Economist exits US leaving trail of unanswered questions
In a 1996 paper called the 'simplistic general equilibrium theory of corruption', economist Steven Cheung Ng-sheong argued that 'the only effective way of getting rid of corruption is to get rid of the controls and regulations that give rise to corruption opportunities' because those very rules were created by policymakers to facilitate corruption. 'It is no use to put a beautiful woman in my bedroom, naked, and ask me not to be aroused,' he explained.
And in a subsequent paper, Cheung compared the taxation systems of Hong Kong and the US, concluding that even though the US taxation system was complicated, in reality the US tax rate was lower than Hong Kong's.
'Assuming a person who earns HK$100,000 a month, (US$12,900, could be classified in the higher middle class), it only took him one to two weeks to file the tax return in Hong Kong as not many receipts are required ... But in the US, only reading the personal income tax return form will give you headache and thus whoever has monthly income of US$12,900 will have to find an accountant to compile it,' Cheung wrote in 1999.
The headache would surely come - in 2003, when US authorities indicted Cheung and his wife Linda on charges of tax evasion and fraud. American authorities alleged that they owned and profited from a multimillion-dollar car park business in Hong Kong, but hid their stakes in the business through a web of corporations across the globe in an effort to avoid US taxes. The companies included West Coast International in Hong Kong and Celinal, based in the British Virgin Islands. According to a 2008 company tax filing in Hong Kong, West Coast International is owned by Cheung's wife and Celinal. Cheung's wife holds one share, while Celinal owns 4,999,999 shares. In its 2003 indictment, US tax authorities said Cheung was the listed owner of Celinal. The company's name is formed from the names of Cheung's wife and two children, Cecile and Ronald.
With 13 tax evasion charges against him, Cheung faces up to 83 years in prison and US$4.75 million in fines if convicted. His wife was charged with one count of conspiracy, punishable by up to five years' jail and a US$250,000 fine.
Shortly after the indictment in January 2003, the Cheungs sidestepped extradition from Hong Kong by saying they would fly to Seattle for the trial. But just three days before the February 20 court day, they released a statement saying they would not go. 'We believe we will not be able to get a fair trial and that further conspiracies of one kind or another will likely continue to crop up to hurt us,' their statement said.
On Febrary 20, a federal judge issued arrest warrants for them but they had already fled to the mainland.
Five days later, Washington state filed consumer fraud charges against the Cheungs as owners of Thesaurus Fine Arts, a defunct Seattle store known to sell fake Asian antiquities. The case was eventually settled - the gallery agreed to reimburse customers and pay US$350,000 in fines and lawyers' fees and the Cheungs' names were removed from the case.
Hefty penalties
With 13 US tax evasion charges against him, Cheung faces up to 83 years in prison and a fine, in millions of US dollars, of: $4.75m
