Yuma Donut Shop Owner Pleads Guilty to Making False Representations and to Failing to Pay Overtime

PHOENIX—TONG—Seng Jerry Luy, 45, of Yuma, Ariz., pleaded guilty on August 23, 2011, in federal court in Phoenix to concealment by trick and to willful failure to pay overtime. The case arises out of an earlier civil investigation by the U.S. Department of Labor into the employment practices at Luy’s Yuma restaurant, Arizona Donut & Café.

“Our partners at the Department of Labor and the FBI went the extra mile, as they always do, to seek justice for employees who were exploited,” said U.S. Attorney Dennis K. Burke.

“This employer took extraordinary measures to avoid paying low-wage workers their rightful overtime wages under the law,” said Eric Murray, district director of the Wage and Hour Division’s Phoenix office. “The Department of Labor appreciates the work of the U.S. Attorneys Office and the FBI in helping to hold employers accountable for their actions and ensuring a level playing field for businesses that do follow the law.”

In his plea agreement, Luy admitted he knew the law required him to pay overtime wages (an additional one half of the hourly rate of pay) to his employees when they worked in excess of 40 hours in a work week, but that he did not do so. He further admitted that he discussed the law with Department of Labor representatives who were investigating his business between July and September 2010, that he agreed with the Department of Labor that he owed over $27,000 in past-due overtime wages to eight employees, and that he would pay those wages by October 31, 2010. In lieu of paying the past-due wages, he printed repayment checks, required his employees to endorse those checks back over to him, and presented the fronts of the checks to the Department of Labor to make it seem as though he had repaid his employees pursuant to the agreement. Luy also admitted that he continued to fail to pay overtime to his employees for new work following his agreement with the Department of Labor.

Sentencing is set before U.S. District Judge Frederick J. Martone on December 8, 2011. A conviction for concealment by trick carries a maximum penalty of five years in federal prison, a $250,000 fine, or both. A conviction for willful failure to pay overtime carries a maximum penalty of six months in federal prison, a $10,000 fine, or both. In determining an actual sentence, Judge Martone will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. Judge Martone, however, is not bound by those guidelines in determining a sentence.

The investigation in this case was conducted by the Wage and Hour Division of the Department of Labor and 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-11-0843-PHX-FJM
RELEASE NUMBER: 2011-188(Luy)