United States Attorney Erica H. MacDonald today announced the unsealing of a federal indictment charging SHIMON SHAKED, 56, with tax evasion, failure to file a tax return, and failure to account for and pay employment tax. SHAKED made his initial appearance today before Magistrate Judge Tony N. Leung in U.S. District Court in Minneapolis, Minnesota.
According to the allegations in the indictment and documents filed with the court, SHAKED owned and operated several t-shirt and souvenir shops in Duluth’s Canal Park tourist zone, including I Love Duluth, I Love Duluth 2, Up North-The Good Life, and the Lake Life (the “Duluth Stores"). SHAKED operated the Duluth Stores under a holding company called ALMS18, LLC, which he formed in 2012. Although SHAKED owned, operated, and controlled ALMS18, LLC, he listed his then 18-year old daughter as the nominal owner in order to hide and evade taxes on income he received from the company.
According to the allegations in the indictment and documents filed with the court, SHAKED did not report the revenue and income he earned from the Duluth Stores on his tax returns from 2013-2015; instead, he reported the revenue and income on his daughter’s income tax returns. SHAKED further evaded the assessment of taxes on the income he earned through the Duluth Stores by failing to report the full revenue and income to the Internal Revenue Service (IRS). Specifically, SHAKED reported the credit card sales for the Duluth Stores, but failed to report or pay taxes on the majority of the cash sales on both his daughter’s returns or on his own tax returns. SHAKED used the company’s bank account to pay for personal expenses including child support, an apartment in Duluth, costs associated with attempting to open an alligator farm in Florida, and other personal loans.
According to the allegations in the indictment and documents filed with the court, in 2017 and 2018, SHAKED opened two more souvenir stores, I Love Marquette and I love Frankenmuth, both in Michigan. SHAKED did not file a 2018 tax return. In all, SHAKED failed to report more than $4 million in income from 2013 through 2018. SHAKED evaded and avoided paying more than $800,000 in federal income taxes.
According to the allegations in the indictment and documents filed with the court, SHAKED hired both American and international students to work at both the Duluth Stores and the Michigan Stores. The international students were in the United States on J-1 exchange-visitor visas. J-1 visas are non-immigrant visas for individuals approved to participate in programs that promote cultural exchange, especially to obtain medical or business training within the United States. SHAKED regularly paid some or all of his employees’ wages in cash. In doing so, SHAKED failed to account for and pay over to the IRS some or all of the required federal payroll taxes due and owing for those employees.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS.
Assistant U.S. Attorney Joseph H. Thompson and Angela M. Munoz are prosecuting the case.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Defendant Information:
SHIMON SHAKED, 56
Duluth, Minn.
Charges:
* Tax evasion, 5 counts
* Failure to file a tax return, 1 count
* Failure to Account for and Pay Over Employment Tax, 14 counts
Source: U.S. Department of Justice, Office of the United States Attorneys
