Following an IRS Criminal Investigation (IRS-CI) case, a Seattle business owner facing allegations of filing false tax returns and tax evasion decided to go to trial — and lost.
Steven Loo is facing sentencing in October of this year following a conviction in U.S. District Court in Seattle on six counts each of creating a false tax return and tax evasion. Tax evasion carries a tag of up to five years on each count, while each count of filing a false tax return can bring up to three years in prison. How did Loo get here?
Shell companies and a lot of money
In 1999, Loo established two companies in Washington state. By 2015, he owned commercial real estate properties in California and western Washington and employed property management companies to manage those parcels. Profits from the properties were directed to the two inactive company accounts he had created earlier and controlled.
Between 2015 and 2020, profits totaling $4.7 million were funneled to the companies controlled by Loo. According to the IRS, Loo moved the money between shell companies to hide the income. He reinvested the money in companies he owned and spent it on himself, family and friends. During this time, Loo did not report the income to his tax preparer. As a result, the tax returns he signed off on were false.
In his defense, Loo claimed that the Tax Code gave him the authority to offset his taxable income with the net operating losses of his two businesses that owned no property. It took the jury seven hours to find him guilty on all counts.
Getting from here to there
Loo put a lot of time and energy into a large, long-running scheme. Unfortunately, it showed. Although he had an impressive income for years, his wealth will likely be used to pay restitution and penalties, and he will probably receive a prison sentence.
If you are involved in a carefully crafted tax scam, it is worth considering the choices made by Loo. He knew that he had become the target of an IRS criminal investigation and continued to push his case. We do not know if that was on the advice of counsel. The trail from the beginning of the scheme to the end was likely well documented, and it took the jury less than a day to convict.
You know whether you are managing an enterprise that is outside legal boundaries. Consider that it will likely be revealed at some point. Speaking with a criminal tax attorney early is critical to maintaining options that could give you a chance to resolve a criminal tax fraud allegation without leaving your fate in the hands of a jury.
Looking for strong representation on criminal tax allegations? We can help
Robert J. Fedor, Esq., L.L.C., provides experienced guidance if you are facing criminal tax allegations. Contact our legal team today at 440-250-9709. We serve clients internationally and in Northeast Ohio, Chicago and New York City from our offices in Cleveland and Chicago.
For more information on criminal tax fraud, improve your grasp of tax crime by downloading our free eBook, Understanding Tax Fraud, today.
