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Painting Contractor Gets Jail Term; $1.9 Million Tax Fraud
Thursday, May 31, 2012

Painter Who Didn't Disclose $1.9 Million Gets Prison Sentence for False Tax Return

A Cupertino, Calif., painter, who used undisclosed funds to pay undocumented workers in cash, was sentenced May 15 to two months in prison and four months home detention for filing a false tax return (United States v. Kim, N.D. Cal., No. 3:10-cr-00171, 5/15/12).
Insoo Kim, who has owned and operated Melody Painting in Santa Clara, Calif., since 1986, was indicted on March 9, 2011, and charged with three counts of filing a false tax return and eight counts of failure to collect and pay employment taxes. He pleaded guilty to one count of filing a false tax return Nov. 14 in the U.S. District Court for the Northern District of California.
According to court documents filed by federal prosecutors, Kim concealed income and three bank accounts from his tax return preparer while working on his 2003, 2004, and 2005 tax returns. He then filed fraudulent income and quarterly employment tax returns under penalty of perjury and went on to lie about unreported income to an IRS revenue agent who conducted a civil examination of his returns.
The revenue agent issued a series of summonses to various banks in February 2007 to find the source of the unreported funds, according to court documents.
In August, Kim admitted to the undisclosed income and bank accounts and explained that he used funds from the accounts to pay about 40 undocumented workers in cash in an effort to conceal their undocumented status.
Ultimately, Kim deposited approximately $1,907,103.33 in business receipts into the undisclosed bank accounts, prosecutors said. He has already paid the $28,451 in total federal income tax loss to the federal government for the 2003, 2004, and 2005 tax years.
An attorney representing Kim was not available to comment on the sentence.

 

 

 

 

Who Is The Real Associated Builders and Contractors?

During any number of dark periods in human history, the forces who set their designs upon absolute power and oppression subscribed to the theory that an endless stream of lies and distortions was central to achieving their aims.  It was, and still is, known as propaganda, and its primary objective is to persuade people of what those seeking power and control think is right - regardless of the facts.  To those seeking power, propaganda does not have to be popular, nor does is have to be intellectually pleasing, because, according to the theory, it is not the goal of propaganda to discover intellectual truths.

In our modern system of political debate and discourse, those tenets have, unfortunately, been embraced and put into practice by various ideologues and extreme organizations.  And nowhere are the dark arts of political propaganda being deployed with such outsized exactitude than inside the Associated Builders and Contractors (ABC).  The distortions, falsehoods and outright lies being consistently perpetrated by the ABC when it comes to issues such as prevailing wage laws and project labor agreements (PLAs), are prime examples of the ABC's aggressive and disciplined devotion to the propaganda playbook.

What the ABC specifically seeks to do with their propaganda efforts is to divert attention away from their fierce defense of a "race to the bottom" business model that, for the most part, defines the non-union construction industry in America today and extracts tremendous social and economic tolls from communities across the nation.

When any entity is seeking to invest dollars in the U.S. construction industry today, it has essentially two business models from which to choose.  The first is a "high road" business model epitomized by the substantive investments in the world's most admired skilled craft training infrastructure.  These programs, in turn, produce highly skilled and productive craft professionals that command a pay and benefits package reflective of their skill and productivity levels (which numerous and rigorous academic studies have shown actually reduces costs for public agencies). 


Furthermore, the "high road" model promotes the development of career training opportunities in the skilled trades for local residents – particularly women, minorities and military veterans (through a program called "Helmets to Hardhats").

But what the ABC advocates on behalf of is a "low road" or “race to the bottom” business that is predicated upon the belief that contracts in the construction industry ought to be awarded solely upon a contractor’s ability to assemble a low-wage, low-skill, and oftentimes highly vulnerable and exploitable, workforce.  The ABC's propaganda characterizes this approach as "fair and open competition."  But, that begs the question as to whether the use of undocumented workers (estimated at 25% of the U.S. construction industry in 2007), or the systematic abuse of the H2(b) visa program to import skilled workers from other countries, or the misclassification of workers as “independent contractors” constitutes “fair and open competition.”

For sure, the ABC does not care that the claims they make about PLAs or prevailing wage laws are erroneous and not true, as long as the media and the citizenry are focused on those issues and not on the ABC itself.

Fortunately, Dr. Tom Kirger PhD. has provided a factually-based foundation upon which a harsh spotlight of scrutiny will now be directed towards the ABC; its operations; and its business practices.

Dr. Kirger, a Professor of Political Science at the National Labor College, recently concluded an in-depth research project that uncovers many of the fallacies that permeate the ABC's image and operations.  His research analyzed ABC from a number of different perspectives, including its origins, its membership and density among contractors in the American construction industry, its finances, its formal apprenticeship and craft training programs (along with its affiliate, the National Center for Construction Education and Research (NCCER), and ABC’s more recent electronic, ideological issue advocacy.

In his conclusion, Dr. Kriger has this to say, in part, about the ABC:

ABC’s low road labor and employment advocacy may have produced short term gains for open shop contractors and construction users over the years (although this point is worthy of debate because many have excluded efficient unionized contractors from bidding jobs), but this strategy also produced negative consequences for the industry and our society.  Low wages and minimal training have had a detrimental effect on individuals and communities.  As a result, many industry leaders decry what they perceive as a tendency of young people to reject construction as a career choice.  ABC’s low road advocacy devalued construction as an occupation.  Where construction jobs once existed as an entry point to the middle class and as the backbone of local economies, it has been observed that today “Construction workers – union and non-union alike – now tend to work harder, for less money, and under harsher conditions.”

 For the industry as a whole, the second negative consequence has been chronic regional shortages of skilled workers in those areas of the country where anti-union campaigns and low road strategies have damaged the industry’s training capacity.