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In September of 1997, the Sunrider Corporation and its owners, the Chens, reached a plea agreement with the federal government in connection with an income tax case brought by the Justice Department several years earlier. The Chen's decision to enter into a plea agreement rather than stand trial was a difficult and painful one. This is because prior to the case, similar matters had all been heard before the U.S. Tax court, a strictly civil forum, rather than before a criminal court. However, rather than continue with expensive and exhausting legal proceedings and possibly risking an adverse jury verdict, the Chens decided it was in the best interest of their family and Sunrider to reach a settlement. By agreeing to reach a plea agreement, the Chens could focus on the needs of their children and eliminate the uncertainty that hung over the company while the matter was pending.

Consequently, on September 4, 1997, Dr. Chen plead guilty to one count of tax evasion in connection with the filing of his U.S. income tax return for the year 1987. He also plead guilty to one count of making a false declaration on a U.S. Custom's form in connection with the value of antiques imported into the U.S. in 1989. It should be noted as to the Custom's matter, antiques are non-dutiable items, so the understatement of the value resulted in no loss of revenues to the government whatsoever.

Also as part of the plea agreement, Dr. Chen was sentenced to 24 months at the Federal Prison Camp in Boron, California, but was released after only 11 months. He was fined a mere $150.00. Mrs. Chen was fined $50.00 dollars after agreeing to plea to one count of filing a false corporate tax return for the year 1988. The Sunrider Corporation was fined $500,000.00.

In its past press releases, the Justice Department makes much of the fact that Sunrider paid the IRS $93,000,000.00 in back taxes, interest and penalties. The fact of the matter is that Sunrider was the one who initiated the tax action against the IRS, who claimed Sunrider owed $250,000,000.00 in back taxes. The parties eventually settled the tax case for $93,000,000.00, considerably less than the $250,000,000.00 the IRS originally claimed was owed.

Nonetheless, the Chens have acknowledged their mistakes and, made the appropriate corrections in filing and reporting procedures and have moved on. All legal matters are resolved and our Distributors can be assured that Sunrider is financially and legally sound and committed to producing the highest quality products and providing our distributors with financial strength and independence.