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February 26, 2002
The United States Attorney's Office for the Northern District of California announced that Phuong Thi Dao Le, who did business within the Northern District of California between July 1991 and April 1995, was sentenced yesterday to 12 months and one day pursuant to her guilty plea on tax evasion in violation of Title 26, United States Code, Section 7201.
Ms. Le, a resident of San Jose, California, along with her co-defendant Stanley Del Carlo, were indicted by a federal grand jury on April 13, 2000, for conspiring to defraud the United States in the collection of federal income taxes owed by Ms. Le for taxable years 1993 and 1994, in violation of Title 18, United States Code, Section 371. Ms. Le was also charged with two counts of tax evasion with respect to taxable years 1993 and 1994, in violation of Title 26, United States Code, Section 7201. In addition, Mr. Del Carlo was charged with two counts of filing two false income tax returns for 1993 and 1994, in violation of Title 26, United States Code, Section 7207. Under the plea agreement, Ms. Le pled guilty to one count of tax evasion for taxable year 1994.
In pleading guilty, Ms. Le admitted that during 1993 and 1994, she owned two chiropractic clinics, Lyon Chiropractic Clinic in San Jose, California, and Downtown Chiropractic Clinic, in Oakland, California, but that she paid Mr. Del Carlo, a licensed chiropractor who worked for Ms. Le at the clinics from July, 1991 through May, 1994, to hold himself out as the owner of the clinics. Ms. Le, who was not a chiropractor, was not permitted by law to own the clinics. Though Mr. Del Carlo ran the day-to-day operations of the clinics, Ms. Le owned and had control over the businesses, including their finances and bank accounts, and over hiring.
As a part of their arrangement, Ms. Le paid Mr. Del Carlo to sign Fictitious Business Name statements falsely claiming to be the owner of the clinics. He also opened bank accounts in the names of the clinics on which he was the nominee for Ms. Le. Ms. Le further paid Mr. Del Carlo to claim on his personal Federal income tax returns some of the business income and all of the business expenses from the clinics earned in 1993 and 1994, that should have been claimed by Ms. Le on her own tax returns. In doing so, Ms. Le obtained the benefit of Mr. Del Carlo's lower tax bracket and saved a significant amount in taxes. In addition, Ms. Le also failed to report on her own tax returns additional business income received by her in payment for medical services performed at the clinics and from other businesses she owned. This income was received in the form of checks which Ms. Le cashed at check cashing businesses and did not deposit into the business bank accounts or record on the businesses' books and records.
Ms. Le admitted that her tax returns were false and that she knowingly, willfully and intentionally failed to report income from the clinics and other businesses which she owned and that she owed substantially more tax than was reported on her returns. As a result of her conduct, Ms. Le evaded the payment of $199,865 in taxes.
Ms. Le was sentenced to a term of imprisonment of 12 months and one day and a $3,000 fine. The sentence was handed down by the Honorable Ronald M. Whyte. Mr. Del Carlo was previously sentenced to a two-year period of probation after pleading guilty to one count of filing a false income tax return in violation of Title 26, United States Code, Section 7207.
The prosecution was the result of a lengthy investigation by agents of the Criminal Investigation Division of the Internal Revenue Service, along with the U.S. Attorney's Office, the Federal Bureau of Investigation and the California Department of Insurance. Assistant U.S. Attorneys Thomas G. Moore and Emily J. Kingston were the Assistant U.S. Attorneys who prosecuted the case with the assistance of Ula Esera and Kathy Tat.
A copy of this press release and related court documents may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can.
All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415)436-7181.
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