Michael H. Higa, Tax Scheme, Hawaii 2018

A Certified Public Accountant (CPA) and controller of several engineering businesses has been sentenced to prison for his role in a tax scheme.

Michael H. Higa, the CPA and controller, was sentenced to 40 months in prison in Honolulu, Hawaii, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Tax Division and U.S. Attorney Kenji M. Price for the District of Hawaii.

On Nov. 20, 2018, a jury convicted Higa of conspiracy to defraud the United States along with co-conspirator Wagdy Guirguis. In addition to the conspiracy conviction, Higa was also convicted of one count of assisting in the preparation of a false tax return.

The convictions arose from a scheme to divert funds from Guirguis' business entities for Higa's own personal benefit and to avoid the payment of federal employment taxes, corporate and individual income taxes, and Internal Revenue Service (IRS) penalties.

According to the evidence presented at trial, Guirguis operated numerous engineering businesses. Higa, a CPA, was the controller of these businesses. Higa also served as a nominee officer of another entity controlled by Guirguis.

When the IRS determined Guirguis' businesses owed over $800,000 in federal employment taxes and assessed an $812,000 penalty, Guirguis and Higa took steps to place income and assets out of the reach of the IRS. For instance, Guirguis and Higa used a nominee entity to fraudulently convey a condominium to Guirguis' wife.

In addition to the term of imprisonment, U.S. District Judge Helen Gillmor ordered Higa to serve three years of supervised release and to pay $2,045,544.97 (jointly and severally with his co-defendant Guirguis) in restitution to the IRS.

On June 27, Guirguis was sentenced to five years in prison. In addition, Judge Gillmor ordered Guirguis to serve three years of supervised release and to pay $3,078,157.81 in restitution to the IRS minus any payments already made to the IRS.

Source: https://www.justice.gov/archives/opa/pr/engineering-firms-cpa-sentenced-prison-role-tax-scheme