News : Peony owners to remain in jail until July 7 hearing

Looking down from the bench in the temporary federal courthouse in Cedar Rapids, Magistrate Judge Jon Scoles told the two defendants that it would be "ironic" if their criminal behavior resulted in two more months of freedom.

Facing Judge Scoles on Monday while wearing Linn County Jail jump suits and shackles around their ankles, waist and hands were Chan Duong, in bright orange; and Phung Ca "Polly" Long, who was wearing dark green.

The owners of the Peony Chinese restaurant in Vinton and Toledo are accused of continuing to defraud the U.S. government, as well as state and local governments, of income and sales tax revenue by underreporting the amount of sales at their restaurants as well as the amount of money they pay their employees. No new charges have been filed against the pair; at this time they are accused of not keeping the guilty plea agreement they made nearly six months ago.

The pair had pleaded guilty to harboring illegal aliens in December; Long also pleaded guilty to receiving Medicaid benefits by providing false information to a government agency.

They were scheduled to be sentenced today, but because of evidence of continuing crimes uncovered in search warrants executed last Tuesday, that sentencing was delayed until July 7.

During their plea hearing in December, Judge Scoles had told the couple that in order to remain free while awaiting sentence, they must keep their agreement with the court.

"I emphasized that the court takes very seriously the conditions of release," Scoles said while ordering Duong and Long to remain in federal custody until their July 7 sentencing.

The judge said that defendants who continue to commit crimes -- especially felonies -- after being released "cannot reasonably complain" about being kept in jail.

Most of the 90-minute hearing featured the testimony of Immigrations and Customs Enforcement (ICE) Agent Christopher Cantrell, who has led the investigation into the restaurant's employment and record-keeping practices since 2008.

Cantrell's testimony focused on the search warrant that was executed on May 3 at the restaurants as well as the couple's home in Vinton.

With Assistant U.S. Attorney Patrick Reinert asking the questions, Cantrell testified about the one-ounce gold bars he found hidden in CD cases at the restaurant as well as in a basket of dirty laundry at the couple's Vinton residence.

The agent also testified that when officers knocked at the door, Long told them she had to go inside to "lock up a dog." Later, they learned there was no dog. Later said the agent, after Long had asked permission to use the restroom (which officers had already searched), the officers went back into that room and found more than six thousand dollars in cash in a trash can.

Officers executing the search warrants found $87,000 in cash in the couples home and businesses. Also, between a picture frame and the picture, they found accounting records that indicate that the owners have been keeping three different sets of accounting records.

Cantrell did testify, however, that no evidence of employing or harboring undocumented workers was found during the execution of the search warrant.

After the search warrant was executed, the U.S. District Court ordered the arrest of Duong and Long. Officers went to their home at around midnight on Wednesday, May 4, and took them into custody. At that time, the couple had four cashier checks totaling $166,000 which had been written the day before.

Cantrell testified that he believed the couple had gone to the bank after the search warrant to clean out their bank accounts.

Reinert argued that he believed that action indicated a that the defendants are a flight risk. While no drugs or weapons were ever found, and the couple never made any threats, Reinert argued that they pose a "threat" to society by their continued violation of the law.

The couple's attorneys, J. Keith Riggs and Timothy McCarthy II, asked the judge to release their clients, who have three children living at home, including a son who will soon graduate from high school. McCarthy, who represents Duong, asked the judge to allow his defendant to go free as long as he did not participate in the operation of the restaurant. Riggs also appealed for release for Long, suggesting the couple would agree to a daily review of all restaurant records.

But Magistrate Scoles said that under federal law (Title 18, section 31.48) probable cause that a defendant has broken the law while released is grounds for keeping the defendant in jail. Also, he said, the possibility of a flight risk is another legal reason for ordering the couple to remain in jail. The fact that the couple went to the bank the day of the search warrant and obtained cashier's checks indicates that they are potential flight risks, said the judge. Only one of those two factors: flight risk or probable cause, is enough for a federal judge to order a defendant kept in custody.

Approximately 90 minutes after the hearing began, it ended with U.S. Marshals leading the couple back to the Linn County Jail, where they will remain until their sentencing July 7.

Restaurant future uncertain

During the hearing, Cantrell testified that while the Toledo restaurant has not opened since the search warrant, the Vinton restaurant has since reopened. A Peony staff member who attended the hearing said she did now know when asked about the future of the Vinton restaurant.