The owners of Good Neighbor Services, an Orange County based janitorial company that provides cleaning services to luxury hotels across Southern California, have been indicted in a $7 million insurance fraud and tax evasion scheme that has allegedly lasted over 10 years.
Hyok “Steven” Kwon and Woo “Stephanie” Kwon, from Irvine California, are accused of working with six accomplices to vastly underreport the number of employees they employ to avoid taxes. It is reported the Kwons underreported their number of employees by 800 people, resulting in the avoidance of $3.6 million in workers’ compensation insurance rates and more than $3.3 million in payroll taxes. San Diego District Attorney Bonnie Dumanis called it the largest ever insurance premium fraud case in San Diego history.
During the course of the investigation, employees said they were paid with checks that carried the names of other businesses, even though they wore uniforms with the Good Neighbor Services logo. The DA’s investigation discovered the Kwons were using 12 different shell companies to defraud insurance providers and the state of California. They also claim they did not receive overtime pay or workers compensation benefits. Additionally, workers who were injured on the job were allegedly threatened with being fired.
The Kwons now face 11 counts of workers’ compensation premium fraud, 18 counts of payroll tax evasion and one count of extortion which can result in 31 years imprisonment upon conviction. The six accomplices face similar charges.
What is Tax Evasion?
Tax evasion is considered a white collar crime, which refers to nonviolent crimes committed by professionals. It is a very serious crime in California. Under the California Revenue and Taxation Code § 19706, tax evasion occurs when a person or business entity purposely underpays or avoids taxes that they owe. This includes:
- Not reporting Not reporting all income earned;
- Not filing a tax return;
- Lying /making false statements on a return; or
- Claiming to be a resident of another state to avoid paying taxes in California.
Similarly, a business incorporated in California may not:
- Fail to file a tax return to avoid tax;or
- Willfully supply any false information.
California tax evasion laws apply to all tax liabilities within the state. A conviction of tax evasion is punishable by up to one year imprisonment and a fine of $20,000.
San Diego White Collar Crimes and Criminal Defense Lawyer
Defending a white collar crime is different from building a defense for someone charged with a violent crime. The Law Offices of David M. Boertje knows how to build a defense for white collar cases, including cases of tax evasion. We understand that sometimes good citizens make an error in judgment. If you have been arrested or charged with tax evasion or any white collar crime, contact us today. We will fight for you.