Owner of Fremont manufacturing firm sentenced for false tax returns
FREMONT – An owner of a Fremont manufacturing company was sentenced to 10 months in prison last week for submitting false tax returns, federal prosecutors said.
Milpitas resident Cuong Chi Quan, also known as "Roger Quan," pleaded guilty in April 2023 to a count each of willfully aiding and assisting in the preparation of a false tax return and willfully violating foreign bank account reporting requirements, the U.S. Attorney's Office for the Northern District of California said in a statement Monday.
Quan, 56, admitted to underreporting his income by nearly $4.5 million as the owner and manager of QXQ, Inc., a Fremont-based manufacturer of circuit board test fixtures. He said that before 2014, his company maintained two sets of QuickBooks bookkeeping files. One set of books logged sales to customers in the U.S. and all of QXQ's expenses. The other set recorded sales to customers in Asia.
Quan told QXQ's customers in Asia to wire their payments to QXQ's bank accounts in New Zealand. The income and expenses of the company were reported on Quan's individual tax returns, according to federal prosecutors.
He admitted that he provided his income tax preparer only with the file that recorded the firm's sales to customers in the United States and all of its expenses, without disclosing to the tax preparer about the books that logged QXQ's sales to customers in Asia or the statements from his and the company's foreign bank accounts.
Quan confessed that his scheme omitted over $4 million in 2017 income, causing his 2017 federal income taxes to be underreported by $1,783,339.
He also admitted that he had signature authority over at least 11 foreign bank accounts in 2017, one of which had a balance of over $12 million in April 2018, but intentionally did not report the existence of these accounts as required. He also did not report the interest earned in foreign bank accounts, according to his guilty plea.
The U.S. Attorney's Office said the federal court-imposed restitution to the IRS of $8,167,733 for underreported federal income tax for the years 2014 through 2018. The court also further imposed on Quan a fine of $35,000, and a 3-year term of supervised release.
