Los Angeles, California – LAWFUEL – Law Announcements – An Arcadia man faces up to 63 years in federal prison and fines totaling $1 million after pleading guilty to tax and mail fraud charges related to a scheme in which he sold sub-standard computer systems as “new” to the public in 2003 and 2004.
As a part of a cooperation clause in his plea agreement, Chul Kyoon Han, of Arcadia, admitted that, from 1999 through early 2004, he had received in excess of $6.8 million from over 30,000 customers of Unicyber’s and other business entities he utilized in the sale of sub-standard computer systems. Han also admitted that he converted hundreds of thousands of dollars of fraudulent Unicyber receipts into cashier’s checks in nominee names in an effort to hide the money from the government and his creditors.
In pleading guilty to the tax charge, Han admitted that he signed a false tax return, for the 2005 tax year, which he filed with the Internal Revenue Service. Han admitted that the return he filed did not include approximately $94,000 he had received from an associate. The source of the money he received in 2005 was from a larger sum of Unicyber receipts he had diverted into cashier’s checks in nominee names in 2003.
Han admitted that he and others at his direction knowingly purchased old, out-dated, and salvaged computers and computer peripherals, cannibalizing them for parts and re-assembling those parts into new computer cases so that the machines appeared to be new. Han then had advertisements produced, which aired on Spanish language television networks across the country, that intentionally misled customers to believe that the computer systems he was selling were new and high-quality. Further, the advertisements falsely indicated that a complete computer system would be delivered to the customer in one shipment when, in fact, the components would be shipped separately and only upon receipt of the corresponding payment. In some instances, even though the customer had made all of the payments to Han, they did not receive all of the computer components from Unicyber. In those instances where the customer did receive all of the components, many would discover that the systems they had purchased were old, substandard, often malfunctioned, and some did not work at all. Han’s plea agreement details three individuals, residing in Missouri, Illinois, and New York, who were victims of his scheme.
“Prosecuting individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system,” said Debra D. King, Special Agent in Charge of IRS – Criminal Investigation in Los Angeles. “Mr. Han’s guilty plea to both tax fraud and mail fraud charges details his conduct in not only defrauding consumers, but also in failing to pay income taxes on a portion of the money he received.”
“The Postal Inspection Service remains committed to the investigation of mail fraud cases, especially frauds, such as this, designed to target those who can least afford it,” said B. Bernard Ferguson, Inspector in Charge, Los Angeles Division, U.S. Postal Inspection Service.
Han’s plea agreement indicates that restitution to the purchasers of computer systems from his companies totals approximately $6.8 million. Further, restitution by Han to the IRS, excluding interest and penalties, totals at least $19,987.
United States District Judge George H. King ordered Han to appear for sentencing on November 3, 2008.
The investigation and prosecution of Han was conducted by IRS – Criminal Investigation and the United States Postal Inspection Service in Los Angeles in conjunction with the United States Attorney’s Office.