Michael E. Ho, age 69, of Grand Junction, Colorado, was sentenced earlier this week by U.S. District Court Judge Christine M. Arguello to serve 24 months in federal prison, followed by 3 years of supervised release, income tax evasion, United States Attorney John Walsh and IRS Criminal Investigation Acting Special Agent in Charge Steven Osborne announced. Judge Arguello also order Ho to pay $202,442 in restitution to the Internal Revenue Service. Ho was indicted by a federal grand jury in Denver on October 28, 2014, pled guilty on July 28, 2015 and was sentenced on December 14, 2015.
According to the indictment and stipulated facts contained in the plea agreement, Ho owned and managed a dental clinic formerly known as Skyline Dental, located in Grand Junction, Colorado, from approximately 1999 through at least 2004 in which he employed licensed dentists to provide dental services to patients. Skyline Dental operated as a “d/b/a” for the parent corporation “Five-O Enterprises” which HO owned and controlled starting in the year 2001. In February of 2004, the State Board of Dental Examiners enjoined Ho from owning and operating Skyline Dental Clinic because Ho was never licensed to practice dentistry and the State Board took the position that only licensed dentists are permitted to own Dental Clinics.
Ho sold the practice in December 2004 to a licensed Dentist and Ho was hired to manage the clinic. In 2006, Ho and the owner had a business dispute which resulted in the dentist defaulting on his purchase agreement with Ho. Ho then sold the practice to a different dentist in November of 2006 for $3.5 million. Ho was then paid a salary for managing the dental practice. In 2010, the Dentist rescinded his contracts with Ho. Ho in turn converted Skyline Dental clinic to a non-profit corporation, Colorado Community Dental Services “CCDS”, which allowed it to operate under state law without a dentist as its owner. An Asset Purchase Agreement was executed between Five-O Enterprises and CCDS in the amount of $2 million. Ho continued to manage Colorado Community Dental Services but did not receive a salary and did not hold a position on the Board of Directors.
During this same period, Ho also operated Preventative Dental as a d/b/a of Five-O Enterprises which sold dental plans to individuals and were then able to receive discounted dental services by the designated provider, Skyline Dental and later Colorado Community Dental Services. Ho received the income from Preventative Dental.
Ho evaded income tax due and owing by committing affirmative acts of evasion. Between 2006 and 2011, the Government has determined that $202,442 is the total tax due and owing by Ho. In an attempt to evade assessment of taxes by the IRS, Ho took a series of steps to include, but are not limited to, utilizing multiple bank accounts (a personal account and business accounts) which he commingled funds from his various income producing activities making the assessment of tax difficult; he received interest income from the sale of Skyline Dental and did not report the interest income to his accountant in the years 2008 and 2009 when he received interest income of $156,005 and $67,225, respectively; he did not report the income from the sale of discount dental plans to his accountant and thus the income from Preventative Dental was not reported on his tax returns; he deposited cash receipts from Skyline Dental and Colorado Community Dental Services to his personal bank accounts in 2010 and 2011 and did not report the income on his tax returns.
“Intentionally hiding income and assets to avoid paying taxes is criminal tax evasion, pure and simple,” said U.S. Attorney John Walsh. “All Americans have an obligation to pay taxes when those taxes are due and owing. Schemes to avoid that shared obligation by intentionally making records confused and commingled, combined with intentional misrepresentations regarding income and assets, pave the road not just to fines and penalties, but federal prison.”
“For over a decade, Ho took extreme measures to conceal his ownership of the dental business,” said Steven A. Osborne, Acting Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “However, in the end, our financial investigators followed the money which ultimately lead to a tax evasion conviction.”
This case was investigated by Internal Revenue Service – Criminal Investigation and was prosecuted by Assistant U.S. Attorney Tim R. Neff.