Date: 11-23-2019

Case Style:

Case Number: 2:19-cr-00120-RAJ

Judge: Richard A. Jones

Court: United States District Court for the Western District of Washington (King County)

Plaintiff's Attorney: Brian Werner

Defendant's Attorney:

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Description: Seattle, WA - The United States of America charged Mike Hsieh and Christine Chen with filing false tax returns.

Two Kent, Washington, dentists who avoided more than $460,000 in income taxes were sentenced today in U.S. District Court in Seattle to seven days in prison and 400 hours of community service for filing false tax returns, announced U.S. Attorney Brian T. Moran. MIKE HSIEH, 48, of Kent, Washington, and CHRISTINE CHEN, 46, of Renton, Washington, own Comfort Family Dentistry, Inc. Between 2007 and 2014, the two took steps to hide illegally their income from the IRS to reduce their tax obligation. At the sentencing hearing, U.S. District Judge Richard A. Jones ordered each to pay a $5,000 fine and said, “It was pure greed… It wasn’t about need, it was about greed…. It wasn’t a simple mistake. For eight years you had your accountant file false tax returns. You had eight separate years to change your mind and not be involved in criminal activity.”

According to records filed in the case, HSIEH and CHEN maintained two sets of financial statements for the business—one showing the actual expenses and another showing inflated expenses. The fraudulent expense statements were given to their accountant for tax preparation. The pair also established a bank account that was not disclosed to the tax preparer. Patient fees deposited into the account were not reported as income. Finally, the pair took cash proceeds from the dental practice and never reported that income to the accountant or on their taxes.

For tax year 2013, HSIEH admits he reported a taxable income of $232,753 when it was really more than $100,000 higher. HSIEH should have paid taxes on income of $348,663. For tax year 2013, CHEN reported income of $319,131 when her true income was $425,679. For all the tax years between 2007 and 2014 they each admit failing to pay about $231,000 in taxes that they should have paid.

Both dentists own multiple properties and dental practices. CHEN lists assets exceeding $4 million, while HSIEH lists assets of more than $2 million. In his sentencing memorandum, Assistant United States Attorney Brian Werner noted, “This was a deliberate, calculated scheme to cheat the government…. (These) Defendants (were) not in need of money.... There was no need to cheat the government – this offense was motivated purely by greed.”

Both defendants will pay slightly more than $231,000 in restitution. Their attorneys estimate they will also need to pay an additional $300,000 in interest and penalties to the IRS. In arguing that HSEIH and CHEN should avoid prison time, their attorneys noted that they criminal conviction prompted one bank to end its relationship with them, and that the dental practice was dropped as a preferred provider by a large dental insurance plan.

“Dr. Hsieh and Dr. Chen, each filed false tax returns that underreported income and inflated expenses at their dental practice in order to avoid paying income taxes. Their criminal scheme lasted years and cheated the Treasury of hundreds of thousands of dollars,” said IRS-Criminal Investigation’s Special Agent in Charge Justin Campbell. “Taxpayers should have confidence that IRS-Criminal Investigation will aggressively pursue tax fraud and ensure that all business owners pay their fair share.”

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).

Outcome: Mike Hsieh:

7 days in custody of the Bureau of Prisons; 1 year of supervised release with standard and special conditions as set forth in the Judgment, which shall include completion of 400 hours of community service; $100.00 special assessment; $5,000.00 fine; restitution in the amount of $231,941.00
Kent@MoreLaw.com

Christine Chen:

7 days in custody of the Bureau of Prisons; 1 year of supervised release with standard and special conditions as set forth in the Judgment, which shall include completion of 400 hours of community service; $100.00 special assessment; $5,000.00 fine; restitution in the amount of $231,626.00

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