Tax Fraud Blotter: Fairway to heaven
Fibbing for a 68-foot yacht; four bedroom in Beverly Hills; and other highlights of recent tax cases.
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Los Angeles: Twin brothers and MRI technicians pleaded guilty to deliberately failing to report to the IRS more than $1.3 million in income, including money they made from running a golf tee-time brokering business as a side hustle.
Se Youn “Steve” Kim, 42, of Buena Park, pleaded guilty to one count of subscribing to a false tax return. Hee Youn “Ted” Kim, 42, of Pomona, pleaded guilty to one count of tax evasion.
Beginning in 2021, the Kim brothers operated a golf tee-time brokering business in which they reserved thousands of golf tee times at numerous golf courses in Los Angeles and Orange Counties and resold them for a fee to members of the public.
The Kim brothers directed reservation fees from their tee time business to be deposited into their personal financial accounts even after they formed a corporate entity for the venture, assigned an EIN and opened a business account.
Neither brother ever reported to the IRS any income from their tee time business, and both admitted to using some of the funds in this corporate account to pay for personal expenses and make cash withdrawals.
For the tax years 2021 through 2023, Steve Kim received approximately $810,919 in income. For the tax years 2022 and 2023 Ted Kim received approximately $496,998 in income.
Steve Kim admitted that his 2021 federal income tax return omitted approximately $27,510 in income he earned from the tee-time brokering business in addition to income from capital gains, unemployment compensation and early retirement distribution in the amounts of approximately $4,747, $8,723, and $8,635, respectively.
Both Steve and Ted Kim falsely claimed to their employers, who hired them as MRI technicians, that they were exempt from federal income tax withholdings, resulting in their employers ceasing any federal tax withholding for them.
For the tax years 2022 and 2023, Steve Kim willfully evaded the assessment of income tax in the amount of $155,021 while Ted Kim willfully evaded the assessment of income tax in the amount of $97,354.
Steve Kim further admitted to willfully failing to pay income tax due for the tax years 2012 through 2021, resulting in at least $221,004 in payments, interest, and penalties owed to the IRS. Rather than using available funds to pay his outstanding tax balance, Steve Kim spent his money on various other purchases and services. He caused a tax loss in the amount of at least $387,221 for tax years 2012 through 2023.
Ted Kim admitted to willfully failing to pay approximately $97,041 owed in payments, interest and penalties for the tax years 2016 through 2021, and instead spent that money on other purchases and services. He caused a tax loss in the amount of $194,395 for tax years 2016 through 2023.
Sentencing hearings are scheduled for Jan. 12, 2027, at which time Steve Kim will face a maximum sentence of three years in federal prison and Ted Kim will face a maximum sentence of five years.
Detroit: Jawan Simpson, 37, a tax preparer and CPA, pleaded guilty to orchestrating a scheme to defraud the Small Business Administration’s Payroll Protection Program. Simpson pleaded guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison.
Simpson promised family members, friends and tax preparation clients (including Amtrak employees) that, in exchange for a fee of $2,000-$3,000, he could help them qualify for pandemic relief loans that would be forgiven by the federal government.
Simpson ultimately filed 111 PPP loan applications that contained materially false information. In support of those fraudulent applications, Simpson created bogus documents, including fake tax returns. His fraud resulted in the loss of $2.3 million in government funds.
Boston: A Lowell man was sentenced for his involvement in payroll tax avoidance and workers’ comp insurance fraud.
Henry Lam, 68, was sentenced to 13 months in prison, to be followed by two years of supervised release. Lam was also ordered to pay $1,652,573 in restitution. He pleaded guilty to failure to collect and pay over taxes and mail fraud.
Between 2016 and 2023, Lam owned and operated HL Temporary Services — a temporary employment agency in Lowell that served client companies in New England. Lam cashed these clients’ checks at check cashing businesses in Massachusetts and paid the temporary employees primarily in cash. By using cash payments, Lam hid over $6.2 million in payroll and avoided paying more than $1.5 million in required payroll taxes. He also used HL’s false payroll numbers to obtain workers’ comp insurance at lower premium rates.
Miami: A Miami real estate developer has been sentenced to more than 11 years in federal prison for defrauding investors of approximately $89 million, diverting investor funds to finance a lavish lifestyle, failing to pay millions of dollars in payroll taxes, and lying to a bank to obtain financing for a 68-foot yacht.
Rishi Kapoor, 41, formerly of Miami, was sentenced to 136 months in federal prison after he pleaded guilty to money laundering and conspiracy to fail to pay payroll taxes.
Kapoor was the CEO of Location Ventures, a Miami-based real estate development company that promoted projects in Coral Gables, Coconut Grove, Miami Beach and Fort Lauderdale. Kapoor raised approximately $89 million from investors, but most of the projects for which he solicited the money were never built.
Rather than use investor funds as promised, Kapoor diverted millions of dollars for his own benefit. Between 2018 and 2023, Kapoor received more than $6 million from LV and its projects. He misappropriated investor funds to finance personal expenditures, including a 68-foot yacht, a 2.8-carat diamond ring and a $5.9 million home in Cocoplum. Kapoor also falsely represented to investors that he had invested approximately $13 million of his own money in LV with his business partner and family, when they had contributed only about half that amount.
Kapoor also made misrepresentations to escrow agents to obtain the release of pre-construction condominium deposits and then misused those funds for himself and for expenses unrelated to the projects for which the money had been designated. As part of this case, Kapoor agreed to forfeit a 2.8-carat diamond ring purchased with investor proceeds.
Kapoor also withheld approximately $1.3 million in payroll taxes from LV’s employees but failed to pay those taxes to the IRS. Instead, he paid himself more than $2 million from LV bank accounts.
The SEC also filed a civil action against Kapoor.
Houston: A Houston woman has pleaded guilty to tax offenses involving businesses and the preparation of false tax returns.
Levi Casildo Castro, 40, of Houston, admitted to willful failure to collect and pay over tax, and assisting in the preparation of false tax returns.
Castro operated LC Home Remodeling and Maid Service and A&M Home Remodeling and Cleaning. Through those businesses, she withheld federal income, Social Security and Medicare taxes from employees’ wages but failed to pay the money to the U.S. Treasury.
Castro also worked as a paid tax preparer despite not having authorization to do so. She prepared tax returns for clients but falsely indicated the clients had prepared the returns themselves.
Those returns included false information about wages, federal tax withholdings and Social Security and Medicare taxes. Castro inflated the amounts to increase the Earned Income Tax Credits her clients could receive.
Castro admitted her actions caused approximately $400,000 in losses to the U.S. Treasury.
Sentencing is set for Dec. 16. At that time, Castro faces up to eight years in federal prison as well as a possible $110,000 maximum fine.
Detroit: Jabari Long was sentenced to 24 months in federal prison after having pleaded guilty to executing a multimillion-dollar fraud scheme involving pandemic assistance funds.
Long previously pleaded guilty to a charge of conspiring to commit wire fraud. Long used a contracting business called Priceless Preservations Construction to obtain a fraudulent PPP loan in the amount of $2,187,000 and a fraudulent Economic Injury Disaster Loan in the amount of $150,000.
Long claimed the business had 50 employees and an average monthly payroll of $875,000. In truth, PPC had few, if any, employees and little to no payroll expenses. Records show that within weeks of receiving the fraudulently obtained pandemic assistance funds, Long used a portion of them to buy a four-bedroom home in the exclusive Beverly Hills community. Long also admitted that he submitted false tax documentation to obtain his loan funding.
Long was also ordered to pay restitution in the amount of $2,187,500 and serve three years of supervised release following the completion of his custodial sentence.
