Home Workplace Legislation/Press Releases Staffing firm owner sentenced for tax fraud involving over $2 million in unreported income

Staffing firm owner sentenced for tax fraud involving over $2 million in unreported income

by HR Law Canada

Sung Oh Chung, a resident of Thornhill, Ont., was sentenced to a conditional two-year term and fined $681,235 on Sept. 12, 2023, after pleading guilty to fraud over $5,000 under the Criminal Code earlier this year on March 21.

The sentencing took place at the Toronto Courthouse.

The Canada Revenue Agency (CRA) investigation disclosed that between 2012 and 2016, Chung failed to report a total of $2,310,678 in personal income on his individual tax returns. The unreported income came from sales and unremitted Goods and Services Tax/Harmonized Sales Tax (GST/HST) through two companies, Sovereign Staffing Inc. (SSI) and Talent Savvies Inc. (TSI), where Chung served as a director. As a result, he evaded $681,325 in taxes.

Both SSI and TSI operate in the Greater Toronto Area, providing temporary labor services. According to court records, the companies maintained multiple bank accounts but disclosed only one to the CRA, enabling Chung to appropriate funds from the undisclosed accounts.

As part of his sentence, Chung was ordered to pay an immediate $500,000 within 24 hours, with the remaining balance due by September 11, 2025.

Chung’s business associate, Kwang Won Lee, had also earlier pleaded guilty to one count of fraud over $5,000 under the Criminal Code and was sentenced on September 7, 2023, incurring a fine of $999,000.

Beyond the court-imposed fines and conditional sentences, those convicted of tax evasion are required to repay the full amount of tax owed, along with related interest and any additional penalties assessed by the CRA.

The CRA underscored the severity of tax evasion as a criminal offense, highlighting that activities like falsifying records, failing to report income, or inflating expenses could result in criminal charges, court-imposed fines, and imprisonment.

Data from the CRA reveals that from April 1, 2022, to March 31, 2023, there were 31 convictions for tax evasion, leading to fines totaling $6,925,440 and jail sentences amounting to 32.7 years for evading a collective sum of $8,142,512 in federal tax.

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