El Balazo Owners Sentenced for Fraud, Employing Undocumented Workers

Pleasanton residents Marino Sandoval and his wife, Nicole, were sentenced Tuesday on various immigration, social security and tax charges related to the operation of their restaurant chain, El Balazo, U.S. Attorney Melinda Haag announced in a press release.

Marino Sandoval, 59, was sentenced to 41 months in prison. Nicole Sandoval, 51, was sentenced to five years probation and 12 months of community confinement. 

And, they were ordered to pay $2.2 million in restitution to the Internal Revenue Service.

The pair owned and operated ten El Balazo restaurants around the Bay Area, including locations in Danville, Concord, San Francisco and two restaurants in both Pleasanton and San Ramon. All but the original San Francisco location have been shut down or are under new ownership.

Despite the restaurant closures, the website is still up, boasting nightly entertainment, margaritas and the "best Mexican food you'll enjoy anywhere."

The Sandovals pleaded guilty on Sept. 7, 2011. In pleading guilty, they admitted to owning and operating the El Balazo Restaurants, along with Marino Sandoval’s brother, Francisco Sandoval, who pleaded guilty to tax charges on Aug. 30, 2010. 

According to the press announcement, Marino and Nicole Sandoval acknowledged that they were responsible for withholding federal taxes, including employment and unemployment taxes, from their employees’ pay. 

Nicole Sandoval admitted that she under-reported the employees' correct wages to the payroll company that the defendants used to prepare the tax returns. Marino and Nicole Sandoval admitted that, based upon their actions, the amount of employment taxes paid to the Internal Revenue Service was understated.

At the hearing, Marino Sandoval also admitted to hiring employees he knew were not legally authorized to work in this country. According to his plea agreement, between August 2007 and August 2008, Marino Sandoval employed more than 100 undocumented workers as employees, many of whom were born outside the United States. 

In May of 2008, agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) conducted a search of several El Balazo Restaurants, during which ICE HSI agents determined there were approximately 63 employees who were unauthorized to work in the United States. After being informed by ICE in writing of the identities of the unauthorized employees, Marino Sandoval rehired more than 10 of these employees, according to the press statement.

Aside from the tax charges, Nicole Sandoval also pleaded guilty to misusing El Balazo employees’ social security numbers that were provided to the Social Security Administration and the IRS. 

Between 2002 and 2007, Nicole Sandoval submitted, on behalf of El Balazo, the employer’s quarterly contribution and wage reports to the Social Security Administration. The reports included the names of undocumented employees receiving wages from their employment. 

In court, Nicole Sandoval admitted that she was aware that the social security numbers submitted were false in that they were not the social security numbers assigned to the employees as she reported.

The pair was charged on Nov. 29, 2010, alleging that they harbored and employed undocumented workers, knowingly misused employees’ social security numbers and engaged in tax fraud between 2003 and 2005.

Francisco Sandoval, 56, of Alameda, Calif., was sentenced on Dec. 8, 2010, to three years probation for failure to account and pay over payroll taxes and for harboring undocumented workers for financial gain. 

Francisco Sandoval was the partner and manager of two El Balazo restaurants located in San Francisco. He was also ordered to pay restitution in the amount of $50,000 to the IRS.