notably Mama's Lu Dumpling House, pled guilty last Friday to tax evasion charges. The pair had cooked their books to avoid paying more than $2 million in taxes.

Both of them pled guilty to filing a false sales tax return and conspiracy to file a false sales tax return. Yan Lu also pled guilty to one charge of filing a false income tax return.

The Lus have now paid the full $2,184,696 they owed, according to a press release from the office of California Attorney General Rob Bonta. Part of that payment — $1.6 million — went to the California Department of Tax and Fee Administration. The rest, more than half-a-million dollars, went to the California Franchise Tax Board. Those amounts include the tax owed, interest on the outstanding tax and the cost of the investigations.

Yan Lu will receive a three-year split sentence, serving one year in county jail and two years on mandatory supervision.

William Lu will be placed on two years felony probation and serve four months in county jail.

"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 in the press release.

There are multiple Mama Lu's locations, including two in Monterey Park. Anna Tang, who in 2015 bought the Mama Lu's at 501 W. Garvey Ave. in Monterey Park, has no connection to the Lus or the charges against them. The restaurant is well-known for its xiao long bao (soup dumplings), beef rolls, beef noodle soup, scallion pancakes and other Taiwanese delicacies.

In 2018, investigators with California's Department of Tax and Fee Administration began looking at the Lus' various companies — Mama’s Lu Dumpling House Corp., HY Gourmet, Inc., Mama Lu Dumpling House Monterey Park, Inc., and Mama Lu Dumpling House, Inc. — for sales tax evasion.

The investigation revealed a decade-long scheme, starting in 2008, in which the duo underreported more than $11 million in sales by falsifying monthly sales reports for their restaurants. The investigation also revealed that Yan Lu had evaded state income tax.

In January 2021, William and Yan Lu were charged with 17 counts related to tax fraud and evasion. In February, the pair pleaded not guilty to these charges in Los Angeles County Superior Court.