Michael Fu and his partner shifted cash overseas, authorities said
NEWARK -- The co-owner of a medical equipment company was sentenced Tuesday to 37 months in prison after previously admitting he diverted profits to offshore shell companies to avoid paying taxes, U.S. Attorney for New Jersey Paul Fishman said in a statement.
Michael Q. Fu, 53, of Cranbury, had pleaded guilty to charges of conspiring to evade income taxes and of tax evasion. In addition to his prison term he must also pay $870,000 in restitution and serve three years of supervised release.
Fu and Albert Chang, 69, of Princeton Junction, owned United Parts and Instruments Inc. in Dayton, which sold and exported microscopes and centrifuges. The two funneled income earned through United Parts to Action Towers and Bench Top Laboratories, two Chinese-based shell companies Fu and Chang created. The diverted cash was then deducted from the tax return for United Parts and marked as commissions and the cost of goods.
Fu and Chang also arranged to have a Hong Kong company, Shanghai Electric, overbill United by five percent on legitimate invoices. When the invoices were paid, Shanghai Electric wired the overbilled amount to accounts in China.
Fu and Chang hid at least $1.5 million in income using the overseas accounts, authorities said.
Chang pleaded guilty in September and is awaiting sentencing.
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