Owner of Duluth t-shirt stores federally indicted with multiple tax crimes

The owner of multiple t-shirt and souvenir stores in Duluth, Minnesota has been federally indicted with multiple tax crimes and allegedly used company money for personal expenses, including an alligator farm in Florida.

Shimon Shaked is charged with five counts of tax evasion, one count of failing to file a tax return and 14 counts of failing to account for and pay employment tax, according to the District of Minnesota U.S. Attorney's Office. Shaked had his first appearance in U.S. District Court on Thursday.

According to the court documents, Shaked owned multiple tourist stores in Duluth's Canal Park including I Love Duluth, I Love Duluth 2, Up North-The Good Life, and the Lake Life. He operated the Duluth stores under a holding company called ALMS18, LLC. Even though he ran the holding company, he listed his 18-year-old daughter as the nominal owner in order to evade taxes.

From 2013 to 2015, Shaked reported the revenue and income from the stores on his daughter's tax returns instead of his own, according to the charges. While he reported the stores' credit card sales, he did not report the majority of the cash sales. In 2018, he didn't file a tax return.

Shaked also regularly paid some of his employees in cash, which meant he failed to pay some or all of the required federal payroll tax, the charges state.

Shaked used the company's bank account to pay for child support, an apartment in Duluth and costs to try to open an alligator farm in Florida, the documents state. In 2017 and 2018, he also opened two more stores in Michigan.

In total, Shaked did not report more than $4 million in income from 2013 to 2018 and avoided paying more than $800,000 in federal income taxes, according to the documents.