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Wednesday, November 6, 2024

California businessman receives prison sentence for over $1 million tax evasion

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Lisa O. Monaco Deputy Attorney General | Official Website

A California businessman has been sentenced to 15 months in prison for tax evasion, following a conviction for failing to pay over $1 million in individual and corporate income taxes owed to the IRS and the California Franchise Tax Board.

Court documents reveal that Haim Jerry Kohen, who owned a business dealing in bulk used clothing, engaged in tax evasion from 2005 to 2017. He filed false tax returns at both federal and state levels, underreporting his income. Kohen diverted business income to himself and handled cash transactions without depositing them into his business accounts or reporting them on tax returns. This conduct continued even after he was aware of an IRS criminal investigation.

In November 2013, a customer owed Kohen’s business more than $648,000. They executed a promissory note ensuring repayment directly to Kohen rather than his business. These payments were received in cash and not reported on any tax return. Additionally, Kohen loaned money without reporting interest payments received on his personal returns.

Kohen also failed to report rental income from properties he owned in Beverly Hills and Tarzana, California. He purchased the Beverly Hills property in 2011 but later transferred it to family members while still collecting rental income and maintaining control over it. Rental income from the Tarzana property was similarly unreported.

The total tax loss caused by Kohen's actions amounted to $1,471,323.

U.S. District Judge Stanley Blumenfeld Jr. has ordered Kohen not only to serve time but also one year of supervised release, pay a fine of $95,000, and make restitution of $1,471,323.

The announcement came from Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division along with U.S. Attorney Martin Estrada for the Central District of California.

The case was investigated by the IRS Criminal Investigation’s International Tax and Financial Crimes group. Senior Litigation Counsel Mark F. Daly alongside Trial Attorneys Sara E. Henderson and John C. Gerardi from the Justice Department’s Tax Division as well as Assistant U.S. Attorney Ranee Katzenstein prosecuted the case.

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