A two-year investigation led by the Tax Recovery and Criminal Enforcement (TRaCE) Task Force, with assistance from the Department of Insurance, ended with a Southern California clothing retailer pleading guilty on four counts of sales tax evasion, filing false state tax returns, failure to pay taxes on employee wages, workers’ compensation fraud, and admitting to two special enhancements: white collar crime and excessive taking.

Jeong Hwan Kim, 59, of Los Angeles County, entered the plea in Los Angeles County Superior Court, Norwalk Branch, on July 18, 2017. Kim owned and operated more than 50 retail clothing stores in Los Angeles, Orange, San Diego, and Ventura counties.

From 2010 through 2016, the TRaCE investigation revealed Kim failed to report more than $29 million in sales, more than $39 million in taxable income, more than $8 million in wages, and evaded payment of $5.7 million in sales, income, and payroll tax. Kim also failed to report more than $7 million in wages to his insurance carriers, and evaded payment of more than $350,000 in workers’ compensation insurance.

Kim’s plea agreement states that he must pay more than $7.6 million in restitution for tax and associated costs, and serve two years in county jail. If he fails to pay full restitution within six months, he will receive a 17-year prison sentence.

The California Attorney General’s Office prosecuted the case in coordination with the California Department of Justice, California Department of Tax and Fee Administration, Department of Insurance, Employment Development Department, and Franchise Tax Board.