Hsu and Chang Convicted in $400K Tax Fraud Scheme

San Francisco residents Howard Hsu, 36, and his mother Tracy Chang, 65, were found guilty after a one-week trial for conspiring to file fraudulent corporate income tax returns, stealing roughly $400,000 from the IRS. The verdict, delivered in federal court, marks the end of a years-long investigation into Didsee Corporation, a Nevada-based online ad marketing firm Hsu owned and operated.

According to trial evidence, Hsu masterminded the scheme by feeding false financial summaries to Didsee’s tax preparers, inflating business expenses that never occurred and laundering his personal spending through company accounts. Chang, serving as Didsee’s bookkeeper and listed as President, Secretary, Treasurer, and Director, opened bank accounts, shuffled funds, and signed off on the falsified returns—knowingly certifying lies to the federal government.

Between 2007 and 2009, the pair filed rigged corporate returns, including an amended 2007 return, to slash tax liabilities. Hsu handed CPAs what investigators called “cooked books,” while Chang maintained the false records. The duo didn’t make honest mistakes—they built a system designed to cheat the IRS and keep hundreds of thousands in owed taxes.

“This case was not about a mistake or a misunderstanding, it was about greed,” declared Special Agent in Charge Michael T. Batdorf of IRS Criminal Investigation. “Tracy Chang agreed to help her son, Howard Hsu, and his business cheat the IRS. Hsu fabricated millions of dollars in expenses and Chang knew the expenses were false.”

Federal prosecutors emphasized that no one, not even family-run operations, gets a pass on tax law. “Owners can’t use their businesses as piggybanks,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg. “All employers are legally required to file accurate and complete returns and pay their fair share – just like their employees.”

Sentencing has not been scheduled. Hsu and Chang face up to five years in prison for conspiracy and three years for each count of filing false returns, along with supervised release, restitution, and steep monetary penalties. The case was prosecuted by Assistant U.S. Attorney Colin Sampson and Trial Attorney Matthew Kluge, with investigation led by IRS-Criminal Investigation.