Former Senior Executive in College Admissions Case Sentenced for Tax Fraud in Connection with Payments to Secure Son’s Admission to USC
BOSTON – A Dorchester woman has pleaded guilty in federal court in Boston to tax and fraud offenses in connection with her operation of a temporary employment agency.
Dam Ngoc Luong, 69, pleaded guilty on April 18, 2023 to two counts of filing false corporate and individual tax returns, three counts of failure to collect and pay over employee taxes and one count of mail fraud. United States Senior District Judge Rya W. Zobel scheduled sentencing for July 13, 2023.
From at least 2015 through 2019, Luong owned and operated Four Seasons Temp, Inc., an agency providing temporary workers for client businesses. A temporary employment agency is responsible for paying wages to the employees, processing employee payroll, collecting and paying all employee payroll taxes and maintaining workers’ compensation insurance to protect employees who suffer work-related injuries. The agency collects payments from the client businesses to cover the agency’s expenses and a profit for the agency.
When collecting payments from business clients of her temporary employment agency, however, Luong cashed most checks rather than deposit the funds into her business account. Then, on annual corporate tax returns, Luong reported to the IRS only the amounts deposited to the business account and failed to pay federal taxes on more than $14 million of the company’s income. Additionally, because Luong created Four Seasons as an S-corporation, the net business income and expenses flowed through to her Form 1040 individual tax returns. As a result, Luong failed to report more than $3 million in pass-through income and failed to pay $885,000 in personal income taxes.
As the owner of the company, Luong also had an obligation to withhold taxes from wages paid to the employees. Despite this obligation, Luong paid more than $12 million of employee wages in cash “under the table.” She failed to withhold taxes from the cash wages and failed to pay more than $3 million in employment taxes she owed to the IRS.
Finally, Luong defrauded the insurance carrier she engaged to provide workers’ compensation insurance coverage for employees, by concealing the cash wages paid to her employees. By concealing the wages she paid, Luong paid lower workers’ compensation insurance premiums and defrauded the insurance carrier of $155,000 in premiums she should have paid.
The charges of filing false tax returns each provide for a sentence of up to three years in prison, one year of supervised release, a fine of $250,000 and restitution to the IRS. The charges of failure to collect and pay over employee taxes each provide for a sentence of up to five years in prison, three years of supervised release, a fine of $250,000 and restitution to the IRS. The charge of mail fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
United States Attorney Rachael S. Rollins and Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorney Victor A. Wild of Rollins’ Securities, Financial & Cyber Fraud Unit is prosecuting the case.