Rochester business owner facing felony tax evasion charges

ROCHESTER, Minn. (KTTC) – Donyale Gayles-Johnson, the owner of an after-hours nightclub, is facing four counts of filing false or fraudulent tax returns and five counts of failing to pay taxes.

4S Entertainment, located on Wellner Drive NE in Rochester, was allegedly operating without filing or paying any Minnesota sales taxes on liquor sales or cover charges from 2019 to 2023.

On March 25, 2023, two law enforcement officers went into 4S Entertainment around 3:15 a.m., paying $10 each at the door and then purchased alcoholic drinks from the bar inside.

Investigators with the Minnesota Department of Revenue, Criminal Investigation Division, discovered 4S did not have a valid liquor license and advertised itself as a music production studio that provides recording, photography, videography, and graphic design rather than a nightclub. They also learned that 4S has not filed any sales or use tax returns from 2019 to 2023.

According to Minnesota laws, both alcoholic beverages and cover charges to a night club are subject to state and local sales tax.

When investigators subpoenaed two bank accounts (one personal, one business) owned by Gayles-Johnson, they discovered that he had discrepancies in reported income tax from 2019 to 2022 and discrepancies in reported sales tax from 2019 to 2023.

The income tax discrepancies totaled $20,388 from 2019 to 2022 that have yet to be paid. The sales tax discrepancies totaled $7,967.68 from 2019-2023 that also have yet to be paid.

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