A San Jose contractor and an employee today were each sentenced on state income tax charges, grand theft, and diversion of construction funds, according to the Franchise Tax Board (FTB).
Abraham Cortez, 40, owner of A.C. Contractors, and his employee, Manuel Borja, 39, pleaded guilty in May. According to court documents, A. C. Contractors would contract to remodel an individual's home, and divert the funds from that job to pay for an unrelated job. In some cases, the victims would be forced to pay A.C. Contractors additional funds upfront for work that had not begun or, in some instances, was never completed. Eventually, A. C. Contractors did not pay suppliers who, in turn, placed liens on the victims homes.
According to court records, Cortez underreported the 1998 gross receipts from his business by more than $747,000, underreported his income by $730,058, and filed a false 1998 state income tax return. Cortez was sentenced to 10 months in county jail for filing a false state income tax return and ordered to pay restitution of $153,226 in tax, penalties, interest, and cost of the investigation to the FTB.
Borja earned $60,475 in 1998. He failed to file his 1998 state income tax return. Borja was sentenced to 2 years in state prison for tax evasion, grand theft, and diversion of construction funds. In addition, Borja was ordered to pay restitution to the FTB of $5,451 in tax, penalties, and interest, and cost of the investigation.
Additionally, restitution of $320,000 was ordered to the victims of A.C. Construction. Borja received the longer prison sentence because of his increased culpability in defrauding the victims.
Santa Clara Superior Court Judge Charles W. Hayden ordered the sentence in Department 28 of the Hall of Justice. Assistant District Attorney Yen Dang prosecuted the case. This was a joint investigation between Santa Clara County District Attorney's Office and the FTB.