Report: Waikiki
Terrace bought with
embezzled money

From staff and wire reports

A Japanese investor is being accused of using embezzled money to buy the Waikiki Terrace Hotel in 1997, according to a Tokyo news report.

Tsuneo Otake, a Tokyo certified public accountant, bought the 242-room hotel for $22.2 million through a company he controlled, Otake Holdings Inc.

Otake has been arrested in Japan on charges that he concealed income and made personal investments with commissions he received from bogus deals, according to a Kyodo News Service report.

Otake has denied the allegations and said he intended to return the commissions, Kyodo reported.

Sources with the investigation told Kyodo that Otake, 49, bought the hotel with money he received in July 1997 from an investor, who is also president of Paloma Co., a gas-equipment company. Otake allegedly was paid the money as commission for his role in buying two deficit-ridden companies for the investor, who was not named in the Kyodo report.

The companies that were for sale were supposed to cost about $600 million.

Sources connected to the Nagoya district public prosecutor's investigation told Kyodo that Otake already was virtually the owner of the companies because the sellers had transferred ownership to him for almost nothing.

The investor sent money in July 1997 directly to a company controlled by Otake. In the same month, Otake transferred the Waikiki Terrace purchase money to a Hawaii bank. The amount mostly came from the Paloma Co. president, Kyodo reported.

The Waikiki Terrace is on Kalakaua Avenue at the entrance to Waikiki.