SACRAMENTO – California Attorney General Xavier Becerra today announced the arraignment and sentencing of brothers Derek Stradley and Justin Stradley for tax evasion related to a Southern California counterfeit apparel scheme, as well as the seizure of an estimated $775,000 in counterfeit clothes. Each defendant, the owners and operators of P.L.A.C.T. BROS., LLC, today 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 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. 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.
Attorney General Becerra is committed to protecting public safety and pushing back against dangerous activity in the underground economy. Last month, the Attorney General, with support from the TRUE Task Force, secured a felony tax evasion conviction and seized more than $1.5 million in unlicensed tobacco products. In 2018, Attorney General Becerra filed dozens of felony charges related to human trafficking, labor exploitation, and sexual assault, as a result of a TRaCE investigation. Earlier that year, he also secured a two-year prison sentence against the owner and operator of a retail clothing store for a multi-million dollar tax evasion scheme. You can learn more about the TRUE Task Force and report suspected criminal activity in the underground economy to the California Department of Justice here: https://oag.ca.gov/bi/true.
A copy of the complaint is available here. The defendants pled guilty to counts one, six, and eight.