Latest Legal News from the Criminal Courts of Los Angeles, California and the U.S.

August 27, 2009

PALO ALTO REAL ESTATE DEVELOPER SENTENCED FOR TAX FRAUD

Failed to disclose foreign transactions to return preparer

SAN JOSE, Calif. – A Palo Alto, Calif., real estate developer was sentenced in federal court yesterday for aiding or assisting in causing a false tax return to be filed, announced United States Attorney Joseph P. Russoniello and Special Agent in Charge, IRS Criminal Investigation, Scott O’Briant.

Yu Fen Huang, aka Justine Hunag, of Palo Alto, was sentenced to six months probation with a condition of home detention for that period, a fine of $8,000 and ordered to pay restitution of $23,026.

Huang was charged on June 3 with one count of aiding or assisting preparation of a false return in violation of Title 26 U.S.C. § 7206(2). She pleaded guilty on June 15. According to the plea agreement, she admitted that she and her husband owned and operated Wellswood Development, Inc. – a real estate development company that builds and sells custom residential homes in Palo Alto, Los Gatos and Cupertino, Calif. In 2000, Huang and her husband established a private operating foundation called J&V 2000 Foundation. J&V was created to be a charitable organization which promotes education among children in third-world countries. Huang and her husband contributed all of the funding for J&V by donating full and partial ownership of two residential homes they built shortly before the foundation was established. They subsequently declared on their tax returns the value of their donation to J&V to be approximately $2.8 million.

Huang and her husband appointed a close family friend as the trustee of J&V and appointed themselves as executives of the foundation. They paid themselves a salary from the foundation’s funds.

For the years 2003, 2004 and 2005, Huang was involved in what she understood to be self-dealing transactions under the Internal Revenue Code. In July 2002, she arranged for her father to enter into a 30-month vehicle lease agreement on behalf of J&V with her stepmother in Taiwan. J&V paid $18,740 for the car lease. In October 2002, Huang arranged for J&V to enter into a 38-month lease agreement with her stepmother to lease office space for J&V’s Taiwan branch office, even though the rented office was actually a three-bedroom condo that Huang owned. J&V paid $89,062 for the lease of this condo. As the payments were going to Huang’s father, a manager of J&V Foundation, the agreements for both the car and condo were self-dealing transactions.

“People who commit tax fraud will be held accountable for their crimes,” said IRS Criminal Investigation Special Agent in Charge Scott O'Briant. “In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”

Thomas Moore is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service Criminal Investigation.

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CALIFORNIA CRIMINAL DEFENSE LAWYER

JOSEPH SHEMARIA

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Latest Legal News from the Criminal Courts of Los Angeles, California and the U.S.