Owner of Canal Park-Based Stores Charged with Federal Tax Crimes
DULUTH, Minn. — The U.S. Attorney’s Office in Minnesota has charged a man who owns several stores in Canal Park with more than a dozen crimes relating to tax evasion and not paying employment taxes.
Shimon Shaked is charged with 14 counts of failing to account for and pay over employment tax, five counts of tax evasion, and one count of failing to file a tax return.
Shaked appeared in the U.S. District Court in Minneapolis on Thursday.
According to federal prosecutors, 56-year-old Shimon Shaked owns four stores in Canal Park: I Love Duluth, I Love Duluth 2, Lake Life, and Up North-The Good Life. The stores mostly sell products for tourists, such as souvenirs and t-shirts.
Agents with the Criminal Investigation Division of the IRS believe Shaked created a holding company eight years ago called ALMS18, LLC. Under that company, he allegedly designated his daughter, who was 18 at the time, as the “nominal owner.”
Investigators believe he did so in order to hide the money he was making from his stores and evade paying income taxes on the profits. They allege that he also reported revenue made from his Canal Park-based stores from 2013 to 2015 on income tax returns that were under his daughter’s name, and not his own tax returns.
According to court documents, Shaked is also accused of not reporting and paying taxes on revenue and income from most cash transactions at his Duluth stores. Documents state he report and pay taxes for revenue and income for credit card transactions.
In 2017 and 2018, prosecutors say Shaked opened two more stores in Michigan geared toward tourists called I Love Frankenmuth and I love Marquette. They said he did not file a tax return in 2018.
The IRS believes Shaked tried to dodge paying federal income taxes of more than $800,000 after allegedly not reporting income of more than $4 million between 2013 to 2018.
Prosecutors believe Shaked paid for his own expenses such as trying to start up a Florida alligator farm, child support, rent on an apartment in Duluth, and personal loans with the company’s bank account.
At the Duluth and Michigan stores, the court documents say Shaked hired American citizens as well as international students, and routinely paid his employees with mostly cash. The allegations say that by doing so, he didn’t pay or submit payroll taxes to the IRS for his employees.