Businessman Albert Hee sentenced for tax fraud involving ‘lavish spending’

Albert Hee

A Honolulu businessman convicted of tax fraud has been sentenced to just over three years in prison.

Albert Hee, 61, of Kailua, Hawaii, was sentenced Wednesday to 46 months in prison for engaging in a 10-year scheme of corruptly interfering with the Internal Revenue Service (IRS) in the calculation and collection of his taxes, and for filing six false individual tax
returns which underreported his income for the years 2007-2012, announced Florence T. Nakakuni, United States Attorney for the District of Hawaii.

Hee will be sent to a high-security facility with medical staff because, according to his attorney, he suffers from severe environmental allergies.

Senior U.S. District Judge Susan Oki Mollway also ordered Hee to pay $431,793 in restitution to the IRS, along with a $10,000 fine.

Hee was convicted of all counts on July 10, 2015, after an 11-day jury trial.

According to court documents and the evidence introduced at trial, Hee owned Waimana Enterprises, Inc., a telecommunications company based in Honolulu, Hawaii. Hee used his company to pay approximately $2.9 million of his personal expenses.

The bulk of the expenses were falsely claimed as business deductions on Waimana’s corporate income tax returns, or falsely characterized as “loans” to Hee, Waimana’s sole shareholder. Hee did not report the receipt of the payments as income on his personal income tax returns, and did not pay tax on it.

Information presented to the court reflected that Hee’s “lavish spending” included $96,000 for personal massages which were deducted as “consulting fees,” $1.6 million in salaries and benefits for his wife and children who were not real employees of the company, and more than $736,900 in college tuition, housing and other expenses for his children.

In 2008, Hee bought a $1.3 million home in Santa Clara, Calif., with corporate money and told his accountants that the property would be used by employees of the company. Instead, Hee’s children lived in the home from 2008-2012, which was within skateboarding distance of Santa Clara University, where they attended college. Hee’s children lived at the home, rent-free, and collected rent from others, without paying the amounts over to Waimana.

Waimana also paid for vacations for Hee’s family to DisneyWorld, Tahiti, France, and Switzerland, which he falsely characterized as business-related. Hee also directed Waimana to pay $17,000 for a five-day family vacation at the Mauna Lani resort on Hawaii Island, which Hee falsely characterized as a “stockholder’s meeting,” even though he was the sole shareholder of the company.

The case was investigated by the Internal Revenue Service-Criminal Investigation, and prosecuted by Assistant U.S. Attorney Larry Tong and Trial Attorney Quinn P. Harrington of the Tax Division of the Department of Justice.

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