A Fremont business owner was sentenced to 10 months in prison last week after pleading guilty to conspiring to underreport his income by about $4.5 million, according to the U.S. Department of Justice.
Milpitas resident Quong Chi Quan, also known as Roger Quan, was charged last year with knowingly aiding and abetting the preparation of a false tax return and willfully violating foreign bank account reporting requirements. Quan pleaded guilty to both charges in April 2023, according to a news release from federal prosecutors.
Quan owned and operated a company called QXQ, Inc., which manufactured circuit board test fixtures. According to the U.S. Department of Justice, he divided his bookkeeping files into two sets. One ledger recorded sales to U.S. customers and all of the company's expenses. The second set of books recorded sales to customers in Asia. He simply provided the income tax preparer with a bookkeeping file that recorded the company's sales and all expenses in the United States.
According to Quan's plea agreement, he also instructed clients in Asia to send money to the company's bank account in New Zealand. He did not provide income tax preparers with sales to Asian customers or statements of his personal and company overseas bank accounts.
In 2017, he was able to omit more than $4 million from his income statement and avoid paying approximately $1.8 million in income taxes. Mr. Quang also had at least 11 foreign bank accounts, but he did not report their existence or the interest earned to tax return preparers.
The court awarded Quan approximately $8.2 million in damages to the Internal Revenue Service for underreporting his federal income taxes from 2014 to 2018. Mr. Quan must also pay a $35,000 fine and be sentenced to three years of supervised release.