March 25, 2002

PASADENA BUSINESSMAN SENTENCED TO EIGHT MONTHS
IN FEDERAL PRISON IN $600,000 TAX EVASION SCHEME

 A Pasadena man who owns a tax preparation service was sentenced this afternoon to eight months in federal prison for his conviction on one count of conspiracy to defraud the Internal Revenue Service and eight individual counts of tax evasion.
 Harry H. Diramarian, 61, was sentenced by United States District Judge A. Howard Matz, who also ordered the defendant to pay a $2,000 fine as well as all back taxes to the Internal Revenue Service.
 Diramarian previously pleaded to a nine-count information that outlines a four-year scheme to avoid the payment of federal income taxes. Diramarian, who operates HAS Professional Services, is also the president of the Vernon-based Aleco Furniture Manufacturing.
 According to court documents, Diramarian evaded the payment of various taxes associated with his furniture business from1994 through 1997. The taxes included employees' withholding for federal income tax, social security tax, and Medicare tax, as well as the company’s federal unemployment and social security taxes. Diramarian not only failed to make the withholding payments, he also filed materially false Employer's Quarterly Federal Tax Returns (Form 941) and Employer's Annual Federal Unemployment Tax Returns (Form 940) with the IRS.
 A criminal information in the case specifically alleged that Diramarian filed Forms 940 and 941 which included wages paid to Aleco employees, but failed to report additional wages and paychecks to a substantial number of employees that came from non-Aleco accounts.
 When he pleaded guilty in 1999, Diramarian admitted that he created sham businesses – such as Harry's Upholstery Company, United Upholstery Company and California Upholstery Company, all supposedly located in Pasadena – that were used to make pay employees. Neither Diramarian nor those employees receiving the supplemental checks would report the income to the IRS. To fund these sham businesses, Diramarian would transfer money from Aleco's bank account to bank accounts set up in the names of the sham businesses, and would create fraudulent invoices characterizing these transfers as purported payments to a vendor or independent contractor.
 Diramarian also admitted to the court that he provided IRS agents with copies of tax returns purportedly filed with the IRS. Those tax returns indicated that some of the withholding taxes on the hidden wages were paid and reported to the IRS. In fact, these returns had not been filed with the IRS.
 The total amount of loss to the IRS was more than $600,000.
 The investigation represents the combined efforts of IRS-Criminal Investigation, the Small Business Administration’s Office of Inspector General, the United States Postal Inspection Service and the Federal Bureau of Investigation.

 Release No. 02-055

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