A woman indicted for her role in a scheme to file false tax returns and then use Hawaii businesses, banks and trusts to launder the refunds entered into an agreement with the U.S. Department of Justice and pleaded guilty Wednesday.
Sook Young Jung, a former Honolulu resident, pleaded guilty to conspiring to defraud the Internal Revenue Service by fraudulently obtaining a tax refund and then thwarting efforts to recoup it, according to a Justice Department news release from Washington, D.C.
Jung was the sixth person charged in connection with the investigation. The case was one of at least three tax-fraud indictments in 2021 that listed “co-conspirator 1” as the owner of the Gimmel Group LLC, a domestic limited-liability company in Hawaii that “purported to be a personal investment business,” according to the 15-count indictment handed down July 15, 2021, and unsealed Sept. 9, 2021.
Jung conspired “with others to file a false 2015 individual income tax return in her name.”
Jung’s co-conspirators created a fake tax form purportedly issued by a mortgage lender to Jung, which Jung attached to her return, that “falsely reported that Jung withheld over $1.7 million in taxes.” As a result of this “fraudulent submission,” the IRS issued Jung a refund of $1,147,036.
Jung allegedly conspired with the Gimmel Group’s owner and a signatory of Mortgage Compliance Advisors &Solutions LLC, a Florida company, by recruiting at least five other people to file false tax returns to obtain refunds they did not deserve.
The five are listed only by their initials in the indictment: C.H., B.K.K., C.S.W., S.S.L. and J.H.
From 2015 to 2019, Jung, an accomplice and the owner of Gimmel Group allegedly used MCA&S to act as their recruits’ mortgage lender to help fill out IRS Form 1099-MISC and Form 1040 to claim fake, sizable tax withholdings.
The conspirators allegedly filed a false 2014 amended individual income tax return that claimed a refund of $464,904 and a false 2015 individual income tax return that claimed a refund of $1,134,902, according to DOJ.
Jung and others paid the owner of the Gimmel Group “substantial fees” based in part on a percentage of tax refunds received and the amount of work done to facilitate false returns, according to the indictment. The pair created fake trusts and opened bank accounts in the name of the trusts to conceal the proceeds and prevent the IRS from recovering the money.
Jung and an accomplice also cut cashier’s checks from the accounts to pay alleged co-conspirators, according to federal court documents.
After filing the false tax return and submitting the fake tax form, Jung took “steps to try and ensure that the IRS could not recover the fraudulently obtained refund,” according to the Justice Department.
On one occasion, Jung deposited the refund check into a newly opened bank account and immediately withdrew most of the funds in cashier’s checks. She also paid, through nominees, one of her co- conspirators “$500,000 for the co- conspirator’s assistance in obtaining the fraudulent refund.”
Jung is scheduled to be sentenced at a later date and faces a maximum penalty of five years in prison, a period of supervised release, restitution and a fine.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Clare E. Connors for the District of Hawaii made the announcement.
The prosecution was the result of an ongoing investigation by the IRS Criminal Investigation, the Treasury Inspector General for Tax Administration and agents with the Federal Bureau of Investigation.
Trial attorneys Sarah Kiewlicz and Sara Henderson of the Justice Department’s Tax Division and Assistant U.S. Attorney Gregg Paris Yates from Hawaii are prosecuting the case.
