Most of us would probably be perfectly content settling down in the famous Aloha state and collecting revenue from 3 successful businesses. Mr. Albert Hee, however, an apparently successful business owner and family man, was not so content in Hawaii. Hee mastered what he thought was a foolproof way to live financially unrestrained by failing to truthfully report his business and personal income for ten years and naturally, no taxes were paid on said income. Mr. Hee intentionally interfered with the IRS in the calculation and collection of his taxes during this time according to a final court ruling, (United States of America vs. Albert Hee, Hawaii,). What turned out to be fully taxable earnings from his businesses allowed for quite a lavish and carefree lifestyle for him and his family.
Taxpayers should be aware that Hee’s case originally began as a civil audit, but turned into a criminal investigation after an auditor noticed conflicting information between two of Hee’s businesses. The Criminal Division of the IRS investigated further and discovered that Mr. Hee, who is the sole shareholder, used Wimana Enterprises to provide himself with over $4 million in what he claimed were personal loans and business deductions. The IRS, however, claims that he deceitfully treated the money as loans, and the jury concluded that he didn’t intend to repay them. The IRS further argued that these “loans” were actually taxable income generated from his businesses. Mr. Hee filed 6 misrepresented individual tax returns between 2007 and 2012, says US Attorney for District of Hawaii, Florence T. Nakakunu.
Court documents report the money was generously dispensed on luxuries like vacations for him and his family in Tahiti, France, Switzerland and Disney world. Hee also provided salaries and benefits for his wife and children (who are not employed with the companies) totaling over 1.6 million. $96,000 went toward personal massages, $736,900 went to college tuition and other expenses for his children and another $17,000 went toward an opulent 5 day family vacation in Santa Clara, which Hee described in his tax documents as a “stockholder’s meeting.”
In defense to the allegations, Hee filed four separate motions in court, one requesting for all charges to be dropped. Hee challenged that the IRS used a civil audit to secretly conduct a criminal investigation. The trial court judge denied Hee’s motions, and after an 11-day jury trial, Hee was convicted on all counts including corrupt Interference with Administration of Internal Revenue Laws in violation of 26 U.S.C. §7212 (a) and 6 counts of filing false tax returns in violation of 26 U.S.C. §7206(1.) Hee was sentenced to 46 months in prison, a $10,000 fine and a restitution of $431,793 to the IRS.