Yuma Donut Shop Owner Indicted for Failing to Pay Overtime

PHOENIX—A federal grand jury in Phoenix returned a 10-count count indictment on Tuesday against Tong-Seng Luy, aka Jerry Luy, 44, of Yuma, for concealment by trick and making false statements to the U.S. Department of Labor, and for willful failure to pay overtime to his employees. Luy is accused of promising to pay, but then withholding over $27,000 in back wages to eight employees over a two-year period.

Luy will be summonsed to appear for an arraignment on May 18 before U.S. Magistrate Judge David Duncan.

“This defendant went to extraordinary lengths to avoid paying wages that his employees lawfully earned,” said U.S. Attorney Dennis K. Burke. “No business owner is above the law, and we will continue to work with our partners at the Labor Department and the FBI to seek justice for employees who have been exploited.”

Added George Friday Jr., Regional Administrator of the Labor Department’s Wage and Hour Division, “The Department of Labor will use every available tool to protect vulnerable workers from employers who do not play by the rules. We appreciate the willingness of the U.S. Attorney’s Office to prosecute this case and hope it sends an important message to any employer who would consider trying to deprive their workers of their hard-earned pay.”

The indictment alleges that Luy owns and operates Arizona Donut & Café in Yuma, and that he employs shift workers who perform combined duties as short-order cooks and cashiers. In the summer of 2010, the Labor Department conducted a civil investigation and determined that Luy owed back wages under the overtime provisions of the Fair Labor Standards Act.

According to the indictment, in September 2010, Luy agreed to pay over $27,000 in back wages to eight employees for the two-year period ending in July 2010. In October 2010, Luy falsely affirmed to the Department of Labor that all employees had been paid, and that he was in compliance with the FLSA. In reality, Luy continued to employ cook/cashier employees in excess of 40 hours per week without paying overtime wages. In addition, in lieu of actually paying the back wages to which he had agreed, Luy prepared additional payroll checks, demanded that his employees endorse them, re-deposited the checks back into his own account and then sent copies of the fronts of the checks to the Department as proof of payment.

A conviction for concealment by trick and making false statements carries a maximum penalty of five years’ imprisonment, a $250,000 fine, or both. A conviction for willful failure to pay overtime carries a maximum penalty of six months’ imprisonment, a $10,000 fine, or both. In determining an actual sentence, a judge will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.

An indictment is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

The investigation preceding the indictment was conducted by the Wage and Hour Division of the Department of Labor, and by the Federal Bureau of Investigation. The prosecution is being handled by Gary M. Restaino, Assistant U.S. Attorney, District of Arizona, Phoenix.

CASE NUMBER: CR-00843-FJM

RELEASE NUMBER: 2011-082(Luy)