Company Owner Steals Investment Funds, Found Guilty of Tax Evasion

According to a Department of Justice press release, Michael Sang Han, 47, formerly of Palm Beach, Florida, was found guilty on two counts of tax evasion. According to court records, Han was the owner of Envion, a company that purported to own several patents related to the conversion of plastics into fuel oil.

Prosecutors introduced evidence at trial to show that Han fraudulently deceived investors into investing more than $40 million into Envion. Instead of using the investment proceeds to grow the business, Han used over $14 million to, among other things, purchase a luxury home in Florida, fly on private jets, and buy several new luxury automobiles, including a Ferrari. Additionally, Han used the funds to replenish Envion funds that he has previously misappropriated. Finally, Han never paid tax on the money he stole and misled his bookkeepers and other Envion staff in an effort to cover up his wrong-doing.

Han was found to have caused a tax loss of nearly $4 million. He will be sentenced later this year and faces up to five years in federal prison for each of the two counts of tax evasion. Additionally, the sentencing judge will likely impose an additional term of supervised release and order Han to pay restitution to the IRS.

It may come to a surprise to many that those who commit crimes involving unjust enrichment may also be found guilty of tax-related crimes, such as tax evasion. According to federal and most state tax law, a taxpayer must include in gross income all income “from whatever source derived”. Simply put, unless the Internal Revenue Code specifically excludes an item of income, any accession to wealth must be included in gross income, even if the act that produced the income was illegal. Interestingly enough, taxpayers may generally offset illegally-earned income with a deduction for ordinary and necessary business expenses.

Although the majority of taxpayers who worry about a federal or state tax audit have not robbed a bank or otherwise enriched themselves illegally, an experienced tax attorney should be consulted in either case. Although many taxpayers believe that they are capable of managing a tax examination, there are many traps and considerations that can be avoided with the assistance of a tax defense lawyer.

A tax evasion defense attorney has not only technical tax experience but also an extensive and thorough legal training. Education in the areas of law such as criminal tax defense, evidence, criminal tax procedure, and Constitutional law can be drawn upon to effectively represent a taxpayer of any type in an audit, criminal investigation or criminal tax prosecution.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from all walks of life, including individual wage-earners, those who are self-employed, and businesses of all sizes and industries. Our team of zealous advocates are ready to assist you in the development of a sound strategy to minimize any potential civil or criminal tax exposure. Do not let the threat of an IRS or state tax audit keep you awake at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate initial consultation.

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