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> This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report in

• peckrob 7y ago
  It's how they got Al Capone back in the 30s. Not for all the illegal things he did. For failing to pay the taxes on all the illegal things he did. https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion
  • rolltiide 7y ago
    Great, let's keep doing that instead of mass surveillance of all of our digital artifacts.
• fintechpwmMEdev 7y ago
  I was having drinks with an accountant friend of mine who had/has clients in the budding borderline legal pot biz a little while ago and he said something interesting - we were talking about President's Trump's refusal to share his tax returns. Forgot the exact gotcha was but the jist of it was that you should ALWAYS report all your income even if it's not technically legally obtained. On a side note, this friend of mine thinks the reason why the President isn't showing his returns isn't because of Russia but because his accountants may have done false filing of some shady business deals and the release of this data will place the President under serious legal troubles.
  • Alupis 7y ago
    > On a side note, this friend of mine thinks the reason why the President isn't showing his returns isn't because of Russia but because his accountants may have done false filing of some shady business deals and the release of this data will place the President under serious legal troubles This is the rationale a lot of laypeople give - but we need to remember the IRS isn't a bunch of laypeople. The entire purpose of the IRS is taxes - more-or-less. I'm very confident that, by now - particularly with all the "Never Trump'ers" that surely populate some of the offices in the IRS - we'd have heard something tangible. I'm confident people at the IRS have looked into Trump and The Trump Organization's taxes quite a bit by now, and the lack of any "leaks" or public releases from the IRS or its employees really speaks to there not being anything there - other than complicated multi-national corporation taxes. The act of not letting every Tom, Dick and Harry look at his personal tax filings and selectively choose pieces to misrepresent for political purposes isn't indicative of wrong-doing. I'm surprised it ever became a thing for any politician to do.
    • JoeAltmaier 7y ago
      Aren't the IRS part of the Executive branch? So they're not going to look into taxes of the President. Have they ever done so before?
      • Alupis 7y ago
        IRS is run under the Treasury, which yes may be part of the Executive Branch - but that doesn't mean there's 100% support for the current President in every desk. Just like any department, there's a lot of career employees and hold-overs from previous administrations. Just look at the EPA... or FBI. Not to mention Trump just became president in 2016... they've had his entire life to review his taxes. Wouldn't there be a whiff of something foul, somewhere, if there was something nefarious going on there?
        • notfromhere 7y ago
          A lack of investigation does not mean a lack of criminal activity. IRS is perpetually understaffed and doesn't have the resources to go after HNW offenders, which is why auditing of lower income individuals has skyrocketed https://www.irs.gov/pub/irs-soi/18databk.pdf https://www.irs.gov/pub/irs-soi/18databk.pdf
          • Alupis 7y ago
            We're talking about an organization that's existing for 96 years... and a person that's been an adult filer for 55 years. I'm confident the IRS has looked into it by now. Other than disliking the guy - is there any evidence there's any "criminal activity" here?
      • jki275 7y ago
        The IRS audits the president continually, I believe they've done so for many years though I don't recall exactly when they started. This particular president has been audited for something like 12 years consecutively as I recall. If there were something there to find, it likely would have been found by now.
• asark 7y ago
  I'd guess tax stuff's a hell of a lot easier to prove in court than a lot of other crimes. Heavy on figures and a defendant with no decent explanation of where the money came from or why they didn't report it, light on witnesses talking about anything other than the figures.
  • tastygreenapple 7y ago
    That's correct. In tax court, there isn't a presumption of innocence: https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=4374&context=clr https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?refe...
• dsfyu404ed 7y ago
  Taxes are the federal catch-all. It's like "disorderly conduct" or "resisting arrest" but for higher net worth individuals. If they can't prove the thing they actually want to get you for and can't trick you into lying to a federal agent then they go through your taxes and generally speaking most people involved in the kind of stuff the feds put you in prison for aren't paying taxes on said stuff in a manner that is fully consistent with law (paying what you owe is not necessarily enough to comply with the law for these purposes).
  • seanmcdirmid 7y ago
    > It's like "disorderly conduct" or "resisting arrest" Not really, those are qualitatively judged crimes while tax evasion is very empirical. It doesn’t get fairer than that.
    • dsfyu404ed 7y ago
      That is a very naive thing to assert. Federal tax law is expansive enough and provides enough discretion to the IRS that if they want you they can almost certainly get you, especially if there's anything you aren't totally above the board with. Remember, a lot of the law hinges on intent and if you made $100 selling drugs and claim you made $100 selling used TVs (and pay taxes accordingly) they'll likely be able to find some felony statute violation if they want to dig into it. When they audit normal people they don't go all in like that. They want their money and it's gonna be hard for you to pay if they destroy your life by putting you in jail.
