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Investment consultant
faces prison for fraud

By Debra Barayuga
Star-Bulletin

An investment consultant faces five years in federal prison on each of 11 counts of making false statements so he could become investment monitor for the Hotel Union and Hotel Industry of Hawaii Pension Plan.

A U.S. District Court jury on Tuesday found Anthony DiPace guilty of 11 counts of mail fraud.

He will be sentenced May 30 by U.S. District Judge Alan Ezra.

The mail fraud charges stemmed from mailings DiPace, of Albany, N.Y., sent in March 1996 to trustees of the pension fund that falsely represented his qualifications.

The investment monitor position would have paid more than $300,000 a year to oversee the investment managers who actually invest the fund's money. The pension fund has assets in excess of $200 million.

The six trustees, at the request of Anthony Rutledge, secretary-treasurer of Local 5 of the Hotel Employees and Restaurant Employees Union, agreed to remove Smith Barney as the fund's investment monitor and solicit proposals from brokerage houses, including DiPace's firm, said Assistant U.S. Attorney Marshall Silverberg.

According to court documents, DiPace claimed to have more Taft-Hartley Fund clients than he actually had and exaggerated their assets.

Rutledge said DiPace was hired as investment monitor for Unity House because of his experience. "We made substantial money for two years while he was our monitor and would have been exceptional for our pension fund."

He criticized the government's efforts to prosecute DiPace, saying "the guy didn't even get a job with the Trust Fund and he's got to go to jail."

Rutledge disagreed with testimony that came out saying he threatened to strike all Local 5 members if the trustees refused to hire DiPace as investment monitor. "Our members wouldn't strike whether we got this investment monitor or not."

The accusations were simply a smokescreen raised by the hotel trustees who were proposing to do away with the pension fund, Rutledge said.