A Family Fraud

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Tax Refund Check with W-2 and 1040 U.S. Individual Income Tax Return Forms

Every business owner and individual dreads April 15 and the tax season. (Let’s be honest. Everyone dreads taxes no matter what season it is.) That is why some people turn to tax preparers who are usually trusted to file tax returns on the behalf of their clients. Not just anyone should be trusted to handle your taxes, or you could find yourself in the middle of a battle with the Internal Revenue Service (IRS). (Or find yourself being charged with fraud.)

One Southern California resident pleaded guilty to a felony count of conspiracy to aid and assist in the preparation of false tax returns. Michael Hung Lee of Garden Grove admitted to knowingly filing false tax returns and defrauding the government out of $5 million. (I guess it’s true what they say, every garden rose has its thorns. This is definitely a thorny situation.) 

Lee owned and operated 1040 U.S. Tax Center from 2014 to 2018, where he worked as a tax preparer. (He did more than just prepare taxes.) He fraudulently helped his clients reduce their taxable income by claiming capital losses his clients didn’t approve and weren’t qualified for. (By reducing their taxable income, he increased money flow to his own pockets.)

As part of a plea deal with prosecutors, Lee admitted to conspiring to file fraudulent federal income tax returns on behalf of clients. This allowed his clients to receive refunds from the IRS that resulted in a tax loss of over $4.9 million. (Rich people never want to part with their money, let alone do something ridiculous with it, like pay taxes.)

Sentencing for Lee will occur on November 16, 2020. Despite his plea arrangement, Lee could still face up to five years in prison. Lee’s daughter Mylinh Thi Lee also worked at the business and was involved in the scheme. (Mixing family, fraud, and business could make family gatherings super tense in the future.)

His daughter pleaded guilty to aiding and assisting in the preparation of false tax returns. She will be sentenced October 26, 2020 and could face up to three years in prison. (Like father, like daughter.)

If you suspect a tax preparer of trying to defraud the IRS or conducting other illegal business practices, you can report them through the IRS website. While tax fraud may seem like a victimless crime, it affects all Americans as taxes fund public programs and ensure the betterment of the country. (Fraudsters steal from all law-abiding tax-paying citizens, not just the government.)

Today’s Fraud of the Day comes from an article, “O.C. man pleads guilty to nearly $5 million tax fraud scheme,” published by The Orange County Register on July 27, 2020.

A Garden Grove man accused of cheating the government out of nearly $5 million pleaded guilty Monday to knowingly filing false tax returns.

Michael Hung Lee, 70, pleaded guilty to a felony count of conspiracy to aid and assist in the preparation of false tax returns during a hearing Monday at the federal courthouse in Santa Ana, according to the U.S. Attorney’s Office.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.