South Bay CPA Charged With Aiding In Tax Fraud

SANTA CLARA COUNTY, CA — A South Bay certified public accountant is set to be arraigned Wednesday on felony tax fraud charges for allegedly helping his clients in the preparation and filing of false returns. According to prosecutors with the Santa Clara County District Attorney's Office, Jimmy Chen, 63, of Saratoga, set up private charitable foundations for hundreds of clients and in the case of at least six of those clients, it was a scheme to help them evade income tax and receive personal benefits.

“Taxes provide funding for essential public services,” said Deputy District Attorney Vonda Tracey. “When someone illegally evades tax obligations, it’s the community that pays the price.”

Prosecutors say an investigation by the Franchise Tax Board showed Chen charged his clients a fee for setting up their private foundations and for other services relating to the private foundations, including bookkeeping services and preparation of foundation returns.

Because private foundations are tax-exempt entities, this allowed the clients to make donations to their private foundations and deduct the amounts as charitable contributions on their personal income tax returns to reduce their income and pay less tax, prosecutors allege.

The clients then purportedly used the private foundation funds for personal purposes, including paying for vacation, vehicles, rents and their children's college tuition, according to the DA's Office.

Chen, whose arraignment is scheduled for 1:30 p.m. Wednesday in San Jose, faces 26 counts of return preparer fraud. If convicted, he faces incarceration.

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