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

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 in restitution to the State. 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.

Our 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 five 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 paid.

Los Angeles County Superior Court Judge Stephen Marcus handed down the sentence in Department 132 of the Clara Shortridge Foltz Criminal Justice Center. Los Angeles County Deputy District Attorney Amy Suehiro prosecuted the case. Through joint efforts, we developed this case with the Los Angeles County Sheriff’s Department.

Back to October 2010 Tax News