Four Family Members Indicted in Scheme to Conceal $30 Million in Profits from the Purchase and Sale of Foreclosed Properties
Allegedly Concealed Substantial Profits from IRS and Bankruptcy Court
Greenbelt, Maryland - A grand jury returned a superseding indictment charging Thanh Hoang and Minh-Vu Hoang, husband and wife, ages 62 and 56; Minh-Vu’s sister, Van Thanh Vu, age 53, all of Bethesda, Maryland; and Hai Duc Ngo, age 59, of Woodbridge, Virginia, the ex-husband of Van Thanh Vu; with tax evasion, money laundering and concealing assets from the bankruptcy court in connection with a scheme to conceal $30 million in profits earned from the purchase and sale of foreclosure properties, announced United States Attorney for the District of Maryland Rod J. Rosenstein. The indictment was returned May 28, 2008 and unsealed today upon the arrests of the defendants.
“I am grateful to the Montgomery County State’s Attorney’s Office and the Internal Revenue Service for their outstanding work on this investigation,” said U.S. Attorney Rod J. Rosenstein. “The indictment alleges that the defendants purchased many foreclosed homes, flipped them quickly to substitute purchasers, and concealed their income and assets from the IRS and their creditors.”
“We are extremely proud of the role the State’s Attorney’s Office played in initiating this case. This indictment is the result of the extraordinary cooperation that was present throughout the investigation between the State’s Attorney’s Office, the Internal Revenue Service, and the U.S. Attorney’s Office for Maryland.”
“It is the responsibility of every taxpayer to file federal tax returns. IRS Criminal Investigation is committed to aggressively pursuing those taxpayers who willfully fail to file their tax returns,” said IRS Special Agent in Charge C. Andre' Martin.
According to the 20 count indictment, Minh-Vu and Thanh Hoang engaged in “flipping” real estate, purchasing hundreds of properties at foreclosure auctions from 2000 to 2005 and selling most of them, typically within a few weeks or months, at substantial net profits. For example, two properties were bought and sold within three and eight months, resulting in net profits of $182,550, and $183,929, respectively. All four defendants formed business entities, including at least 15 general partnerships, limited liability corporations and limited partnerships, to conceal their involvement in the purchase and sale of the foreclosure properties. To hide their profits from the property sales, the Hoangs sometimes transferred foreclosure properties to “substitute purchasers,” typically before the foreclosure sale took place, which resulted in public records showing the foreclosed owner selling the property directly to the substitute purchaser, rather than to the Hoangs. The Hoangs also established an escrow account at a title company to hide their financial interests in the properties. The indictment alleges that the Hoangs failed to report the profits they earned from this scheme to the IRS by failing to file income tax returns for the six year period from 2000 to 2005. According to statements made by the government to the court at today’s initial appearances of the defendants, the taxable income they are alleged to have concealed from the IRS exceeded $30 million during that time period.
The indictment also alleges that the Hoangs and Van Thanh Vu each filed separate voluntary bankruptcy petitions in 2005. These defendants are alleged to have filed false petitions, schedules and statements of financial affairs, omitting numerous foreclosure properties and ownerships interests in the business entities they formed, thereby attempting to conceal their receipt of substantial income and control of substantial assets from the bankruptcy court. Hai Duc Ngo allegedly filed a false affidavit in Van Thanh Vu’s bankruptcy proceeding, claiming that all the funds in a particular business entity were his exclusive contributions.
The indictment further charges that the defendants engaged in extensive money laundering to conceal their assets from the bankruptcy court, including using third party bank accounts to deposit monies from the property sales that were then used to pay the Hoangs personal bills, such as their American Express bills.
All four defendants face a maximum sentence of five years in prison for conspiracy to conceal assets in bankruptcy and 10 years in prison each act of money laundering. The Hoangs face a maximum sentence of five years in prison for conspiracy to evade taxes. Minh-Vu Hoang faces a maximum sentence of five years in prison for each act of concealment of assets in bankruptcy. HaiDuc Ngo faces a maximum sentence of five years in prison for making a false oath in a bankruptcy case. Minh-Vu Hoang and Van Thanh Vu face a maximum sentence of five years in prison for making false statements in a bankruptcy case. The defendants have been released pending trial.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein thanked the Department of Health and Human Services - Office of Inspector General, the Internal Revenue Service - Criminal Investigation; Montgomery County State’s Attorney John McCarthy and Special Investigator Daniel N. Wortman; and the Greenbelt Office of the United States Trustee Program, the Department of Justice agency that supervises bankruptcy cases and trustees, for their work in this investigation and prosecution. Mr. Rosenstein commended Assistant United States Attorneys David I. Salem and Emily Glatfelter, who are prosecuting the case.