Prison For A Year-And-A-Day in $14 Million Payroll Tax and Insurance Fraud Case
The owner of a Massachusetts staffing company has been sentenced to federal prison for tax fraud and workers’ compensation insurance fraud.
Dam Ngoc Luong, the 70-year-old owner of Four Seasons Temp, Inc., a temporary employment agency based in Dorchester, Massachusetts, was sentenced last week by Judge Leo T. Sorokin to one year and one day in federal prison for carrying out multi-year schemes to commit tax fraud and defraud her workers’ compensation insurance provider.
Guilty Plea and Sentence of Prison, Supervised Release, and Restitution to IRS and Travelers
Earlier this year, Ms. Luong pleaded guilty to two counts of filing false corporate and individual tax returns, three counts of failure to collect and pay employee withholding taxes, and one count of insurance fraud.
At her sentencing on September 15, 2023, Judge Sorokin ordered Ms. Luong to serve one year and one day in prison, three years of supervised release following her prison sentence, and the payment of $4,149,039.61 in restitution. The restitution is payable by $3,993,169 to the IRS and $155,870 to Travelers Insurance Co. On the insurance fraud count, the Judge entered a forfeiture judgment against Ms. Luong for an additional $155,870, equal to the amount she defrauded Travelers.
$14 Million in Income Hidden from the IRS and Her Workers’ Compensation Insurer
The criminal case against Ms. Luong focused only on the tax and insurance fraud she orchestrated as the owner of Four Seasons Temp from 2015 to 2019. According to prosecutors, during that time, she knowingly failed to report more than $14 million in Four Seasons business income to the IRS and Travelers Insurance.
Ms. Luong paid more than $12 million in cash to the temporary agency’s employees without any deductions. Consequently, she failed to pay over $3 million in employment taxes owing to the IRS by Four Seasons for her unlawful “under the table” compensation payments.
Luong defrauded Travelers, the insurance company providing workers’ compensation insurance coverage to Four Seasons, by concealing the cash payments made to her employees. By misrepresenting the Four Seasons payroll, she fraudulently reduced her workers’ compensation premiums by $155,000.
Federal Prosecutors Recommended 18 Months Prison Time
In their sentencing memorandum for Judge Sorokin, the federal prosecutors emphasized that the frauds of which Ms. Luong stood convicted totaled $4,149,000 losses to the Internal Revenue Service and Travelers Insurance Company. However, as alleged in the indictment, these losses included her actions between 2015 and 2020.
The prosecution’s sentencing memorandum stated: “The $4.1 million losses do not include Ms. Luong’s brazen and defiant continuation of her criminal scheme even after this prosecution began—indeed, even after she had pleaded guilty before this Court.”
Based on its sentencing memorandum arguments, the government requested the court sentence Ms. Luong as follows:
Imprisonment for 18 months
Three years of supervised release
Restitution of $155,870.14 to Travelers Insurance Company
Restitution of $3,993,169.47 to the IRS as a condition of supervised release
Forfeiture of $155,870
Judge Sorokin accepted most but not all of the government’s recommended sentence. Per the Judge’s order, Ms Luong is to self-report to the institution designated by the Bureau of Prisons by 2:00pm October 27, 2023
The Prosecution Team
Acting United States Attorney Joshua S. Levy and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, announced Ms. Luong’s sentence. Assistant U.S. Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit prosecuted the case.
