On July 10th, 2020

Two Southern California Brothers Ordered to Pay Nearly $1 Million in Restitution for Tax Evasion A joint investigation involving California State investigators and special agents

SACRAMENTO – On July 9, 2020, two Southern California brothers, Derek Stradley and Justin Stradley were arraigned and sentenced for tax evasion related to a Southern California counterfeit clothing scheme in which authorities seized an estimated $775,000 in counterfeit apparel.

Each defendant, the owners and operators of P.L.A.C.T. BROS., LLC, pled guilty to multiple felonies for failing to report more than $6.7 million in taxable sales over a period of nearly thirteen years and nearly $1 million in gross income over a period of approximately two years. As part of their sentences, the brothers will be required to pay $997,803 in restitution to the state, county, and other victims, forfeit any interest in the counterfeit apparel, and serve three years on probation.

“When you rip off California’s taxpayers, there are consequences,” said Attorney Xavier General Becerra. “The Stradley brothers did just that and now they’re paying the price. Tax evasion hurts the state’s efforts to provide public services and cheats businesses that do things the right way. At the California Department of Justice, we stand ready to enforce the rules and take on bad actors in the underground economy across the state.”

The seizure and convictions were the result of an investigation by members of the Tax Recovery in the Underground Economy (TRUE) Task Force, including the Los Angeles County Sheriff’s Department, California Department of Tax and Fee Administration, California Franchise Tax Board, and special agents and prosecutors with the California Department of Justice.

“State investigators and DOJ special agents work to protect Californian’s and this state from harm, be it financial or physical,” said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona.  “They don’t get a lot of fanfare or attention, but they are out there doing a fantastic job.”

As a result of the investigation, the brothers will also be required to perform 90 days of community service and face time in prison if they violate the terms of their sentence.

The TRUE Task Force, formerly known as the Tax Recovery and Criminal Enforcement (TRaCE) Task Force, works to combat and deter financial crimes in the underground economy. The state’s underground economy is estimated to generate tens of billions of dollars in unreported revenue annually, depriving the state of billions in corporate, personal, and sales and use taxes each year. Tax evasion hurts California's economy as legitimate businesses are confronted with unfair competition, funding for public resources is lost, and employees may be subjected to working conditions that lack basic protections.

A copy of the complaint is available here. The defendants pled guilty to counts one, six, and eight.

 

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