A Bay Area restaurateur will serve two and a half years in prison after admitting he misused COVID-19 relief funds intended for restaurants.
The Northern California U.S. Attorney’s Office announced on Thursday that David Tai Leung, a co-owner of Tomi Sushi and Seafood Buffet in San Jose, pleaded guilty to three counts of wire fraud related to loans he received illegally from the Restaurant Revitalization Fund (RFF) and the Paycheck Protection Program (PPP). The government assistance programs provided economic aid to businesses to help them survive the economic downturn during the height of the pandemic in 2020 and 2021.
Leung was indicted in September, 2022 on fraud charges for his use of RFF assistance.
In his February plea agreement, Leung admitted he submitted an application in May 2021 for $5 million in RFF funds certifying the money would be used for authorized business expenses — such as payroll, rent or mortgage payments, utilities and maintenance expenses. He did this knowing he would use the money for other purposes, he said. Of the total $5.6 million he admits to obtaining, he said he misused $3,359,701.28. Leung was ordered to pay the amount back in restitution, which he agreed to.
The Small Business Administration, which administers the RFF, granted Leung’s application and funded Leung’s forgivable loan in June 2021.
In his plea agreement, Leung admitted he made payments to a Lexus dealership and spent money at a Northern California casino with the funds. He also transferred $3.5 million into a personal investment account through which he purchased securities and paid refinancing fees for the mortgage of his residence in Sacramento, violating the program’s requirements.
This is not the first time Leung has been in legal trouble. In April 2021, California Attorney General Rob Bonta’s office charged Leung and two associates with theft of more than $893,000 in employee wages, and with evading employment taxes as well as sales taxes.
In June 2018, the California Labor Commissioner accused Leung and other owners of Daly City Japanese seafood buffet Kome of violating the employment rights of 133 workers, including protections like minimum wage and overtime. That restaurant shut down in January 2019.
