Garden Grove tax preparer who cheated the IRS out of nearly $5 million by fraudulently filing income tax returns on his clients’ behalf – and without their consent – to obtain false tax refunds was sentenced Monday to 34 months in federal prison.
Michael Hung Lee, 70, of Garden Grove, was sentenced by United States District Judge David O. Carter, who also ordered him to pay $4,917,035 in restitution. Lee pleaded guilty on July 27 to one count of conspiracy to aid and assist in the preparation of false tax returns.
From 2014 to March 2018, Lee was a tax preparer who owned and operated the Garden Grove-based business, 1040 U.S. Tax Center Inc. Lee conspired with others at the business to fraudulently prepare and file federal individual income tax returns on behalf of their clients.
Specifically, Lee claimed Schedule D capital losses on these fraudulent tax returns. Schedule D is a form the IRS provides to help taxpayers compute their capital gains or losses from the sale of items such as stocks, bonds and real estate, and the corresponding taxes due from them.
On these tax returns, Lee claimed capital losses that he knew his clients never approved and for which they were unqualified. The false declarations of capital losses reduced his clients’ listed taxable income. As a result, the federal government incurred a tax loss of at least $4,917,035. The tax refunds went to the customers, while Lee obtained more business as a result of the scheme.
On June 15, Mylinh Thi Lee, 50, of Garden Grove, who is Michael Lee’s step-daughter and also was a tax preparer at 1040 U.S. Tax Center, pleaded guilty to one count of aiding and assisting in the preparation of false tax returns. She will face a statutory maximum sentence of three years in federal prison at her sentencing hearing, which is scheduled for December 7.
The matter was investigated by IRS Criminal Investigation.
This case was prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.
Categories: Courts & Law