Ex-HSBC Client Chon Gets Year in Prison for Tax EvasionDavid Voreacos and Andrew Zajac
A Maryland cosmetics manufacturer who had offshore accounts at HSBC Holdings Plc was sentenced to a year and a day in prison for evading $522,650 in federal and state taxes.
Bae Soo “Chris” Chon, 49, who owned Mirage Cosmetics Inc., was sentenced yesterday in federal court in Baltimore, where he pleaded guilty on Oct. 18. He admitted diverting Mirage proceeds from foreign distributors to accounts in Hong Kong and South Korea and understating them on his personal tax returns, according to a statement by U.S. Attorney Rod Rosenstein.
Chon also was fined $15,000 and ordered to pay restitution of $412,404 to the U.S. Internal Revenue Service and $172,844 to the Maryland Office of the Comptroller, Rosenstein said. He must pay a civil penalty of $441,483 for failing to disclose his accounts, according to the prosecutor.
“The license to run a business is not a license to evade paying taxes,” said Thomas J. Kelly, special agent in charge of the IRS Criminal Division’s office in Washington.
Mirage marketed its products in the U.S. as well as China, Japan, Germany, Australia, the U.K., South Africa, Canada, Dubai, Kuwait and Lebanon, Rosenstein said.
In the fall of 2008, Chon began diverting proceeds from transactions with foreign distributors into the bank account of a shell company at HSBC in Hong Kong and an account at Woori Bank Co. in Seoul, South Korea, established in the name of Mirage’s local distributor, according to court papers.
Chon’s Hong Kong shell company, Giant Century Holdings Ltd., was formed in the Sultanate of Brunei. He bought it from a Hong Kong firm that specialized in setting up offshore shell entities, the papers state.
In addition to failing to report the money diverted into the HSBC and Bank Woori accounts on his and Mirage’s 2008 and 2009 tax returns, Chon also didn’t file Reports of Foreign Bank and Financial Accounts for 2009 and 2010, or FBARs. He must pay an FBAR penalty of half of the highest amount of the accounts.
The case is U.S. v. Chon, 12-cr-506, U.S. District Court, District of Maryland (Baltimore).