Rutledges’ fraud plea:
Father and son are charged
with allegedly filing false tax returns
Unity House President Tony Rutledge and his son, Aaron, pleaded not guilty yesterday in federal court to fraud and tax evasion charges.
They are scheduled to go to trial Dec. 2 in front of U.S. District Court Judge David Ezra.
The elder Rutledge, 57, and his son, 33, were charged in a federal indictment last month that also named Tony's father, the late labor leader Art Rutledge, as an un-indicted co-conspirator.
The indictment alleges that the Rutledges skimmed more than $350,000 in earnings from Star-Beachboys Inc., the family's Waikiki beach concession stand, from 1992 to 1997, hid the cash in at least four safe deposit boxes in Hawaii and used the money as a slush fund.
The Rutledges are charged with conspiracy and filing false company tax returns.
Aaron Rutledge was also charged in a previous indictment with witness tampering, for allegedly persuading another person to withhold, conceal or destroy evidence from a federal grand jury proceeding and related criminal investigation.
Tony Rutledge faces up to eight years in prison and $500,000 in fines.
Aaron Rutledge is facing up to 13 years in prison and $750,000 in fines.
Jeff Rawitz, Tony Rutledge's attorney, said his client is "deeply saddened by the fact that lawyers from the tax division of the Department of Justice in Washington, D.C., have decided to bring charges when the local U.S. attorney's office looked at this same conduct and opted not to."
Rawitz said he plans to ask the court to dismiss the case because the government took too long to file charges.
Michael Green, Aaron Rutledge's attorney, said he plans to do the same.
"Art Rutledge has been in the ground a long time, and he is named predominantly in this case," Green said.
Art Rutledge died Sept. 22, 1997, at age 90.
"As to whether or not they could have brought this indictment when he was still alive, we believe they could have," Green said. "And had this been brought years ago, it certainly would have been easier to defend."
On Oct. 30, 1997, federal investigators searched Art Rutledge's Kahala home and the headquarters of Unity House and Hotel Employees and Restaurant Employees Local 5. That is the same day Aaron Rutledge is alleged to have tampered with a witness in the investigation.
Art Rutledge founded and headed Local 5 and Unity House.
Tony Rutledge is a former head of Local 5 and continues to run Unity House.
Special Attorney Edward Groves, of the U.S. Department of Justice tax division, said in court he will seek to disqualify Green from the case for a conflict of interest.
Green could be called as a witness for the prosecution because he is named in the indictment as receiving a $150,000 check drawn from the beach concession's bank account. Groves said the check was for legal fees.
Green said he can still fairly represent his client.
He said he is seeking to overturn an order prohibiting the defendants from speaking to each other or witnesses, even though the Rutledges live in the same home.