Fails to Report over $1.1 Million to the IRS

Los Angeles – A San Fernando Valley woman who owned and operated three mortgage referral businesses was sentenced by United States District Judge Gary A. Feess to 18 months imprisonment after pleading guilty to tax fraud.

Shelly Tammy Kim, 43, of Northridge, was further ordered to pay restitution to the Internal Revenue Service in the amount of $398,164, representing the taxes owed for the years 2003 through 2005. In imposing the sentence, Judge Feess noted that defendant “gamed the system” by writing commission checks from her business accounts to other individuals to hide over one million dollars in income, when in fact, defendant was cashing the checks and using the money to fund her own lavish lifestyle . The Judge noted that defendant had used sophisticated means in committing the offense and stated that a custodial sentence was necessary to protect our voluntary system of reporting income and paying tax.

According to her plea agreement, Kim owned and operated Best Funding Incorporated (BFI), CalState Lending Incorporated (CLI) and Pacifica Mortgage (PMI)–companies that earned income by referring loans to various lenders from whom they received loan referral commissions. Kim was required to report her income from these companies on the individual tax returns she filed for the years 2003 through 2005.

Kim failed to report all of the income she received from BFI, CLI and PMI on her 2003 through 2005 tax returns by issuing checks payable to three individuals and informing her tax return preparer that these payments represented commission payments to loan agents for loan referrals. However, Kim cashed the checks and used the funds for her own benefit.

In filing her income tax returns for the years 2003, 2004 and 2005 Kim failed to report approximately $469,000, $420,000 and $295,554, respectively, in income resulting in a tax due of approximately $398,164.

According to documents filed with the court, Kim’s crimes appear to have been motivated by the desire to live a lifestyle that was not commensurate with her reported income. That lifestyle included the purchase of a multi-million dollar home, luxury car leases and gambling trips to Las Vegas during these years.

The investigation of Kim was conducted by IRS – Criminal Investigation in Los Angeles in conjunction with the United States Attorney’s Office for the Central District of California.