A Brooklyn Park man was convicted Thursday for his involvement with two St. Paul employment agencies that conspired to evade more than $1 million in federal employment taxes.
Julian Xiong, 59, was sentenced to one year probation with six months house arrest and $409,340 in restitution to the Internal Revenue Service.
Between 2012 and 2017, Xiong ran a temp agency in St. Paul with his brothers Chong Xiong and Andrew Xiong, through which the three evaded federal employment taxes, according to court documents.
Chong Xiong, 60, of Minneapolis, was sentenced to two years in prison followed by a year of supervised release and ordered a restitution of $877,820 to the IRS in May.
Andrew Xiong, 59, of Ramsey, was sentenced to a year and a day in prison followed by a year of supervised release and restitution of $686,079 to the tax authorities last July.
Andrew Xiong and Julian Xiong previously pleaded guilty to tax evasion, and Chong Xiong pleaded guilty to conspiracy to defraud the United States.
Chong and Julian Xiong committed the escape while running the recruitment agency Twinstar.
In 2013, Julian Xiong opened another branch in Roseville to serve one of Twinstar’s clients and pursued a similar fraud. The original company was renamed Hope Solutions and operated by Andrew and Chong Xiong. In 2016, Andrew Xiong left the plot and Chong Xiong renamed the business Step Staffing until the business closed a few months later.
The Xiong brothers paid some employees in cash and kept the deductions for themselves, according to court documents.
They submitted false payroll reports to the IRS and only paid a fraction of the employment taxes owed.
In addition, the defendants filed false annual corporate tax returns and used multiple bank accounts to cover up the scheme.