News : Peony owners accused of continued immigration, fraud violations

A week before they were scheduled to face sentencing on the federal charges of harboring illegal aliens and defrauding the government, Chan Duong and Phung Ca (Polly) Long of Vinton have been accused of continuing to break federal law in the operation of their two Peony restaurants.

No new charges have been filed, according to federal court documents on file in the U.S. Clerk of Courts office in Cedar Rapids. But the two were taken into custody this week for violating their pre-release agreement. There has been no comment from the U.S. Attorney's Office, which is prosecuting the couple's case. A detention hearing set for Monday morning will determine their immediate future.

On Tuesday, May 3, Immigrations and Custom Enforcement (ICE) and other Iowalaw enforcement agents executed a search warrant at the Peony restaurants in Vinton and Toledo, as well as the couple's residence on O Avenue in Vinton. Officers also received information about several bank accounts.

ICE agent Christopher Cantrell, who has been investigating the Peony case since the summer of 2008, submitted a 78-page document on Thursday, May 5, that lists several of his findings.

Cantrell wrote that "there is probable cause to believe Chan Duong and Phung Ca Long have knowingly harbored and employed illegal aliens; committed mail and/or wire fraud; and are engaged in a conspiracy to defraud the United States."

Cantrell's lengthy affidavit says agents found evidence that Duong and Long have been keeping three sets of books; one of actual sales at the two restaurants, one for the IRS and one for the Iowa Department of Revenue.

Another court document specifically involving Long's case, filed by Assistant U.S. Attorney Patrick Reinert, states that "in this case, the evidence will show that the defendant simply continued to participate in substantially the same scheme to defraud the United States as well as state and local government bodies."

Reinert's memo to the federal court says that during the May 3 search warrant, Polly Long tried to "secrete currency in the restroom" of the business. Investigators also say they found seven gold bars in the couple's possession, including five at the restaurant.

The purpose of Reinert's memo is to argue the government's case against a reduced sentence for Long on the previous fraud and harboring illegal aliens charge.

"The defendant has not clearly demonstrated acceptance and responsibility and should not receive the two-level reduction," wrote Reinert.

Reinert continues: "It appears the pattern of failing to deposit and report cash transactions has continued. During the course of the searches on May 3, 2011, agents seized seven gold bars (five at the Vinton restaurant and two at the defendants' home), over $87,000 in cash and again recovered handwritten sales logs that show gross sales figures well in excess of amounts deposited into the business bank accounts."

Cantrell's affidavit claims that on more than one occasion, law enforcement officials ate at the restaurants during a covert operation. During these visits, the officers observed that the cash register was not plugged in or turned on.

"The law enforcement officers noted that the cash register was not used to record sales" and also observed that "patrons paying for their meals in cash were not provided a receipt for their purchase," Cantrell wrote.

Because of the new information revealed during the execution of the search warrants, the sentencing for Duong and Long has been tentatively rescheduled for June 9.