FOR FURTHER INFORMATION CONTACT
AUSA VICKIE E. LEDUC or
MARCIA MURPHY at 410-209-4885
February 15, 2013
FOR IMMEDIATE RELEASE
BELTSVILLE BUSINESS OWNER SENTENCED TO PRISON FOR
EVADING OVER $522,000 IN FEDERAL AND STATE TAXES
Failed to Report Over $1.8 Million in Revenues Deposited in Overseas Accounts
Baltimore, Maryland - U.S. District Judge William D. Quarles, Jr. sentenced Bae Soo “Chris” Chon, age 49, of Beltsville, Maryland late yesterday to a year and a day in prison, followed by one year of supervised release for income tax evasion. Judge Quarles also ordered Chon to pay a fine of $15,000, and restitution of $412,404 to the IRS and $110,245.70 to the Maryland Office of the Comptroller. Chon was also required to pay a civil penalty of $441,482.50 for failing to disclose his foreign bank accounts. Chon tendered two checks to the IRS on September 11, 2012 for $111,069.72 and $679,775.78, reflecting the agreed restitution and his counsel’s calculation of the amount of the applicable interest and penalties, for the tax years 2008 and 2009 respectively.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
“The license to run a business is not a license to evade paying taxes, said Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office. All Americans have to pay their fair share of taxes for the various government services and protections that we all enjoy. Mr Chon’s sentence serves as a reminder that IRS Criminal Investigation is committed to maintaining the integrity of our tax system and will continuously direct its efforts at the portion of individuals who willfully choose to evade their tax obligations.”
According to his plea agreement, Chon owned and operated Mirage Cosmetics, Inc., which manufactured cosmetics products at its facility on Tucker Street in Beltsville. Mirage marketed its products domestically through Walgreens, Target, Costco and other chain stores, as well as in Canada, Australia, United Kingdom, Australia, Estonia, Dubai, Kuwait, Lebanon, South Africa, Germany, Japan, New Zealand, China and Vietnam. As a subchapter S corporation, the net profits Mirage earned were required to be reported as taxable income by Chon.
In the fall of 2008, Chon started a tax evasion scheme whereby he caused the proceeds from Mirage’s transactions with many of its foreign distributors to be diverted into foreign bank accounts in Hong Kong and Seoul, South Korea. The funds deposited into these foreign accounts were not reflected on Mirage’s official records. Accordingly, Chon substantially understated Mirage’s income on his 2008 and 2009 personal income tax returns. Chon continued making deposits into these undisclosed foreign accounts until November 2010, when IRS investigators learned of the accounts.
On March 23, 2009, the IRS announced the agency’s Overseas Voluntary Disclosure Program, which offered taxpayers who maintained previously undisclosed foreign bank accounts incentives to disclose those accounts and bring themselves into compliance with the law. This highly-publicized program remained open until October 15, 2009, and nearly 15,000 taxpayers took advantage of it to make voluntary disclosures about foreign bank accounts in more than 60 foreign countries. Chon did not disclose the existence of his foreign bank accounts under this program.
On November 16, 2010, IRS agents executed a search warrant at Mirage’s offices and seized a laptop computer on which the records of the foreign accounts were kept. Thereafter, Chon timely filed his 2010 federal and state personal and corporate tax returns, in which he reported the amounts that had been deposited in the overseas bank accounts during the 2010 tax year. Chon paid the tax due for the tax year 2010 in 2011, after he became aware of the investigation.
As a result of the scheme, approximately $1,818,895 in revenues from Mirage’s foreign clients that were diverted into the overseas bank accounts resulted in understating Chon’s federal and state tax liability by $522,649.70 for the tax years 2008 and 2009.
United States Attorney Rod J. Rosenstein praised the IRS Criminal Investigation for its work in the investigation and thanked Assistant U.S. Attorney Jefferson M. Gray, who prosecuted the case.