LOS ANGELES – A Downey man who operates second-hand clothing stores across the Los Angeles area pleaded guilty today to failing to report $3.7 million in corporate income to the Internal Revenue Service.
Jose Martin Andrade Flores, 53, the owner and operator of American Superior Used Clothing, Inc., pleaded guilty this afternoon to subscribing to a false corporate tax return for the 2013 tax year.
According to a plea agreement filed in this case, American Superior was in the business of recycling used clothing, which it then resold at retail stores located on Melrose Boulevard and in Hollywood, Echo Park and Pasadena. The company also engaged in bulk wholesale transactions with buyers worldwide, as well as selling merchandise at Rose Bowl swap meets and sidewalk locations in East Los Angeles.
From 2012 through 2016, Flores concealed from his corporate tax preparer cash sales and deposits into foreign bank accounts that were made on behalf of American Superior. As a result, Flores admitted in court, the tax returns he filed for American Superior for those five years failed to report a total of $3,766,473 in income to the IRS.
At today’s hearing, Flores specifically pleaded guilty to subscribing to a false corporation income tax return (Form 1120) that he filed for American Superior for 2013. In that year, American Superior had income of approximately $3,440,769, but Flores instead reported only $2,505,183, omitting income of $935,586.
Flores pleaded guilty before United States District Judge Christina A. Snyder, who scheduled a sentencing hearing for December 3. As a result of today’s guilty plea, Flores faces a statutory maximum sentence of three years in federal prison.
As part of this case, Flores agreed to pay all back taxes, interest and penalties associated with his willful failure to accurately report American Superior’s income. Flores has paid the IRS $1,189,331, which includes $439,632 in penalties.
This case was investigated by IRS Criminal Investigation.
This matter is being prosecuted by Assistant United States Attorney Ranee Katzenstein, Chief of the Major Frauds Section.