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Thursday, February 24, 2005



Suzuki gets
3-year federal
prison term
for tax fraud

Former state Rep. Nathan Suzuki was sentenced yesterday to three years in federal prison for conspiring with a Honolulu businessman to defraud the Internal Revenue Service.

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Nathan Suzuki: He pleaded guilty to conspiring with Michael Boulware to avoid taxes

Reactions

Lawmakers who had served in the state House with former Rep. Nathan Suzuki expressed sympathy for him and lauded his work in the Legislature:
» "It's very unfortunate," said Rep. Jerry Chang (D, Piihonua-Kaumana), who was chairman of the House Tourism and Culture Committee with Suzuki as his vice chairman. "I never thought that would happen to him."
» Rep. Marcus Oshiro (D, Wahiawa-Poamoho), who was also majority leader when Suzuki last served, was saddened to hear the news. "My sympathies go to his wife and family. It's tough on them."

U.S. District Judge Edward Rafeedie rejected Suzuki's request to be given a sentence of between zero and six months, citing the seriousness of the offense and the importance of punishment as a deterrence.

"This type of tax fraud is pervasive. ... With professionals assisting, it makes it worse," said Rafeedie, a visiting federal judge.

In April, Suzuki, a certified public accountant, pleaded guilty to conspiring with Michael Boulware, president of Hawaiian Isles Vending, from June 1993 to February 2000 to set up offshore corporations and bank accounts in Hong Kong and Tonga to avoid tax liability.

He also admitted to using his office fax machine at the state Capitol to wire authorizations transferring money from the foreign accounts that he had established for Boulware's benefit.

"Frankly, he's stunned," said Suzuki's attorney William Harrison as Suzuki, flanked by his wife and numerous supporters, left the courthouse declining comment. "He didn't know what to expect coming in here. Personally, we think the sentence was a little bit harsh under the circumstances."

Special U.S. Attorney Edward Groves of the Department of Justice's Tax Division called the sentence "fair."

"We think it's consistent with the evidence and the conduct that (former) Rep. Suzuki pleaded guilty to," said Groves, who had agreed with the recommendation of the probation division that he serve between 57 and 71 months.

Suzuki has admitted in court that $1.7 million was transferred 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. Money was later transferred into Boulware's personal Hawaii accounts. Suzuki knew at the time that Boulware was under investigation by the IRS.

Harrison argued that Suzuki, who represented the Aliamanu-Moanalua Valley-Salt Lake district from 1992 until he decided not to seek re-election in 2002, is not a danger to the community nor likely to commit another crime.

Given his history of public service, Suzuki would be a greater asset to the community if he were placed on probation, supervised release or some type of community confinement, he said. "To incarcerate someone like him is really a waste of federal resources."

Suzuki has been, in effect, imprisoned by the humiliation he has suffered since the day federal agents raided his state office and each time he appears in court when he and his family have been subjected to negative publicity, Harrison said. "He made a terrible mistake, and every day he pays for his mistake."

More than 100 letters were submitted to the court in support of Suzuki and his past work as legislator, including testimony from former Gov. Ben Cayetano and U.S. Rep. Ed Case, who called Suzuki's conduct an "aberration" in his career as public servant.

Suzuki apologized to the court, to the community he represented and especially to his family and friends for their support during what he called a "long and painful ordeal." It was his first public apology since his indictment in June 2002.

"I understand the consequences of my actions and am reminded of it every day," he told the court. "I'm here to accept responsibility and move forward."

Groves argued that at no time in the last 11 years since the conduct began or during Boulware's federal trial in 2001 did Suzuki come clean or put a stop to the activity.

Suzuki even filed documents alluding to his position as a Hawaii legislator to prevent the federal grand jury from obtaining documents it was seeking from the kingdom of Tonga, hindering the federal investigation, Groves said.

Judge Rafeedie agreed with federal prosecutors that Suzuki's behavior was not an aberration, noting that it occurred over a long period of time and took sophisticated planning. He also noted that Suzuki committed the offense while serving as state legislator and using state resources.

To his credit, Suzuki has no criminal history, has been gainfully employed and apparently was motivated by a "misguided sense of friendship for Michael Boulware or a desire to retain him as a client," Rafeedie said.

Suzuki was ordered to turn himself in on April 18. After completing his prison term, he will be placed on three years of supervised release. He must also pay a $10,000 fine.

Harrison said they have 10 days to appeal the sentence, and if they do, he will ask that Suzuki remain free pending the outcome.

Suzuki is working as a real estate broker and with a loan company. He is likely to lose his CPA and real estate licenses because of his conviction, Harrison said.

Suzuki's sentence 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. Another chapter reopens today when Boulware returns to federal court to find out when he must undergo a second trial.

Although Boulware was convicted in 2001 of tax evasion, filing false income tax returns and conspiracy and sentenced to four years and three months in federal prison, the 9th U.S. Circuit Court of Appeals reversed the conviction in September and sent it back to the lower court for a new trial.



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