Lexington, Kentucky, August 18, 2025
News Summary
Mi Pequeña Hacienda, a popular restaurant chain in Lexington, is under investigation by the IRS and Kentucky State Police for alleged tax evasion. The establishment may have underreported income by over $2.3 million across five years. Despite the investigation, the restaurant remains operational and emphasizes its commitment to transparency. The inquiry, which involves bank records and undercover operations, has raised significant concerns regarding financial discrepancies within the business.
Lexington, Kentucky—Mi Pequeña Hacienda, a local restaurant chain, is currently under investigation by the IRS and the Kentucky State Police for alleged tax evasion. The inspections, which occurred on August 5, took place at both the restaurant’s Lexington and Nicholasville locations. Despite the unfolding situation, Mi Pequeña Hacienda remains operational and is cooperating fully with authorities during the investigation.
General Manager Julian Gallegos reassured customers via a Facebook statement, emphasizing the restaurant’s commitment to transparency and tax compliance. The investigation, unsealed in U.S. District Court records, suggests that the restaurant may have underreported its receipts by over $2.3 million over the past five years, raising significant concerns about financial discrepancies and potential misconduct.
The investigation’s origins trace back to findings that include undercover operations and subpoenas for bank records. Investigators are closely examining the financial dealings of the restaurant chain, owned by Lorena Gallegos, following suspicions concerning income reporting. A detailed analysis of assets across various locations has led authorities to suspect underreporting of income.
In February 2024, undercover agents interacted with brokers who labeled the establishment a “cash cow” for its owners. The Lansdowne Drive restaurant reported a business income loss of $47,372, while the Jessamine County establishment indicated a total claim of $138,846 over four years. Tax filings from the two restaurants showed an annual salary or wage amounting to approximately $205,000, along with variable other income.
The IRS investigation points toward probable cause that Lorena Gallegos willfully underreported her restaurants’ income for tax years 2019 through 2023. Authorities observed cash and card payment transactions occurring at different kiosks during undercover visits, contributing to their findings. The records subpoenaed confirmed underreported income: nearly $1.6 million at the Lexington location and $758,000 at the Jessamine County site.
As of the latest information, the investigation is ongoing, and requests for comment have been made to the IRS and Kentucky State Police but have not been answered. The outcomes of the inquiry could significantly impact Mi Pequeña Hacienda’s operations and its owners’ financial responsibilities.
Background and Context
Mi Pequeña Hacienda operates as a well-known dining establishment specializing in authentic cuisine. Over the years, the restaurant has established a loyal customer base throughout Lexington and Nicholasville. However, the current financial scrutiny marks a significant shift in the restaurant’s reputation and raises questions about compliance with federal tax regulations.
Key Features of the Investigation
| Feature | Details |
|---|---|
| Investigation Date | August 5, 2023 |
| Locations Inspected | Lexington and Nicholasville |
| Estimated Tax Underreporting | $2.3 million over five years |
| Annual Reported Salaries | $205,000 |
| Cash Transactions Observed | Yes |
| Income Discrepancies | Lexington: $1.6 million; Jessamine County: $758,000 |
FAQ
What led to the investigation of Mi Pequeña Hacienda?
The investigation stems from allegations of tax evasion, particularly related to suspected underreporting of receipts exceeding $2.3 million over five years.
How is the restaurant responding to the investigation?
Mi Pequeña Hacienda has stated that it is cooperating fully with the investigation and remains committed to ensuring transparency and compliance.
What actions have the IRS and Kentucky State Police taken?
Authorities conducted inspections at the Lexington and Nicholasville locations and have been gathering evidence, including bank records and undercover operations.
What financial discrepancies were identified?
Subpoenaed records revealed that the Lexington location potentially underreported nearly $1.6 million, while the Jessamine County site is suspected of underreporting $758,000.
What might the outcome of this investigation be?
The outcome could lead to significant financial repercussions for the restaurant and its owners, possibly affecting their operational status and future compliance with tax laws.
Deeper Dive: News & Info About This Topic
HERE Resources
Additional Resources
- LEX18 News
- Kentucky.com: Local Investigation
- Kentucky.com: Restaurant Insights
- LEX18 News: COVID-19 Impact
- Wikipedia: Tax Evasion
Author: STAFF HERE LEXINGTON KY STAFF
The LEXINGTON STAFF WRITER represents the experienced team at HERELexingtonKY.com, your go-to source for actionable local news and information in Lexington, Fayette County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Woodland Art Fair, Crave Food and Music Festival, and Railbird Festival. Our coverage extends to key organizations like Commerce Lexington and Blue Grass Community Foundation, plus leading businesses in education, manufacturing, and technology that power the local economy such as University of Kentucky, Toyota Motor Manufacturing, and Lexmark. As part of the broader HERE network, including HEREBowlingGreen.com and HERELouisville.com, we provide comprehensive, credible insights into Kentucky's dynamic landscape.
