Leader Pleads Guilty in Family Scheme to Conceal Millions in Profits from the Purchase and Sale of Foreclosed Properties

Concealed from IRS Millions of Dollars of Profits Made from “Flipping” Hundreds of Properties Bought at Foreclosure Auctions

January 28, 2010 - Minh-Vu Hoang, age 59, of Bethesda, Maryland, pleaded guilty today to conspiracy to defraud the Internal Revenue Service and the U.S. Bankruptcy Trustee in connection with a scheme to conceal millions in profits earned from the purchase and sale of foreclosure properties.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge C. André Martin of the Internal Revenue Service - Criminal Investigation; Montgomery County State’s Attorney John McCarthy; and Special Agent in Charge Richard McFeely of the Federal Bureau of Investigation.

“People who create elaborate schemes that have no purpose but to mislead others and defraud the IRS run the risk of prosecution,” stated C. André Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge. “Those Americans who file accurate, honest and timely tax returns can be assured that the Government will hold accountable those who do not.”

According to Hoang’s plea agreement, Minh-Vu Hoang, her husband and other family members purchased property at foreclosure auctions beginning in 1999, and resold some of the properties at a profit. Hoang and others deposited and withdrew money from an escrow account for the purchase and sale of properties, and transferred money from the escrow account to business entities they controlled in order to conceal Hoang’s financial interests in the properties. From 2000 to 2005, Hoang and others purchased and sold hundreds of foreclosure properties using the names of their agents or business entities to conceal their involvement in the purchase and sale of the properties, and thereby avoid taxes.

On May 10, 2005, Minh-Vu Hoang filed for a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland. On May 27, 2005, Minh-Vu Hoang filed several false schedules and a false Statement of Financial

Affairs with the Bankruptcy Court, in support of her petition. In her Schedules, Minh-Vu Hoang reported a financial interest in only six properties, knowing that she had an interest in other properties, and further reported income in 2003 and 2004 of only $96,000 each year, knowing that her income for those years was substantially higher. She also failed to report her interest in various bank accounts.

For example, on or about May 10, 2005, the same day that she filed her bankruptcy petition, Minh-Vu Hoang withdrew $10,000 from an account she controlled in order to purchase property located at 9807 Moreland Street in Fort Washington, Maryland in the name of Cybele GP. Neither that property nor her interest in Cybele PG was reported in the bankruptcy schedules submitted in conjunction with her bankruptcy petition. Similarly, in July 2005, Minh-Vu Hoang’s sister, Van Vu, opened a bank account in the name of Madison Plus LLC. Van Vu was the sole signatory on the account. Over the course of the next several months, proceeds from the sale of real estate controlled by Minh-Vu Hoang were deposited into the Madison Plus LLC account. Over the life of the Madison Plus LLC account, more than $1 million flowed through the account.

The government contends that the tax loss and the loss from the bankruptcy fraud exceeded $2.5 million but was not more than $7 million. The defendant contends that the loss was less. Chief U.S. District Judge Deborah K. Chasanow will determine the amount of loss at Minh-Vu’s sentencing, which has not yet been scheduled. Minh-Vu Hoang faces a maximum sentence of five years in prison.

Minh-Vu’s sister, Van Thanh Vu, age 55, of Bethesda, and Van Vu’s ex-husband, Hai Duc Ngo, age 61, of Fairfax, Virginia pleaded guilty on Monday and Wednesday this week to misprison of a felony, for attempting to conceal Minh-Vu’s interest in the Madison Plus LLC account. Specifically, in July 2005 Van Vu filed a voluntary Chapter 11 bankruptcy petition. Hai Duc Ngo, with Van Vu’s knowledge and consent, submitted an affidavit in Van Vu’s bankruptcy proceeding, claiming that the Madison Plus LLC account was to be managed by Van Vu for Hai Duc Ngo’s exclusive benefit. At the time this affidavit was filed, Van Vu and Hai Duc Ngo knew that Minh-Vu Hoang was in bankruptcy and that Minh-Vu Hoang did not disclose that she had a financial interest in the Madison Plus LLC account on her bankruptcy schedules or in her Statement of Financial Affairs. Knowing that Minh-Vu Hoang had an interest in the Madison Plus LLC account, neither Van Vu nor Hai Duc Ngo made that fact known to any law enforcement personnel, including the IRS.

Van Thanh Vu and Hai Duc Ngo face a maximum sentence of three years in prison. Judge Chasanow has scheduled their sentencings for May 3, 2010 at 2:00 p.m. and July 19, 2010, at 9:00 a.m., respectively.

Minh-Vu’s husband, Thanh Hoang, age 64, of Bethesda, pleaded guilty to conspiracy to impede the IRS for his role in the scheme and is scheduled to be sentenced on June 14, 2010 at 9:00 a.m. Hoang faces a maximum sentence of five years in prison.

United States Attorney Rod J. Rosenstein thanked IRS - Criminal Investigation; Special Investigator Daniel N. Wortman of the Montgomery County State’s Attorney’s Office; the Federal Bureau of Investigation and the Greenbelt Office of the United States Trustee Program, the Department of Justice agency that supervises bankruptcy cases and trustees, for their work in this investigation and prosecution. Mr. Rosenstein commended Assistant United States Attorneys David I. Salem and Emily N. Glatfelter, who are prosecuting the case.