May 05, 2009

PRESIDENT OF ALLIED TELECOM INTERNATIONAL SENTENCED TO 27 MONTHS IN PRISON FOR TAX EVASION

Diverted more than $1.9 million of income from corporation to herself

SAN FRANCISCO – The author of “Daughter of the Yellow River” and Chief Executive Officer of Image Global Impact was sentenced to 27 months in prison and ordered to pay $557,363 in restitution for tax evasion and filing false tax returns, announced United States Attorney Joseph P. Russoniello and Special Agent in Charge, IRS Criminal Investigation, Scott O’Briant.

Diana Hojsak a/k/a Diana Lu a/k/a Jing Jing Lu was convicted on June 4, 2008 on two counts of tax evasion and two counts of filing false tax returns in connection with her prior company, Allied Telecom International, Inc. Hojsak operated ATI from her residences in Soquel, Calif., and San Francisco.

At trial, the evidence showed that ATI entered into an agreement with a Chinese company, Yantze Optical Fibre and Cable Co. Ltd, to sell its fiber optics to Chinese businesses exclusively within the People’s Republic of China. From 1998 and 2001, ATI earned approximately $3 million in commission payments from its contract with YOFC.

During the 2000 and 2001 tax years, Hojsak instructed YOFC to wire approximately $1,904,566 of ATI’s $3 million in commissions to her personal bank account at Hong Kong and Shanghai Banking Corporation Limited, and $601,429 to ATI’s business bank account at Wells Fargo Bank in California. Hojsak maintained a business bank account at Wells Fargo Bank in the name of ATI and a personal bank account with HSBC held in her Chinese name, Jing Jing Lu.

For her 2000 and 2001 tax returns, Hojsak provided her tax return preparer with bank statements from eleven personal and business bank accounts but did not provide statements for her personal bank account in Hong Kong. The return preparer relied upon the provided bank statements to determine ATI’s gross receipts in preparation of ATI’s 2000 and 2001 corporate tax returns. Included in the bank statements Hojsak provided her return preparer were the monthly bank statements for the Wells Fargo account she held in ATI's name. However, Hojsak did not provide any bank statements, nor notify her return preparer of the existence of her personal bank account at HSBC.

By concealing the $1,904,566 of ATI's gross receipts from her tax-return preparer, Hojsak caused ATI to under report gross receipts by that amount on ATI’s 2000 and 2001 tax returns. Further, Hojsak did not report the diverted funds on her personal income tax returns, thus evading a personal income tax liability of approximately $557,363 for both the 2000 and 2001 tax years.

Hojsak, 41, of San Francisco, was indicted by a federal grand jury on May 24, 2007. She was charged with two counts of evading her federal income taxes for the 2000 and 2001 tax years, along with two counts of filing false federal income tax returns for her wholly owned corporation, Allied Telecom International, Inc.

Wednesday’s sentenced was handed down by U.S. District Court Judge Phyllis J. Hamilton.

Cynthia Stier and Thomas M. Newman are the Assistant U.S. Attorneys who prosecuted the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation Division, led by Special Agent Bryan Wong.

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For more information on federal criminal defense law, contact the Law Offices of Joseph Shemaria of Los Angeles, California.