SAN FRANCISCO – Joseph Nubla and Henry Ku were sentenced today to 36 months and 30 months in prison, respectively, following their convictions by a jury at trial in April 2023 on charges of conspiracy to defraud the United States and tax evasion, announced United States Attorney Ismail J. Ramsey and Internal Revenue Service – Criminal Investigation (IRS-CI) Acting Special Agent in Charge Mark Silva of the Oakland Field Office. The sentences were handed down by the Hon. Richard Seeborg, Chief U.S. District Court Judge for the Northern District of California.
Nubla, 45, of Danville, California, is—and at all relevant times was—President of Brisbane Recycling Company, Inc. (“Brisbane”), a rock-crushing business located in Brisbane, California. Ku, 56, of Pleasanton, California, was formerly counsel for Brisbane and Nubla. Both defendants were convicted by a jury on April 7, 2023, following a two-week trial on charges that they conspired to defraud the United States from 2008 through 2016, in violation of 18 U.S.C. § 371. Nubla was also convicted of one count of tax evasion, in violation of 26 U.S.C. § 7201, for failing to report more than $5.8 million in income on his 2014 federal tax return.
The evidence at trial showed that Nubla ran daily operations at Brisbane and that Ku owned and controlled several businesses, including Pegasus Aggregate, Inc., Jupiter Prime Monarch, and JPM Energy, Inc. (collectively, “Ku’s entities”). Between February 20, 2009, and March 30, 2015, Ku and his entities deposited checks written by Nubla from Brisbane and totaling more than $18 million. To avoid paying corporate income taxes for Brisbane, Nubla expensed Brisbane’s payments to Ku’s entities as royalties for the use of heavy equipment purportedly owned by Ku’s entities. In fact, however, Ku had used the funds from Brisbane to purchase that equipment. Ku also returned the funds he received from Brisbane to Nubla in a variety of ways: (i) by regular money transfers from 2009 through 2016; (ii) by purchasing three homes for Nubla; and (iii) by writing 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.
“These defendants skirted paying their taxes out of pure greed,” said U.S. Attorney Ramsey. “Today’s sentences send a clear message to those who try to avoid paying their fair share that our office will always marshal its resources to protect the public treasury.”
“The schemes orchestrated by Mr. Nubla and Mr. Ku seeking to defraud the United States and evade our tax system were rooted in blatant greed,” said IRS-CI Acting Special Agent in Charge Silva. “Today’s sentencing reaffirms that IRS-CI special agents are superbly motivated and equipped to disrupt, foil, and eliminate future nefarious attempts to defraud and evade our government. Just outcomes like today’s sentencing help protect responsible law-abiding business owners and taxpayers.”
In addition to the custodial sentences, Chief Judge Seeborg ordered Nubla and Ku to pay fines of $15,000 and $10,000, respectively, and $9,322,549.20 in restitution—a sum for which the defendants are jointly and severally liable.
Assistant U.S. Attorney Daniel N. Kassabian and Trial Attorney Christopher J. Carlberg of the Department of Justice’s Antitrust Division are prosecuting the case, with assistance from Helen Yee, Veronica Hernandez, and Amala James. The prosecution is the result of an investigation by IRS-CI.