Boulware gets 5 years for $10.2 million fraud
The judge says the sentence is lenient for Hawaiian Isles Enterprises' founder
The founder of Hawaiian Isles Enterprises -- a successful vending machine, coffee and bottled water company -- was ordered to serve five years in federal prison for filing false income tax returns and tax evasion.
Michael Boulware: He is ordered to report to the U.S. Bureau of Prisons on Jan. 5
Michael Boulware, 57, was convicted a second time in July by a federal jury that found he stole $10.2 million from his company through various fraudulent schemes and failed to report it on his individual federal tax returns.
This time, he will not be allowed to remain free pending an appeal.
Saying Boulware was only postponing the inevitable, visiting U.S. District Judge Edward Rafeedie ordered him yesterday to turn himself in to the U.S. Bureau of Prisons on Jan. 5.
Two juries have unanimously found Boulware guilty of the charges, and although a federal appeals court overturned the first verdict, the second jury confirmed it, Rafeedie said.
In its ruling, the 9th U.S. Circuit Court of Appeals did uphold Boulware's conviction for conspiring to make false statements to a federally insured bank. Even if the remaining counts were overturned, it would have had no effect on the sentence, Rafeedie said yesterday.
Defense attorney Dennis O'Connor said they intend to appeal. Although the defense introduced evidence at trial they felt showed that the money belonged to the corporation and not to Boulware, the jury did not buy it, he said.
In a brief statement, Boulware apologized to the court, noting that his problems came during a troubled period in his life. "I'm sorry that it happened, and I can assure you, whatever the outcome, it will never happen again," he said.
O'Connor had asked the court to consider sentencing his client to no prison or up to six months, arguing that nearly half a million dollars Boulware was ordered to forfeit was improper but could be assessed as a fine in lieu of prison.
Assistant U.S. Attorney Jared Dwyer had argued that Boulware should receive at least 63 months -- the maximum possible under advisory sentencing guidelines -- for failure to accept responsibility.
Boulware continues to maintain that the money belonged to the corporation and not to him, Dwyer said. By his conduct, Boulware also placed the company at risk, taking money that could have benefited the company and its employees, he said.
Even after he became aware that the Internal Revenue Service was investigating him as early as 1993, Boulware continued to evade paying taxes for four years using more sophisticated methods, including setting up offshore corporations and accounts with the help of his accountant, former lawmaker Nathan Suzuki, Dwyer said.
Rafeedie agreed that the government's case during the second trial was much stronger given the testimony of new witnesses, including Suzuki, who did not testify at the first trial.
Boulware ran a successful business, but instead of paying his taxes on his income, he took extreme measures to hide it, Rafeedie said. "The fact of the matter shows the offenses involved here was the product of unnecessary greed."
Although Boulware was ordered to serve four years and three months for his first conviction, Rafeedie said five years is still "fairly lenient" given he could have faced a potential maximum of 40 years under federal statute.
Suzuki pleaded guilty to conspiring with Boulware to set up accounts in Hong Kong and Tonga and was sentenced to three years in federal prison.
Suzuki admitted he used his state Capitol fax machine to wire authorizations transferring money from the foreign accounts he established for Boulware's benefit.