Alleged $7.2 million tax fraud results in criminal charges for directors of Toronto temporary staffing agencies
August 16, 2022
Canada Revenue Agency
The Canada Revenue Agency (CRA) announced today that Kwang Won Lee (Lee) and Sung Oh Chung (Chung), of Mississauga and Thornhill, Ontario respectively, were charged on June 14, 2022, with six counts of fraud in an amount greater than $5,000 under the Criminal Code. The amount of the fraud allegedly committed by Lee and Chung during the five-year period from 2012 to 2016 totalled more than $7.2 million in tax evaded. Lee and Chung were both arrested on June 15, 2022 and were released on bail under court-imposed conditions.
The criminal charges laid allege that, from 2012 to 2016, Lee, as the sole director of Sovereign Staffing Inc. (SSI) and both Lee and Chung as the directors of Talent Savvies Inc. (TSI), participated in a scheme to evade tax by underreporting corporate taxable income earned and goods and services tax/harmonized sales tax (GST/HST) collected by their companies. Both SSI and TSI operated as temporary staffing agencies in the Greater Toronto Area.
In addition to the charges related to the companies, both Lee and Chung were charged with underreporting income in their individual income tax returns for the years from 2012 to 2016.
All case-specific allegations above were obtained from the court records.
Tax evasion is a crime. Falsifying records and claims, wilfully not reporting income, or inflating expenses can lead to criminal charges, prosecution, court ordered fines, jail time, and a criminal record. From April 1, 2021, to March 31, 2022, there were 23 convictions, with court imposed fines totalling $3,303,110. These taxpayers were sentenced for wilfully evading payment amounts totalling $4,407,386 in federal tax. Out of the 23 convictions, 10 individuals were sent to jail for a total of 15.3 years.
The CRA is dedicated to maintaining the integrity of Canada’s tax system, thereby contributing to the social and economic well-being of Canadians. The CRA continues to aggressively pursue tax evasion, and false claims with all the tools available to it. The CRA works to make sure that individuals and businesses report all income earned and only claim benefits to which they are entitled, so that important benefit programs can be administered to those who need them. Any individual or business who underreports income or claims losses or benefits to which they are not entitled may have to repay the benefit amounts and may be subject to other possible action.
The CRA has set up a free subscription service to help Canadians stay current on the CRA’s enforcement efforts.
Voluntary Disclosures Program
Paul N Murphy
Senior Communications Advisor
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