HONOLULU – Arthur Lee Ong of Honolulu was convicted by a federal jury Monday of conspiracy to defraud the United States and tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. District Judge Leslie Kobayashi presided over the case.
According to evidence introduced at trial, Ong, the owner and operator of Thunder Bug Inc., doing business in the state of Hawaii as Magnum Firearms, failed to report to the IRS millions of dollars of income he earned from the sale of firearms and related products to federal, state, county and military agencies, as well as to the general public. The evidence at trial showed that Ong, with the assistance of others, created multiple sham trusts in 1990 for the purpose of hiding his income and assets.
The evidence further showed that Ong stopped filing personal income tax returns beginning in 1994 and also filed false tax returns on behalf of the sham trusts that fraudulently reported to the IRS that the income from his businesses was attributable to these trusts and not to him. The evidence at trial established that Ong evaded more than $600,000 in federal income taxes from 2000 to 2006.
District Judge Kobayashi set sentencing for March 1, 2012. Ong faces a maximum prison sentence of 35 years and a fine of up to $1.75 million.
The case resulted from an investigation by IRS - Criminal Investigation and was prosecuted by Trial Attorneys Timothy J. Stockwell and Todd Kostyshak of the Justice Department’s Tax Division.