Friday, November 30, 2001

Isle exec is found
guilty of tax evasion

A federal jury finds Michael
Boulware failed to report $10
million in income

By Debra Barayuga

A U.S. District Court jury has convicted isle businessman Michael Boulware of lying on his tax returns for tax years 1989 to 1993 and failing to report $10 million in personal income that he funneled from his company for his own use.

Boulware, who built a vending machine company into a multimillion-dollar business distributing wholesale coffee, tobacco and bottled water, also was found guilty of tax evasion for tax years 1994 to 1997 and conspiracy to defraud a federally insured financial institution.

Edward Groves, special attorney with the U.S. Department of Justice who prosecuted the case, said this is the largest tax case successfully prosecuted in the United States.

Defense attorney Vincent Marella said Boulware is disappointed in the verdict and expects to appeal.

A U.S. District Court jury has found isle businessman Michael Boulware guilty of concealing $10 million in personal income.

He said the investigation involved only Boulware's personal tax returns and not the company's.

Groves said Boulware's conduct in this case showed a blatant disregard for the law and that the jury's verdict confirmed it. "It indicates contempt for the system and other taxpayers who file returns every year and file them honestly."

Boulware was convicted of concocting a number of schemes to defraud the state and federal government and avoid paying $10 million in taxes and another $21 million in state tobacco taxes. The government said Boulware used the money to line his pockets and support a wife, a pending divorce and a girlfriend.

After the IRS interviewed Boulware in June 1993 for failure to file previous returns, Groves said the evidence showed he used offshore companies, including one owned by state Rep. Nathan Suzuki (D, Aliamanu-Moanalua-Salt Lake), and foreign bank accounts to conceal his income after he knew he was under investigation.

Boulware testified that he relied on the advice of his lawyer and accountants that he did not have to report the $10 million on his personal returns because he believed the money belonged not to him, but to the company.

He said he turned over about $6.9 million to his girlfriend to hold in trust for the company and purchase coffee. He gave an extra $3.1 million to his then-wife for alleged claims she had against the company after he asked her for a divorce.

The case is significant because it is the first time the federal government has prosecuted nine years of tax violations, given there is a six-year statute of limitations, IRS special agent Jerry Yamachika, who has worked the case since 1993, said outside the courtroom. Because Boulware filed his returns late, the statute did not begin running until he filed in 1993.

Groves said Boulware faces maximum penalties of 10 years in prison when sentenced March 25, 2002.

Boulware will remain free on bail until sentencing.

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