NEWARK, N.J. – A Cranbury Township, New Jersey, man was sentenced today to 37 months in prison for failing to report over $1.5 million in income he fraudulently diverted to overseas shell companies, U.S. Attorney Paul J. Fishman announced.
Michael Q. Fu, 53, previously pleaded guilty before U.S. District Court Judge William H. Walls to an information charging him with one count of conspiring to evade income taxes and one substantive count of tax evasion. Judge Walls imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Fu and Albert W. Chang, 69, of Princeton Junction, New Jersey, co-owned and operated United Products and Instruments Inc. (UNICO) located in Dayton, New Jersey. UNICO was established by Fu and Chang in 1991 and primarily engaged in the sale and export of microscopes and centrifuges for medical purposes.
As part of the conspiracy, Fu and Chang created two shell companies headquartered in China – Action Towers and Bench Top Laboratories. Fu and Chang then diverted business income to themselves by funneling money to the shell companies’ bank accounts and deducting the diverted funds from UNICO’s corporate tax return as the cost of goods sold or commission.
In addition, Fu and Chang had Shanghai Electric, a Hong Kong based utility company, overbill UNICO by approximately five percent on legitimate invoices. Once the invoices were paid by UNICO, they directed Shanghai Electric to wire transfer the overbilled amount to their accounts in China, which they used for their personal benefit. Fu and Chang failed to report any of that income on their federal income tax returns.
In addition to the prison term, Judge Walls sentenced Fu to three years of supervised release and ordered him to pay restitution of over $870,000.
Chang pleaded guilty to his role in the conspiracy in September 2016 and awaits sentencing.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Terence S. Opiola; and officers of the Springfield Police Department, under the direction of Chief John Cook, with the investigation.
The government is represented by Senior Litigation Counsel Margaret Ann Mahoney of U.S. Attorney’s Criminal Division in Newark.
Defense counsel: Steven Seltzer Esq., New York, New York