East Bay businessmen sentenced to prison for tax fraud

SAN FRANCISCO – The president and former corporate counsel of a San Mateo County rock-crushing business were sentenced to prison Tuesday for conspiring to conceal more than $18 million in taxable income from the IRS, federal authorities said.

Joseph Nubla, 45, of Danville, and Henry Ku, 56, of Pleasanton, received terms of 36 months and 30 months, respectively, the U.S. Department of Justice said in a statement.

In April, a jury convicted Nubla and Ku on charges that they conspired to defraud the United States between February 2009 and March 2015. Nubla was also found guilty of failing to report more than $5.8 million in income on his 2014 federal tax return.

Nubla oversaw daily operations at the Brisbane Recycling Co., a rock-crushing business located in Brisbane, and Ku was formerly counsel for the business and Nubla.

Authorities said Nubla wrote checks totaling more than $18 million to businesses controlled by Ku to hide the money from the IRS. Nubla expensed the payments, which came from Brisbane, as royalties for the use of heavy equipment purportedly owned by Ku’s businesses. Ku, however, used those funds to buy the equipment.

Ku also returned the funds to Nubla through money transfers, home purchases and cashier’s checks related to a fake loan, authorities said.

Nubla did not declare the funds he received from 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,” U.S. Attorney Ismail Ramsey said. “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.”

In addition to time in prison, Nubla and Ku were ordered to pay fines of $15,000 and $10,000, respectively, as well as about $9.3 million in restitution, authorities said.