Government food service provider pleads guilty to payroll tax fraud; did not pay more than $10 million in taxes

 

Date: February 7, 2020

Contact: newsroom@ci.irs.gov

A Potomac, Maryland-based operator of companies providing food-services in government buildings pleaded guilty today to failing to account for and pay over more than $10 million in employment and sales tax, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department's Tax Division and U.S. Attorney Timothy J. Shea for the District of Columbia.

According to documents and information provided to the Court, Steve Choi was the founder, president, and operator of nine companies that provided food services within government buildings located in the DC area. As president and operator of the companies, Choi was responsible for withholding, accounting for, and paying over to the Internal Revenue Service (IRS) employment taxes. Notwithstanding these obligations, and civil collection efforts by the IRS, Choi failed to pay the companies' employment taxes. Even after Choi acknowledged in a 2011 interview with IRS personnel that he had the authority and responsibility to pay employment taxes, from 2012 through 2015, Choi did not pay over $4.4 million in employment taxes. During the same period, Choi also did not pay more than $6.2 million in sales taxes to the D.C. Office of Tax and Revenue on behalf of his food services companies. Rather than pay the sales and employment taxes, from 2011 through 2015, Choi directed his companies to pay millions of dollars in other expenditures, including over $1 million in personal salary, personal donations, and cash advances.

"Choi chose to personally enrich himself rather than abide by the law and pay over employment taxes he already withheld," said IRS-CI SAC Kelly R. Jackson. "The tax law is clear – every employer is responsible for withholding and paying over employment taxes from the salaries of their employees."

"Prosecuting employment tax fraud remains a priority for both the Tax Division and the Internal Revenue Service," said Principal Deputy Assistant Attorney General Zuckerman. "As today's guilty plea reflects, we will aggressively pursue those who do not comply with their employment tax obligations."

U.S. District Judge Ketanji Brown Jackson scheduled sentencing for June 2, 2020. At sentencing, Choi faces a statutory maximum sentence of five years in prison. He also faces a period of supervised release and monetary penalties. In his plea agreement, Choi has agreed to pay restitution of $6,490,515 to the Office of Tax and Revenue and of $4,903,820 to the United States.

The investigation was conducted by special agents of IRS-Criminal Investigation and Office of Tax and Revenue and is being prosecuted by Trial Attorneys Jack Morgan and Eric Schmale of the Tax Division, as well as Assistant U.S. Attorney Veronica Sanchez.