Orange County businessman under-reports 2.1 million dollars to the IRS


Date: February 17, 2023


A local business owner plead guilty to filing false tax returns, which under-reported his income by over $2.1 million over a five year period and failed to pay $683,405.00 in tax due to the Internal Revenue Service.

Young Hwan Lee of Riverside, owned and operated K-Tech Dental Lab, Inc. ("K-Tech"), which was located in Orange County, California. On February 17, 2023, Young Hwan Lee pleaded guilty to one count of Tax Evasion in violation of 26 U.S.C. § 7201.

According to his plea agreement, from January 2016 through December 2020, Lee evaded the assessment of $683,405 in taxes due and owing to the United States. During that period, Lee operated and was the 100% owner of K-Tech Dental Lab, Inc. ("K-Tech"), an S corporation, that made dental prosthetics and crowns for dentists. In order to conceal income, Lee frequently cashed client checks, rather than depositing them into K-Tech's accounts.

For preparation of returns, Lee retained an outside accountant to prepare both Forms 1120-S for K-Tech's S corporation income tax return, and Forms 1040 for defendant's personal income tax return. Lee intentionally failed to inform the outside accountant of all the payments that K-Tech had received from its clients.

By providing this false information to the accountant, both Lee's and K-Tech's income tax returns failed to report the following amounts in gross receipts and sales, $343,905.01 for tax year 2016; $540,616.18 for tax year 2017; $623,138.37 for tax year 2018, $496,709.29 for tax year 2019, and $138,614.10 for tax year 2020.

"Tax crimes harm everyone. We all have a duty to pay our fair share of taxes," said IRS-Criminal Investigation Los Angeles Field Office Special Agent in Charge Tyler Hatcher. "Young Hwan Lee under reported millions of dollars to line his own pockets, and IRS-CI Special Agents will always hold tax cheats accountable."

Lee acknowledges that he knowingly and willfully evaded and failed to pay taxes due and owing to the United States in the total amount of $683,405, which comprises $113,946 for tax year 2016; $196,978 for tax year 2017; $205,605 for tax year 2018; $149,600 for tax year 2019; and $17,276 for tax year 2020.

IRS Criminal Investigation investigated this matter. Assistant United States Attorney Rosalind Wang of the United States Attorney's Office for the Central District of California prosecuted this case.