Yuma doughnut shop owner indicted in overtime case

A Yuma doughnut shop owner has been indicted by a federal grand jury on charges of failing to pay overtime to employees.

Tong-Seng Luy, aka Jerry Luy, 44, has been indicted on 10 counts of concealment by trick, making false statements to the U.S. Department of Labor and willful failure to pay overtime to his employees, according to the U.S. Attorney's Office, District of Arizona.

Luy is accused of promising to pay but then withholding over $27,000 in back wages to eight employees over a two-year period at Arizona Donut and Cafe, 1583 S. Avenue B.

Luy will be summoned to appear for an arraignment May 18 before U.S. Magistrate Judge David Duncan.

The indictment alleges that Luy owns and operates Arizona Donut, and he employs shift workers who perform combined duties as short-order cooks and cashiers.

During the summer of 2010, the Labor Department conducted a civil investigation and determined that Luy owed back wages under the overtime provisions of the Fair Labor Standards Act.

According to the indictment, in September 2010, Luy agreed to pay over $27,000 in back wages to eight employees for the two-year period ending in July 2010. In October 2010, Luy falsely affirmed to the Department of Labor that all employees had been paid, and that he was in compliance with the FLSA. In reality, Luy allegedly continued to employ cook/cashier employees in excess of 40 hours per week without paying overtime wages.

In addition, in lieu of actually paying the back wages to which he had agreed, says the Labor Department, Luy prepared additional payroll checks, demanded that his employees endorse them, redeposited the checks back into his own account and then sent copies of the fronts of the checks to the department as proof of payment.

A conviction for concealment by trick and making false statements carries a maximum penalty of five years imprisonment, a $250,000 fine or both. A conviction for willful failure to pay overtime carries a maximum penalty of six months imprisonment, a $10,000 fine, or both.

In determining an actual sentence, a judge will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines.

An indictment is the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

The investigation preceding the indictment was conducted by the Wage and Hour Division of the Department of Labor, and by the Federal Bureau of Investigation. The prosecution is being handled by Gary M. Restaino, assistant U.S. attorney, District of Arizona, Phoenix.