October 17, 2003

OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California

United States Attorney
Carol C. Lam

For Immediate Release

NEWS RELEASE SUMMARY

Carol C. Lam, United States Attorney for the Southern District of California, announced today that the Honorable Jeffrey T. Miller, United States District Court Judge, sentenced Brian Lee Petrosian to five months in custody and five months in a community confinement center for willfully filing a false U.S. Income Tax Return for the year 2000 for his Subchapter S Corporation, Web Design, Inc. Petrosian plead guilty to this offense on July 16, 2003. Petrosian, a resident of San Diego, is the president and sole shareholder of Web Design, Inc.

According to the plea agreement, Petrosian is also the president and sole shareholder of Bellagio Insurance, Ltd., which was incorporated under the laws of the Territory of the British Virgin Islands. Petrosian formed Bellagio for the purpose of creating false insurance expense deductions for Web Design.

Petrosian wrote checks totaling over $420,000 which were drawn on Web Design's bank account and deposited into an account in the name of Bellagio at E-Trade Securities. The words "Insurance Premium" were handwritten in the memo section of these checks. Petrosian maintained control over the Bellagio's E-Trade account at all times.

Petrosian claimed false insurance deductions on his U.S. Income Tax Returns for the tax years 2000 and 2001. A $232,353 insurance expense deduction was falsely reported on Web Design's U.S. Income Tax Return for the year 2000, and a $190,500 insurance expense deduction was falsely reported on Web Design's U. S. Income Tax Return for the year 2001. Contrary to the representations contained on the tax returns, Web Design did not pay for insurance. The money was instead used to pay Bellagio which was owned and controlled by Petrosian. Although insurance policies were written by Bellagio, Petrosian admitted that this was just a sham to support the false insurance expense deductions claimed by Web Design. In fact, although it appeared that Bellagio received funds from Web Design for insurance premiums, the funds were actually held in an E-Trade account which Petrosian maintained control of and used for his own personal purposes.

United States Attorney Lam said, "This office will continue to prosecute tax fraud schemes, no matter how elaborate or complex." Denise Rubin, Special Agent in Charge of IRS - Criminal Investigation in San Diego, said, "IRS special agents are committed to investigating individuals who willfully challenge the integrity of our tax system. Most taxpayers choose to report the income they receive and file correct returns. Those taxpayers who choose to do the right thing should be confident that the tax system works. This case serves as an example that the consequences of filing a fraudulent tax return can result in criminal prosecution."

DEFENDANT

Brian Lee Petrosian

SUMMARY OF CHARGES

Title 26, United States Code, Section 7206(1): Subscribing and Filing a Materially False Income Tax Return. Maximum sentence: Three years in prison and fine not to exceed $250,000.

AGENCY

Internal Revenue Service, Criminal Investigation