Chong Xiong, Tax Evasion, Minnesota 2021

MINNEAPOLIS – A trio of St. Paul staffing agency owners have been sentenced in connection with a multi-year tax evasion scheme in which they conspired to evade more than $1 million in federal employment taxes, announced U.S. Attorney Andrew M. Luger.

U.S. District Judge Patrick J. Schiltz sentenced Julian Xiong, 59, of Brooklyn Park, to a year of probation with six months in home detention and $409,340 in restitution to the Internal Revenue Service.

On May 24, 2022, Chong Xiong, 60, of Minneapolis, was sentenced to two years in prison followed by a year of supervised release and ordered $877,820 in restitution to the IRS. On June 17, 2021, Andrew Xiong, 59, of Ramsey, was sentenced to one year and one day in prison followed by a year of supervised release and restitution of $686,079 to the IRS.

The Xiong brothers' staffing agency operated under the names Twinstar Solutions, Hope Solutions, and Step Staffing. According to court documents, between 2012 and 2017, Chong Xiong operated a temporary staffing agency in St. Paul with his brothers Julian Xiong and Andrew Xiong. The defendants contracted with local companies to supply workers, but instead of accurately withholding and paying over the correct taxes to the government, they paid some of their employees in cash and kept the tax withholdings for themselves.

Chong Xiong and Julian Xiong committed the evasion while running the business under the Twinstar name until 2013 when Julian Xiong opened an employment agency in Roseville to serve one of Twinstar's clients and continued a similar fraud. The original company was then renamed Hope Solutions and operated by Andrew Xiong and Chong Xiong. In 2016, Andrew Xiong left the conspiracy, and Chong Xiong renamed the business Step Staffing until the business closed a few months later.

In addition to falsely reporting and underpaying payroll taxes, the defendants caused the business to file false annual corporate tax returns and use multiple bank accounts to hide the scheme. Chong Xiong admitted to purchasing a Mercedes-Benz with more than $28,000 in $100 bills.

In sentencing him to the lengthiest term, Judge Schiltz noted that Chong Xiong was the last to accept responsibility and plead guilty and was responsible for the greatest tax loss and was the longest participant and supervisor of the scheme.

Source: https://www.justice.gov/usao-mn/pr/st-paul-staffing-agency-owners-sentenced-tax-evasion-scheme