United States v. Ai Zhen Xu, et al.

Press Release U.S. Attorney Announces 30-Count Indictment Charging Garment-Manufacturing Executive With Tax Fraud Scheme, Masking Millions In Payroll Tuesday, January 16, 2024 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Ai Zhen Xu Allegedly Hid Millions of Dollars from the Internal Revenue Service by Paying Employees in Unreported Cash Payments Damian Williams, the United States Attorney for the Southern District of New York, and Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of an Indictment charging AI ZHEN XU with criminal tax offenses. XU was the vice president and secretary of the garment-manufacturing company Winner Fashions, Inc. (“Winner Fashions”). XU is alleged to have conspired to perpetrate a long-running scheme to conceal more than approximately $3,800,000 in gross receipts attributable to Winner Fashions and to evade more than approximately $290,000 in federal payroll taxes owed by Winner Fashions to the Internal Revenue Service (“IRS”). XU was arrested this morning and will be presented before U.S. Magistrate Judge Katharine H. Parker this afternoon. The case is assigned to U.S. District Judge Mary Kay Vyskocil. U.S. Attorney Damian Williams said: “For at least six years, Ai Zhen Xu allegedly engaged in a scheme by which she used the off-the-books services of a check-cashing business to conceal nearly $4 million in gross receipts paid to her company and evade payroll taxes. Thanks to the skillful investigative work of IRS-CI and the career prosecutors of this Office, the defendant will be held accountable for her actions.” IRS-CI Special Agent in Charge Thomas Fattorusso said: “It’s alleged Xu concealed millions to avoid paying the federal taxes that every legitimate business pays. This is not a victimless crime. While this failure to pay business taxes further widens the American tax gap, every other taxpayer is now responsible to cover the cost. Xu’s alleged willful disregard for U.S. law has prompted this arrest, and she will now pay the price for her actions.” According to the allegations in the Indictment:[1] From 2016 through at least 2021, XU and others used the services of a check‑cashing business to cash checks issued to Winner Fashions as payment for its services. XU concealed this cash revenue from Winner Fashions’ accountant, resulting in Winner Fashions’ relevant tax filings omitting substantial amounts of gross receipts. During the same period, XU and others paid Winner Fashions’ employees via a combination of cash payments and payroll checks generated by Winner Fashions’ accountant. XU concealed these cash payments from Winner Fashions’ accountant, resulting in Winner Fashions failing to pay to the IRS payroll taxes associated with these unreported cash payments. * * * XU, 70, of Port Washington, New York, is charged with one count of conspiracy to defraud the IRS, which carries a maximum sentence of five years in prison. XU is also charged with 23 counts of failure to collect, account for, and pay over payroll taxes, each of which also carries a maximum sentence of five years in prison, and six counts of aiding and assisting the preparation and presentation of false U.S. corporation income tax returns, each of which carries a maximum sentence of three years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. Mr. Williams praised the outstanding investigative work of IRS-CI. This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Benjamin M. Burkett is in charge of the prosecution. The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty. [1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation. Contact Nicholas Biase, Lauren Scarff (212) 637-2600 Updated January 16, 2024 Attachment U.S. v. Xu Indictment [PDF, 448 KB] Topic Tax Component USAO - New York, Southern Press Release Number: 24-015

Press Release U.S. Attorney Announces 30-Count Indictment Charging Garment-Manufacturing Executive With Tax Fraud Scheme, Masking Millions In Payroll Tuesday, January 16, 2024 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Ai Zhen Xu Allegedly Hid Millions of Dollars from the Internal Revenue Service by Paying Employees in Unreported Cash Payments Damian Williams, the United States Attorney for the Southern District of New York, and Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of an Indictment charging AI ZHEN XU with criminal tax offenses. XU was the vice president and secretary of the garment-manufacturing company Winner Fashions, Inc. (“Winner Fashions”). XU is alleged to have conspired to perpetrate a long-running scheme to conceal more than approximately $3,800,000 in gross receipts attributable to Winner Fashions and to evade more than approximately $290,000 in federal payroll taxes owed by Winner Fashions to the Internal Revenue Service (“IRS”). XU was arrested this morning and will be presented before U.S. Magistrate Judge Katharine H. Parker this afternoon. The case is assigned to U.S. District Judge Mary Kay Vyskocil. U.S. Attorney Damian Williams said: “For at least six years, Ai Zhen Xu allegedly engaged in a scheme by which she used the off-the-books services of a check-cashing business to conceal nearly $4 million in gross receipts paid to her company and evade payroll taxes. Thanks to the skillful investigative work of IRS-CI and the career prosecutors of this Office, the defendant will be held accountable for her actions.” IRS-CI Special Agent in Charge Thomas Fattorusso said: “It’s alleged Xu concealed millions to avoid paying the federal taxes that every legitimate business pays. This is not a victimless crime. While this failure to pay business taxes further widens the American tax gap, every other taxpayer is now responsible to cover the cost. Xu’s alleged willful disregard for U.S. law has prompted this arrest, and she will now pay the price for her actions.” According to the allegations in the Indictment:[1] From 2016 through at least 2021, XU and others used the services of a check‑cashing business to cash checks issued to Winner Fashions as payment for its services. XU concealed this cash revenue from Winner Fashions’ accountant, resulting in Winner Fashions’ relevant tax filings omitting substantial amounts of gross receipts. During the same period, XU and others paid Winner Fashions’ employees via a combination of cash payments and payroll checks generated by Winner Fashions’ accountant. XU concealed these cash payments from Winner Fashions’ accountant, resulting in Winner Fashions failing to pay to the IRS payroll taxes associated with these unreported cash payments. * * * XU, 70, of Port Washington, New York, is charged with one count of conspiracy to defraud the IRS, which carries a maximum sentence of five years in prison. XU is also charged with 23 counts of failure to collect, account for, and pay over payroll taxes, each of which also carries a maximum sentence of five years in prison, and six counts of aiding and assisting the preparation and presentation of false U.S. corporation income tax returns, each of which carries a maximum sentence of three years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. Mr. Williams praised the outstanding investigative work of IRS-CI. This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Benjamin M. Burkett is in charge of the prosecution. The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty. [1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation. Contact Nicholas Biase, Lauren Scarff (212) 637-2600 Updated January 16, 2024 Attachment U.S. v. Xu Indictment [PDF, 448 KB] Topic Tax Component USAO - New York, Southern Press Release Number: 24-015