Downey man pleads guilty to filing false tax return
A Downey man who owned three auto repair and parts businesses in the local area pleaded guilty in federal court today to filing a false income tax return. Efrain Espinoza Gonzalez, 65, entered his guilty plea before U.S. District Judge Manuel L. Real. Gonzalez pleaded guilty to count two of a 16-count indictment which charges him with filing a false income tax return for the 2007 tax year.
He faces a maximum sentence of three years in prison when he returns to court July 7 for sentencing. He may also be ordered to pay restitution of $86,562, in addition to the $140,052 that he paid towards his income tax liability during an audit.
According to the plea agreement, from 2006-08 Gonzalez owned EG Auto Electric in Bell Gardens and HP Used Auto Parts in Huntington Park, and was a partner in Avalanche Truck & Van Used Parts. He also owned "several" rental properties.
Although Gonzalez maintained separate bank accounts for each of the businesses, as well as a separate account for his rental properties, he frequently deposited income that he received from his various businesses into his personal bank accounts, authorities said.
The IRS began auditing Gonzalez's 2006 federal income tax return in October 2008, and expanded the audit to include Gonzalez's 2007 return. During the audit, Gonzalez filed an amended return for 2007, as well as a return for 2008.
Gonzalez admitted in the plea agreement that he intentionally understated his total income by $250,969, $250,061 and $245,756 on the 2006, 2007 and 2008 returns, respectively. He also admitted he had intentionally understated his total income on the amended 2007 tax return by $183,351.
Gonzalez's failure to report the additional taxable income resulted in a tax loss to the government of between $226,614 and $266,080 -- the exact amount is under dispute.
In the plea agreement, Gonzalez also admitted he had structured cash deposits to his personal bank accounts to evade the federal currency reporting requirements, and that during a 10-month period beginning in February 2008, he had structured $152,850 in cash deposits. (Banks are required to submit reports to the U.S. Department of Treasury whenever a person deposits more than $10,000 in currency.)