      • greenyoda 7y ago
        > if you made $100 selling drugs and claim you made $100 selling used TVs (and pay taxes accordingly) they'll likely be able to find some felony statute violation if they want to dig into it. And in fact, the article mentions the crime that you could be charged with for lying about the source of your income: "making false statements to a government agency".
      • seanmcdirmid 7y ago
• seanmcdirmid 7y ago
  Even Al Capone went in for tax evasion. If you are going to do crime, just report and pay taxes on the income you get from it as “other”, the IRS doesn’t talk to the police for anything other than tax evasion.
  • cf141q5325 7y ago
    > the IRS doesn’t talk to the police for anything other than tax evasion. Source?
    • elliekelly 7y ago
      I don’t know whether the IRS proactively shares information with law enforcement, though I wouldn’t be surprised, but I do know with absolute certainty that the IRS regularly works with law enforcement on many issues that don’t necessarily relate to tax evasion. Money laundering being chief among them. There’s a bi-weekly process called “314(a) Information Sharing” that’s run by the Treasury Department under the USA PATRIOT Act. It requires financial institutions to pass all kinds of information on to the agencies in the Department - IRS, Secret Service, Customs, ATF, Homeland Security, etc. - who are looking into various matters. All of those agencies are under the same umbrella and they absolutely work together. A good friend of mine is also a forensic accountant/investigator for the US Attorney’s Office so I know the IRS works closely with the DOJ though I’m not familiar with how that process works in practice.
      • A4ET8a8uTh0 7y ago
        In our recent ACAMS chapter event, the IRS person seemed very eager to be pro-active ( and in AML world the general push is towards greater surveillance anyway ). I don't know how common this attitude is, but I never hear anyone really challenging it either.
    • seanmcdirmid 7y ago
      It isn’t a huge secret: https://www.irs.gov/government-entities/federal-state-local-governments/disclosure-laws https://www.irs.gov/government-entities/federal-state-local-... > IRC 6103(i)(1) provides that, pursuant to court order, return information may be shared with law enforcement agencies for investigation and prosecution of non-tax criminal laws. They need a warrant, the IRS can’t proactively share tax info with law enforcement agencies for non-tax law reasons.
• greenyoda 7y ago
  > I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money? The article states that he was actually the president of the Chinese company that he transferred the chips to: "The scheme was uncovered and investigators realized that Shih was the president of CGTC."
• moftz 7y ago
  That's kind of how it works. He may have friends of friends or met someone from a professional's organization that learn either what kind of business he's in or what kind of resources he has access to. Contact is made and a relationship is formed to the point where the guy feels comfortable doing all of this for a big stack of money. He might be lied to and told everything is on the up and up (or at least told it's a legal grey area) or he might be in on everything and know that he's breaking the law.
• stcredzero 7y ago
  > This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns Funny how it always comes back to taxes These people were rank amateurs. You don't do something in this category of activity, unless you're planning to move back to China and you know the government authorities there will have your back. You don't commit a US federal crime that involves defense secrets, continue to live in the USA, and have that income noticed by the IRS. Also, the payoff needs to be commensurate with the risk. If you're not set for life, you're not doing it right. In fact, if given the opportunity, assume you won't do it right, and just don't do it. I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money? I wonder if there are foreign agents conning US citizens into ex-filtrating sensitive materials and information? The average person would have no way of knowing if someone was using an assumed identity. Such agents could arrange to be out of the country when the deal went down, and certainly by the time the IRS gets involved. Chinese business practices can sometimes be a bit scofflaw. I know that some Chinese exporters (at least used to) ignore certain procedures and documents, because the US personnel didn't have the manpower to enforce certain regulations, despite the fact that jail sentences could technically result. I'd bet a lot of IoT startup projects have run afoul of those regulations. There's also a startup culture idea that people should be a "bit naughty" or engage in civil disobedience in the name of disruptive capitalism. That stops when it comes to the interests of the US Defense Department.
  • jjoonathan 7y ago
    Hasn't China gotten caught a couple of times recently bulk-mailing people on LinkedIn with lightly disguised invitations to commit espionage? Spying ain't what it used to be.
• CharlesColeman 7y ago
  > Funny how it always comes back to taxes Tax evasion is actually a really clever way to catch for-profit criminals. They don't commit crime just to bury the proceeds in a hole, so they'll inevitably perform easier-to-observe criminal actions when they seek to enjoy their ill-gotten gains.
  • mywittyname 7y ago
    It has become very easy to hide money today. Shell companies are cheap and readily available. They can be had with functional bank accounts, phony board members, and subsidiaries in countries that don't make it easy to obtain ownership information. You can enjoy your ill-gotten gains by proxy. Instead of taking a million and buying a house, you happen to find a great deal on a rental. Or find a company willing to loan you the money to buy a Ferrari at 0.9% interest with no repayment date stipulated. Obviously this raises suspicions, but it provides enough cover to make tackling your case onerous enough that probably only a really determined and well-funded Federal prosecution team will come after you.