CPA Charged With Aiding in Tax Fraud

​For release on December 12, 2017 

CONTACT:
Vonda Tracey, Deputy District Attorney
Insurance Fraud Unit
(408) 792-2580

 

CPA CHARGED WITH AIDING IN TAX FRAUD

A South Bay certified public accountant faces felony tax fraud charges for helping his clients in the preparation and filing of false returns.

Jimmy Chen, 63, of Saratoga, set up private foundations for at least six of his clients as a scheme to help them evade income tax and receive personal benefits. These foundations were established purportedly for charitable purposes, but were used primarily by the clients for personal purposes. Chen set up private foundations and prepared foundation returns for hundreds of clients. Six of the foundations set up by Chen are listed in the criminal complaint.

Chen faces 26 counts of return preparer fraud. If convicted, he faces incarceration. Chen is scheduled to be arraigned tomorrow at 1:30 p.m., in Department 23 of the Hall of Justice, in San Jose.

“Taxes provide funding for essential public services,” Deputy District Attorney Vonda Tracey said. “When someone illegally evades tax obligations, it’s the community that pays the price.”

The investigation, conducted by the Franchise Tax Board, shows that Chen charged his clients a fee for setting up their private foundations and for other services relating to the private foundations, including bookkeeping services and preparation of foundation returns. 

Because private foundations are tax-exempt entities, this allowed the clients to make donations to their private foundations and deduct the amounts as charitable contributions on their personal income tax returns to reduce their income and pay less tax. The clients used the private foundation funds for personal purposes, including paying for vacation, vehicles, rents, and their children's college tuition. If anyone has further information, they can contact Deputy District Attorney Vonda Tracey 408-792-2580.

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