Iowa bar owner seeks punishment for her husband’s actions

The owner of a West Des Moines nightclub is suing the city and state over the loss of her liquor license, arguing that she is unfairly held responsible for her husband’s actions.

The city of West Des Moines first denied a liquor license for Xcaret Club and Lounge in 2018, citing the criminal history of then-owner Jorge Sanchez, who had previously been charged three times with served alcohol after hours. A few days after this refusal, Sanchez transferred ownership of the bar to his wife, Maria Mendoza, who applied for a license.

Court records show that at the time council members expressed skepticism about the arrangement, but Mendoza assured the city that she would be the only person to run the club and manage its finances, although that her husband organizes entertainment at the club.

The city approved the license application and renewed it a year later, in 2019. But in 2020, the city denied the owner’s renewal application, citing the recent arrests of Sanchez and Mendoza. The two had each been charged with five counts of tax evasion and, in addition, Sanchez was charged with fraudulent practices.

Prosecutors alleged the couple paid no sales tax and received no tax withholding permits from late 2018 to 2019. During that time, the club allegedly generated more than $335,000 in unreported revenue , resulting in tax liabilities of over $39,000.

The state liquor division, meanwhile, determined in August 2020 that the club violated public health emergency orders related to the COVID-19 pandemic and fined the club $1,000. the establishment. Three months later, the ABD again determined that the bar was operating in violation of pandemic restrictions.

After City rejected the club’s license renewal application, Mendoza appealed and the case went to Administrative Judge Thomas Augustine, who ruled against it last August.

Augustine noted that Mendoza claimed that most of the allegations against her were the result of misunderstandings stemming from her status as a first-time business owner and the fact that English is not her first language.

“While there is some empathy for the circumstances in Mendoza,” Augustine said, “Xcaret cannot be allowed to escape liability for the content of the license application or violations of law simply by asserting its It was Mendoza’s responsibility to ensure that accurate information was provided, all taxes were paid, income was reported correctly, and all laws and regulations were followed.

He added that “the combination of so many breaches makes it harder to believe they were just simple mistakes.”

A day after Augustine issued his decision, Mendoza and Sanchez agreed to plea bargains in the pending criminal cases. They each pleaded guilty to a single count of fraudulent practices, an aggravated misdemeanor, in exchange for the dismissal of all counts of tax evasion. They were each fined $650.

Mendoza is now suing the city and ABD, seeking a judicial review of the decision to deny Xcaret Club and Lounge a license.

“Obviously, in its denial, the City of West Des Moines wrongly held Mrs. Mendoza responsible for her husband’s actions,” Mendoza’s attorney, Billy J. Mallory, said in court documents, adding that at time of the city’s decision. , Mendoza had no criminal history.

Regarding tax issues, Mallory states that Mendoza is “working with the Iowa Department of Revenue and its CPA to prepare master accounting to determine amounts of sales tax that should be refunded” and that she ” is working to correct this oversight in due form”. Faith.”

As to whether Sanchez’s involvement with the club was really limited to providing entertainment, Mallory argues that “because Xcaret was a nightclub, everything inside those four walls involved entertainment” .

The city and state have yet to file a response to the petition.

Iowa Capital Dispatch is part of States Newsroom, a grant-supported network of news outlets and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Managing Editor Kathie Obradovich with any questions: [email protected] Follow Iowa Capital Dispatch on Facebook and Twitter.

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