DISTRICT ATTORNEY - NEW YORK COUNTY

NEWS RELEASE
December 8, 2009

Contact: Alicia Maxey Greene
212-335-9400

Manhattan District Attorney Robert M. Morgenthau announced today that a 38-year-old man has pleaded guilty to evading New York State and City corporate and personal income taxes.

The defendant, STEVEN CHANG, pleaded guilty to one count of Repeated failure to file; personal income and earnings taxes, in violation of former Tax Law 1802(a), and one count of False returns or reports; utility tax, corporate taxes or unincorporated business tax, in violation of former New York City Administrative Code §11-4004(b), both class E felonies.  The crimes charged occurred over a three-year period between April 17, 2006 and April 15, 2008.

CHANG is the owner of Namu Design, Inc., a full-service architectural, interior design, and engineering firm located at 247 West 35th Street, in Manhattan.  The investigation leading to today’s plea revealed that CHANG operated a cash business by negotiating client checks through check cashing establishments.  By paying suppliers, subcontractors and workers with that cash, CHANG was able to conceal the true amount of the business’s gross receipts and therefore underreport its profits.

CHANG is charged with underreporting over $1.3 million of the gross receipts on his 2005 New York City general corporation tax return, thereby underreporting his tax liability to the New York City Department of Finance.  CHANG also failed to file his 2005, 2006 and 2007 personal income tax returns, and thereby failed to report earnings as high as $272,000.  CHANG did not pay any personal income tax to the New York State Department of Taxation and Finance for the period charged. 

As a result of his disposition, the defendant accepts a plea exposing him to incarceration in a state facility if he does not comply with all terms and conditions of the plea agreement, which includes the repayment of $173,112 in personal income and corporate taxes, accrued interest and applicable penalties, prior to sentence.  He will be required to pay the maximum criminal fines of $100,000, and perform 350 hours of community service.  He will also be required to submit tax filings for tax year 2009 that will account for an addition $2.8 million of unreported gross receipts generated in that period. A class E felony is punishable by up to 1 1/3 to 4 years in prison.

CHANG was arraigned on a Superior Court Information today in State Supreme Court, Part 59. The case was adjourned to February 23, 2010.

Mr. Morgenthau said, “This case illustrates the continued existence of the underground economy.  According to the New York State Banking Department, in 2008 the commercial checking industry negotiated checks totaling almost $3 billion.  All but one commercial check casher was located in New York City.

By availing themselves of the services of check cashers, businessmen conceal a substantial portion, and sometimes all, of the gross receipts of their businesses, and thereby evade several types of City and State taxes, including corporate, payroll and personal income taxes. This is not an isolated case.  The investigation has disclosed hundreds of businesses that have engaged in similar conduct.  The extent of the tax evasion is of staggering proportions. ”

Mr. Morgenthau thanked Commissioner David M. Frankel of the New York City Department of Finance and his staff, including Group Chief Auditor Michael Schenk and Auditor Helen Yuen; Acting Commissioner Jamie Woodward of the New York State Department of Taxation and Finance and her staff, including Field Audit Specialist Frank Hernandez; and Superintendent Richard H. Neiman, of the New York State Banking Department and his staff, including Director Ricardo Velez and Assistant Director Gia Morris of its Criminal Enforcement Bureau. 

Assistant District Attorney Gilda Mariani, Chief of the Money Laundering and Tax Crimes Unit, handled this case with the assistance of the staff of the Unit. Financial Intelligence Director David Rosenzweig of the Investigations Division also assisted. The District Attorney’s Office (NYPD) Office Squad, particularly Detective Raymond Winslow, assisted in the investigation under the supervision of Captain Ronald Haas.

Defendant Information:

STEVEN CHANG, 8/18/1971
15 Broad Street
New York, New York