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Thursday, January 10, 2002



Mirikitani’s taxes
not filed since 1997

The convicted former councilman
expects a refund each year
and could avoid a penalty


By Lisa Asato
lasato@starbulletin.com

Former city councilman Andy Mirikitani has not filed his income taxes since 1997, a state Department of Taxation representative said yesterday at a meeting of Mirikitani's creditors as part of his bankruptcy proceedings.

Mirikitani did not say why he did not file, but said he is in the process of retaining an accountant to do the filing. His pro bono attorney, Dawn Smith, told interim bankruptcy trustee Paul Sakuda that Mirikitani expects refunds of about $2,000 per year.

Sakuda said there is no penalty for not filing the taxes if an individual is owed a refund.

Mirikitani did not respond to questions following the hearing.

Sakuda, who is overseeing Mirikitani's personal bankruptcy, also said creditors probably will not recoup money owed them after lawyers get their share.

Mirikitani, convicted July 3 on federal charges of theft, bribery, extortion, wire fraud and witness tampering relating to a kickback scheme involving two aides, lists debts of almost $1.4 million. He filed for Chapter 7 personal bankruptcy Dec. 18, saying he had $100 in the bank.

"Right now it looks like there won't be any net assets," said Sakuda, who pegged the chance of recovery for unsecured creditors at 10 percent.

Unsecured creditors include credit card companies whose loans do not involve collateral, Sakuda said. Mortgages are considered secured. Mirikitani's unsecured debts include almost $70,000 in credit card charges and $6,000 owed the city.

Although a final decision was not made yesterday, Sakuda said Mirikitani's interest in two Oahu properties probably will be tied up by liens filed by two law firms.

Mirikitani's 17 percent stake in his family's multimillion-dollar Bayer Estate is protected from unsecured creditors because of a spendthrift provision in trusts written by his parents, Sakuda said. Under bankruptcy law, another protected asset is the $1,300 monthly city pension Mirikitani will receive as a former councilman.

Sakuda was trying to determine yesterday whether one of two liens filed on behalf of Edmunds Maki Verga & Thorn complied with a 90-day provision. If the lien was filed within 90 days of Mirikitani's Dec. 18 bankruptcy filing, it would make the claim an unsecured debt, in effect weakening the firm's claim, Sakuda said.

Mirikitani owes about $218,000 to Torkildson Katz Fonseca Jaffe Moore & Hetherington for an unrelated case involving his family's estate. He owes $340,000 more to the law firm of his former criminal defense attorney, John Edmunds, who withdrew last month from representing him because Mirikitani could not afford it, court documents said.

Mirikitani is the highest-ranking politician in Hawaii to be convicted of a federal crime. Last month, U.S. District Judge Helen Gillmor sentenced him to four years and three months in prison, recommending he serve time at Nellis Camp near Las Vegas.

Mirikitani surrenders to authorities next Thursday.



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