An attorney for the Covarrubias family and their stores denied the allegations in the IRS affidavit, said they “have always employed people who they believed were entitled to work at their stores,” and added no one has been charged with any crimes.
“We don’t think there is sufficient evidence for a criminal charge at this point,” said Jay Strongwater, the family’s attorney.
“If there is underreporting of withholding taxes, we will talk to the government about it. There are avenues to resolve underreporting civilly without criminal charges. And, as far as undocumented workers, we deny those charges. The only contacts we have had with law enforcement were with the IRS — no contact whatsoever with ICE.”
A pair of former Jalisco employees sued the store chain in 2017, alleging they were not paid overtime as hourly employees. Two months later, they filed a court notice to dismiss the case. Strongwater said he did not know if there are any connections between that lawsuit and the IRS investigation.
The IRS and ICE executed the search warrants at six Jalisco stores in Duluth, Marietta, Norcross, Lawrenceville and Roswell last month. The IRS affidavit says they were looking for federal income tax returns, payroll records, employee verification reports from E-Verify and federal work authorization documents, including copies of driver’s licenses and passports.
“Covarrubias knew that the employees hired by him were often illegal and did not have legitimate employment documents,” the IRS affidavit says about the tips it received from the informant. “If the employees did not have legitimate employment/identification documents, he would encourage them to get bogus documents.”
Spokesmen for ICE and the IRS declined to comment Friday.
Jose Luis Covarrubias, CEO of Super Mercado Jalisco, issued a statement after the IRS searched the stores last month, saying he was “disappointed in the heavy-handed tactics of the federal government.”
“Super Mercado Jalisco,” he said, “maintains the strictest standards on compliance and completion of all of the necessary paperwork required by the federal government.”