Date: April 12, 2023 Contact: newsroom@ci.irs.gov San Francisco — Joseph Nubla and Henry Ku were convicted of conspiracy to defraud the United States, and Nubla was convicted of an additional charge of tax evasion, all in connection with a scheme to evade taxes on millions of dollars of income derived from a rock crushing business, announced United States Attorney Ismail J. Ramsey and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Darren Lian. The verdicts followed a two-week jury trial before the Hon. Richard Seeborg, Chief U.S. District Judge. Joseph Nubla is the President of Brisbane Recycling Company, Inc. (hereafter "Brisbane"), a rock crushing business located in Brisbane, Calif. Henry Ku was counsel for Brisbane and Nubla during the relevant time. Nubla ran the daily operations at Brisbane, and Ku owned and controlled separate businesses including Pegasus Aggregate, Inc. ("Pegasus"), Jupiter Prime Monarch ("JP Monarch"), and JPM Energy, Inc. ("JPM Energy") (collectively, "Ku's entities"). The evidence at trial demonstrated that between February 20, 2009, and March 30, 2015, Ku and his entities deposited checks written by Nubla from Brisbane, totaling more than $18,000,000. To avoid Brisbane paying corporate income taxes, Nubla then expensed Brisbane's payments to Ku's entities as royalties for the use of heavy equipment purportedly owned by Ku's entities. In reality, Ku had used the funds from Brisbane's checks to purchase that equipment. Ku also returned the funds from Brisbane's checks to Nubla in a variety of ways: (1) by regular money transfers from 2009 through 2016; (2) by purchasing Nubla three homes; and (3) by writing Nubla cashier's checks totaling $7 million pursuant to a fake loan. Nubla did not declare the funds given to him by Ku as personal income, even though they originated from Brisbane and thus were taxable, constructive dividends. In year 2014 alone, Nubla failed to report more than $5.8 million of income. On April 6, 2021, a federal grand jury indicted Nubla and Ku, charging both with one count of conspiring to defraud the United States in violation of 18 U.S.C. § 371. In addition, the grand jury charged Nubla with one count of tax evasion in violation of 26 U.S.C. § 7201 for his 2014 federal income tax return. Pursuant to the trial jury's verdict, the defendants were found guilty of all counts with which they were charged. Chief Judge Seeborg has not yet scheduled the defendants' sentencing hearing. The defendants each face a statutory maximum of five years in prison and a fine of $250,000 for the conspiracy charge. Nubla also faces a statutory maximum of five years in prison and a $100,000 fine for the tax evasion charge. In addition, the court may order the defendants to serve an additional term of supervised release and restitution as part of any sentence; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Assistant United States Attorney Daniel N. Kassabian and Special Assistant United States Attorney Christopher J. Carlberg are prosecuting the case with the assistance of Helen Yee, Veronica Hernandez, and Amala James. The prosecution is the result of an investigation by the IRS-CI.
