Albany, NY – Chong Mun Chae, a Sunnyside, New York resident, was sentenced to 46 months in federal prison on July 28, 2009, following a guilty plea to charges of mail and tax fraud. The case, investigated by federal authorities, revealed a calculated scheme to defraud insurance companies and the federal government, resulting in substantial financial losses and ultimately, Chae’s impending deportation.
Chae operated a network of companies – including Charlie Brown Services, Inc., Top Ace Services, and K-One Service, Inc. – frequently altering their names in an attempt to evade detection. These businesses provided laborers for hazardous asbestos removal projects across New York State. However, Chae systematically misrepresented the scope and nature of his workforce to insurance providers, claiming each policy only covered a single, low-risk employee, typically a receptionist or similar position. This deception allowed him to secure drastically reduced workers’ compensation premiums, effectively pocketing the difference.
The scheme wasn’t limited to insurance fraud. Federal prosecutors also uncovered a pattern of failing to report substantial income generated by his businesses, deliberately avoiding the payment of federal taxes. This dual-pronged fraud allowed Chae to amass significant illicit profits while simultaneously shifting the financial burden onto legitimate businesses and the government.
Investigation and Prosecution
The investigation began to gain traction in 2008, leading to charges filed on October 6th, 2008. Chae was indicted on one count of mail fraud, a violation of 18 U.S.C. § 1341, and one count of tax fraud, a violation of 26 U.S.C. § 7206(1). He subsequently entered a guilty plea on both counts. The sentencing on July 23, 2009, included not only the 46-month prison term, but also a two-year period of supervised release following incarceration and a $200 special assessment.
Restitution Ordered
Beyond the criminal penalties, Judge McAvoy ordered Chae to pay significant restitution to the defrauded parties. This included $1,067,265 to the New York State Insurance Fund, $238,187 to Princeton Insurance, and $345,904 to Zurich Insurance, totaling $1,651,356. The court’s decision underscores the severity of the financial harm caused by Chae’s actions.
Deportation Proceedings
Following the completion of his prison sentence and supervised release, Chae will be deported to his native South Korea. This additional penalty reflects the seriousness of his crimes and the government’s commitment to removing individuals who exploit the U.S. financial system.
Key Facts
- Defendant: Chong Mun Chae
- Location: Sunnyside, New York
- Crimes: Mail Fraud and Tax Fraud
- Sentencing: 46 months imprisonment, 2 years supervised release, $1,651,356 restitution
- Laws Violated: 18 U.S.C. § 1341, 26 U.S.C. § 7206(1)
- Additional Penalty: Deportation to South Korea
This case serves as a stark reminder of the consequences of insurance and tax fraud, and the dedication of law enforcement to hold perpetrators accountable.
Source: EPA ECHO Enforcement Case Database
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