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Raymond Chu Pleads Guilty In Tax Evasion Scheme Case

Raymond Chu, owner of a firm that does sewing work for couture companies, pled guilty to charges that he was involved in a $480,000 tax evasion scheme...

Raymond Chu, owner of a firm that does sewing work for couture companies, pled guilty to charges that he was involved in a $480,000 tax evasion scheme earlier this month.

This story first appeared in the January 30, 2008 issue of WWD.  Subscribe Today.

Chu could not be reached for comment.

The allegations concern a period of time between 2002 and 2005. According to court documents filed in Manhattan federal court on Jan. 17, Chu, who owns Divine Couture Corp., allegedly cashed checks written to the business by clients through check-cashing establishments instead of depositing them into a bank account. The complaint said that, as part of the scheme, Chu asked some customers to issue checks of less than $10,000 to Divine Couture. Some customers did comply with that request.

The scheme gave him cash that he used to pay himself and his employees wages that were not reported to the Internal Revenue Service. The wages paid in cash did not have income tax, Social Security tax or any other amounts withheld.

Chu was charged with tax evasion and willful failure to collect tax. He could face up to five years in prison, three years of supervised release, a fine of $250,000 and the prosecution costs, according to information from the IRS Criminal Investigation division. The sentencing is set for April 17 before Judge Harold Baer. Chu said he would file updated personal and business tax returns prior to sentencing.