Saturday, July 16, 2005

Jury finds businessman
guilty of tax violations

He is convicted for funneling money via
dummy corporations and offshore accounts

A federal jury has found Honolulu businessman Michael H. Boulware guilty of failing to report and pay taxes on $10.2 million in personal income over a nine-year period.

The jury deliberated for a full day before convicting him yesterday of five counts of filing false tax returns from 1989 to 1993 and tax evasion from 1994 to 1997.

Boulware, 57, is chairman of Hawaiian Isles Enterprises -- a company he founded that sells tobacco, coffee, bottled water, video games and vending machines.

According to prosecutors, Boulware funneled millions of dollars from his company into his own pocket using various fraudulent schemes, including setting up dummy corporations and depositing money into secret and foreign bank accounts to avoid personal tax liability.

Boulware testified in his defense that since the money belonged to the corporation and was reported on the corporation's books, he had a good-faith belief that he did not have to pay taxes on it.

Former legislator Nathan Suzuki, currently serving three years in federal prison for conspiring with Boulware to defraud the Internal Revenue Service, testified under immunity for the government. Suzuki pleaded guilty earlier to conspiring with Boulware by setting up offshore corporations and bank accounts in Hong Kong and Tonga.

This is the second trial for Boulware, who was first convicted in November 2001 and sentenced to prison for four years and three months, none of which he served because the court allowed him to remain free pending an appeal to the 9th U.S. Circuit Court of Appeals.

The 9th Circuit found in his favor, saying the trial court should have allowed the defense to introduce at trial evidence of a judgment in a state case involving Boulware and his girlfriend. The 9th Circuit, however, did affirm his conviction for conspiring to submit fraudulent statements to a federally insured bank.

Visiting U.S. District Judge Edward Rafeedie allowed Boulware to remain free on bail pending sentencing on Oct. 24.

E-mail to City Desk


© Honolulu Star-Bulletin -- http://archives.starbulletin.com