Wagdy Guirguis, a businessman from Hawaii, and his accomplice Michael Higa have been convicted of tax evasion in a scheme that diverted millions of dollars from Guirguis’ business entities for his personal use. The convictions arise from a scheme to defraud the United States and avoid the payment of federal employment and income taxes.
Honolulu, HI – Wagdy Guirguis, owner of an engineering firm, and Michael Higa, a certified public accountant, were convicted of conspiracy to defraud the United States yesterday, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman and U.S. Attorney for the District of Hawaii Kenji M. Price. In addition to the conspiracy conviction, Guirguis was also convicted of three counts of filing false corporate income tax returns, one count of failure to file a corporate income tax return, three counts of tax evasion, one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws and one count of witness tampering.
Guirguis was convicted of filing false corporate income tax returns that omitted millions of dollars of gross receipts for one of his businesses. He also failed to file a corporate income tax return for the same business, resulting in more than $1.7 million in unreported gross receipts. Higa, on the other hand, was convicted of aiding and assisting in the preparation of a false tax return for one of Guirguis’ business entities.
According to court documents and evidence presented at trial, Guirguis operated numerous engineering businesses. Higa, a certified public accountant, was the controller of these businesses. When the IRS determined Guirguis’ businesses owed over $800,000 in federal employment taxes and assessed a $812,000 penalty, Guirguis and Higa took various steps to place income and assets out of the IRS’ reach.
The scheme involved diverting approximately $1.3 million from Guirguis’ businesses for his personal use. Guirguis and Higa used a nominee entity to conceal the transaction and evade taxes. They also instructed a bookkeeper to alter the books and records to conceal the transaction from the IRS.
The case is a reminder that employers who withhold employment taxes from their employees’ paychecks and choose to pocket those funds violate the trust of their employees and the United States. The U.S. Attorney’s Office and the IRS will continue to identify and prosecute employment tax offenders, ensuring that such businesses and executives are held to account and do not gain an unfair advantage over honest employers who follow the law and pay their fair share.
Guirguis and Higa’s actions to obstruct the IRS’ collection efforts are very serious. IRS-Criminal Investigation will continue to pursue employers who collect these taxes and use the funds for personal gain.
Guirguis’ 2010 through 2012 returns omitted $553,000 in income, resulting in a tax deficiency of $165,000. The convictions are a result of a scheme to defraud the United States and avoid the payment of federal employment and income taxes.
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Key Facts
- State: Hawaii
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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