Thursday, April 1, 2004

Ex-state Rep. Nathan Suzuki, right, left it to his attorney, Michael Green, to talk to reporters yesterday outside the federal courthouse. Suzuki had just pleaded guilty to conspiracy to defraud the U.S. government. He faces a maximum of five years in federal prison when he is sentenced July 28.

Suzuki guilty

The former state representative
admits he set up accounts in
Tonga and Hong Kong to help
a client avoid paying taxes

Former state Rep. Nathan Suzuki pleaded guilty yesterday in U.S. District Court to conspiring with a successful Honolulu businessman to defraud the Internal Revenue Service.

In a plea agreement reached last Thursday, Suzuki admitted that from about June 1993 to February 2000, he conspired with others to set up two offshore corporations and bank accounts in Tonga and Hong Kong for Michael Boulware to avoid tax liability.

Suzuki knew at the time that Boulware was under investigation by the Internal Revenue Service.

Suzuki, 56, a Democrat, represented the Aliamanu-Moanalua Valley-Salt Lake district from 1992 until he decided not to seek re-election after he was indicted in 2002. He also admitted that he used his office's fax machine at the state Capitol to wire authorizations transferring moneys from the foreign accounts.

Suzuki admitted during questioning by U.S. visiting Judge Edward Rafeedie that moneys were funneled from Boulware's corporate accounts to Harvest International King Coffee Ltd. in Hong Kong and Pacific Vendors Equipment Ltd. in Tonga, to avoid detection by the IRS, and ended up in Boulware's personal Hawaii accounts.

The foreign corporations were majority-owned by Suzuki, a certified public accountant who was a comptroller for Boulware's company from the early to mid-1980s and prepared personal income tax returns for Boulware and his wife from the 1980s to 1994.

Suzuki faces a maximum five years in federal prison when sentenced July 28.

His attorney, Michael Green, is hoping to convince the court that the government suffered no loss from Suzuki's participation in the conspiracy and ask that he be sentenced to probation instead of prison.

"There's an agreement here to assist in avoiding the payment of federal taxes, but that doesn't mean ultimately that the taxes were not paid," Green said. "We plan to show that through Nathan's accounting, all the money owed to the government were captured and the taxes were paid."

Government attorneys said they are pleased with the agreement, which closes another chapter in the Boulware case, one of the largest and lengthiest tax evasion cases successfully prosecuted by the U.S. Department of Justice.

"It's a significant victory for the United States to finally get an admission of guilt from one of the individuals who facilitated this long-running conspiracy that deprived the federal government and state of Hawaii of significant tax revenue for almost a 10-year period," said Edward Groves, special attorney with the Department of Justice's Tax Division.

Boulware, president and major shareholder of Hawaiian Isles Vending, a major distributor of wholesale coffee, tobacco and vending machines in the state with gross sales of upward of $80 million a year, was subsequently convicted in 2001 for lying on his tax returns and failing to report $10 million in personal income that he funneled from his own company. He was sentenced to four years and three months in federal prison but is free pending an appeal before the 9th U.S. Circuit Court of Appeals.

Based on federal sentencing guidelines and the government's interpretation, Suzuki is not likely to receive probation, Groves said. "I see no way that would happen, but ultimately it's up to Rafeedie."

The government contends that Suzuki is responsible for $1.7 million in unreported income -- money transferred from the Hong Kong corporation to Boulware's personal bank accounts for tax years 1994 to 1997.

The government also contends Suzuki benefited personally when, while making about $22,000 annually as a legislator, he made upward of $90,000 a year in 1995 and upward of $70,000 in 1996 and 1997 for doing accounting work on behalf of Boulware. During this time, Suzuki failed to report his financial interests in the offshore corporations and accounts.

"He certainly used his office at the Legislature in order to make this conspiracy take place," Groves said.

During Boulware's trial, Suzuki's counsel at the time filed court documents in which Suzuki admitted that he helped Boulware set up the offshore accounts in hopes that his position as a Hawaii legislator would facilitate the incorporation of Pacific Vendors Equipment in Tonga.

The conspiracy charge against Suzuki stemmed from information gleaned during Boulware's trial. Five remaining charges in the October 2003 indictment against Suzuki will be dropped at sentencing.

Green said Suzuki decided to accept responsibility in the conspiracy rather than go to trial after they reviewed all the documents, evaluated the case and felt it was improbable they could win all the six counts.

"I think this is a result that lets Nathan and his family have some peace of mind, and we still have the opportunity to present our case," Green said.


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