Business owner pleads not guilty to fraud charges
The owner of a Honolulu furniture import company pleaded not guilty yesterday to wire and mail fraud charges in connection with an insurance claim he filed after a fire heavily damaged the company's office and warehouse in September 2000.
Sam Szabla, owner and operator of Hawaiian House, which also has stores on Kauai, is accused in an October 2005 federal indictment of devising a scheme to defraud First Insurance Co. of at least $250,000.
According to the indictment unsealed yesterday, Szabla obtained an insurance policy that included $500,000 in fire insurance and business interruption insurance for one year beginning January 2000. On Sept. 15 that year, a fire of undetermined origin broke out at the Honolulu office and warehouse.
Szabla notified First Insurance of the fire the next day and filed a claim in December for $544,659, an amount he later amended to $596,000.
The wire fraud was based on allegedly false documents he submitted that represented the store's sales the year before the fire, detailed income statements for the previous years and projected sales for the remaining months of 2000.
Based on those representations, First Insurance issued Szabla seven checks totaling $536,753 for losses sustained in the fire.
According to the indictment, Szabla also submitted false sales information and bogus general excise tax returns filed the previous year to insurance adjusters. The following year, he submitted a claim for an additional $150,000 based on lost income from Internet sales, the indictment said.
The mail fraud count stemmed from a letter he sent to a California insurance company that helps First Insurance in the handling of claims.
U.S. Magistrate Kevin Chang allowed Szabla to be released on a $50,000 cash bond pending trial. He also prohibited Szabla from traveling except between here and Florida, where he has a home.
Assistant U.S. Attorney Les Osborne noted that Szabla has exhibited "remarkable contempt for his obligations and requirements under the law," but agreed with the cash bond.
Osborne had argued earlier that Szabla agreed to return from Europe to face the charges but failed to return on the date he agreed. Since being served with the grand jury warrant, Szabla has traveled a great deal to countries that do not have extradition treaties with the United States, such as Switzerland, Egypt and other Arab countries, Osborne said.
Defense attorney James Koshiba noted that Szabla's job requires him to travel to other countries on buying trips. Although he didn't comply initially, he said, Szabla subsequently agreed to surrender and flew in from Europe via Australia so he could turn himself in yesterday.
Trial was set for April 25.