Cheung ran a fraudulent tax and workers’ compensation insurance scheme from January 2012 to March 2019, in which he failed to report or underreported:
- Over $16 million in sales to the Department of Tax and Fee Administration;
- Over $14 million in taxable income to the Franchise Tax Board;
- Over $2.1 million in wages to the Employment Development Department; and
- Over $2.1 million in wages to insurance carriers;
Cheung also evaded payment of $2,414,769.93 in sales tax, income tax, and payroll tax; and $549,606 in workers’ compensation insurance premiums.
Today, Cheung pleaded guilty to felonies including filing a false sales tax return in violation of the Revenue and Taxation Code, failure to pay payroll taxes in violation of the Unemployment Insurance Code, and filing a false income tax return in violation of the Revenue and Taxation Code. He also admitted to the white-collar enhancement.
The investigation into Cheung’s extensive fraud was done by members of the Tax Recovery in the Underground Economy (TRUE) Task Force. As a result of their investigation, Cheung will serve no less than three years in prison if he pays restitution or nine years and four months in prison if he fails to pay the full agreed upon amount of $2,964,375.93. Cheung will be formally sentenced in August 2021.