Joseph Nubla, Tax Fraud, California 2021

Joseph Nubla, the president of Brisbane Recycling Company, Inc., and Henry Ku, the company’s former counsel, have been convicted of tax fraud charges in connection with a scheme to evade taxes on millions of dollars in income derived from a rock crushing business.

The convictions followed a two-week jury trial before Chief U.S. District Judge Richard Seeborg. Nubla was convicted of conspiracy to defraud the United States, and tax evasion, while Ku was convicted of conspiracy to defraud the United States.

The evidence presented 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: by regular money transfers from 2009 through 2016; by purchasing Nubla three homes; and 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.

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. The court may order the defendants to serve an additional term of supervised release and restitution as part of any sentence.

The case was investigated by the Internal Revenue Service-Criminal Investigation (IRS-CI). 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.

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