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Beverly Hills Executive Ordered to Pay $7.8 Million For State Income Tax Evasion

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John.Barrett@ftb.ca.gov

Public Affairs Office
John Barrett

For Immediate Release

9.01.2010

Sacramento—A Beverly Hills man pleaded no contest to two felony counts of state income tax evasion and was ordered to pay more than $7.8 million restitution to the State, the Franchise Tax Board (FTB) announced.

Ilya Chatsky, 36, was an officer of two corporations, JP Wholesale Drugs, Inc. and Megatrade, LLC, that were engaged in the buying and selling of pharmaceuticals. According to court documents, Chatsky earned more than $12.8 million in unreported income during 2003 – 2006 and his businesses earned more than $37.3 million combined in unreported income during these same years. Chatsky failed to report this income on his personal and corporate state income tax returns for the same period.

FTB special agents reconstructed Chatsky’s income based upon information obtained through search warrants executed at his residence and at financial institutions.

The restitution represents the unpaid tax, penalties, interest, and the cost of the investigation. Chatsky has paid $505,906 toward this amount. Chatsky was also given 5 years formal probation and ordered to serve 270 days of CalTrans work.

The underreporting of income is part of the $6.5 billion tax gap now facing California. The tax gap is defined as the difference between the tax that is owed and the tax that is due.

Los Angeles County Superior Court Judge Stephen Marcus handed down the sentence yesterday in Department 132 of the Clara Shortridge Foltz Criminal Justice Center. Los Angeles County Deputy District Attorney Amy Suehiro prosecuted the case. This case was developed through the joint efforts of the Los Angeles County Sheriff’s Department and FTB.

For more information on other taxes and fees in California, visit taxes.ca.gov.

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