| FOR IMMEDIATE RELEASE October 22, 2007 WWW.USDOJ.GOV/USAO/CAN |
SAN FRANCISCO – United States Attorney Scott N. Schools and IRS-CI Special Agent in Charge Scott O’Briant announced that Rene Medina, owner of Lucky Chances Casino in Colma, pleaded guilty to three counts of tax evasion. These charges are the result of an investigation by the Internal Revenue Service Criminal Investigation.
In pleading guilty, Mr. Medina, age 62 of Atherton, CA admitted that from July 7, 1999 through June of 2007, he was the sole shareholder of Lucky Chances, a casino/card club in Colma, CA. Lucky Chances filed U.S. Income Tax Returns for a Subchapter S Corporation (Form 1120S) with the IRS for the tax years 1999, 2000, and 2001. In filing as a Subchapter S Corporation, Lucky Chances paid no corporate income tax but its ordinary income was reported by Mr. Medina as a shareholder on his personal income tax returns.
Mr. Medina plead guilty to evading payment of his federal income taxes by causing Lucky Chances to make payments for personal expenses and fictitious business expenses in the amount of $1,129,901. These payments were expensed by Lucky Chances on its books, records and tax returns as ordinary and necessary business expenses. These expenses reduced the amount of income tax Mr. Medina reported and paid on his personal income tax returns. The personal expenses included furniture and redecorating services for his personal residence. The additional expenses were paid by Lucky Chances to Casino Players Promotions, for fictitious services allegedly provided to Lucky Chances.
According to a superseding indictment filed on May 17, 2006, Mr. Medina caused his casino to deduct approximately $2,634,000 in bogus business expenses from the income of Lucky Chances Casino. This amount included $245,161 for furniture for his Atherton home and a new 2000 Mercedes Benz E320W. Mr. Medina’s niece and nephew, Phyllis Reyes Cuison, of South San Francisco, and Rawlin Reyes, of Fremont, allegedly helped Mr. Medina divert hundreds of thousands of dollars of Lucky Chances money to Mr. Medina by funneling checks from Lucky Chances through various business entities controlled by them. The indictment alleged that the defendants used false documents in an attempt to disguise where money was being diverted.
Mr. Medina has agreed to pay additional income taxes owed of $591,083 within 60 days of this plea.
The maximum statutory penalty for tax evasion in violation of 26 U.S.C. § 7201 is 5 years imprisonment, a fine of $250,000, and three years of supervised release.
However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Tina Hua and Cynthia Stier are prosecuting the case. These charges are the result of a lengthy investigation by the Internal Revenue Service Criminal Investigation.
Further Information:
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Natalya LaBauve at (415) 436-7055 or by email at Natalya.LaBauve@usdoj.gov.