Advertisement - Click to support our sponsors.

Thursday, August 31, 2000

Feds seek to deny
Sia bail following
FBI arrest

By Peter Wagner

A federal grand jury has indicted former Honolulu investor Sukamto Sia on charges that he knowingly hid nearly $8 million before declaring bankruptcy in late 1998 and thereafter spent $757,249 in tax refunds that should have gone to his bankruptcy estate, according to documents unsealed today.

Federal authorities today will ask that the Singapore businessman be held without bail pending trial in October.

"We view Mr. Sia as a flight risk," said Assistant U.S. Attorney Omer Poirier. "There's a large amount of money involved."

The 41-year-old Sia, a citizen of Singapore, was to appear before Federal Magistrate Barry Kurren today to seek bail. Kurren denied overnight bail yesterday during an arraignment hearing at which Sia pleaded not guilty to the charges.

Trial is scheduled Oct. 31 before Judge David Ezra.

Sia was arrested by Federal Bureau of Investigation agents during a bankruptcy creditors meeting in Honolulu yesterday, after a federal grand jury returned the indictment against him on three counts of fraud.

The maximum penalty for each charge is five years in federal prison and a $250,000 fine.

Yesterday's indictment alleges that Sia concealed $7.6 million of $20 million received in 1997 sale of a Gulfstream jet. It also charges that Sia spent two state tax refunds totaling $757,249 that should have gone to his bankruptcy trustee.

According to testimony during yesterday's creditors meeting, some of the tax money was spent on earrings and a diamond ring for Sia's mother, who lives in Singapore.

U.S. Attorney Steven Alm announced Sia's indictment at a news conference yesterday, saying Sia misled creditors by claiming in a recently filed amendment to his bankruptcy papers that the entire proceeds of the Dec. 15, 1997 sale of his private jet went to a lender called Finova Capital Corp.

Alm said only $10,164,873 went to Finova while $7,835,126 ended up in four Virgin Island companies owned by Sia.

John Edmunds, Sia's defense attorney, could not be reached for comment.

An undisclosed number of FBI agents closed in on Sia yesterday, surprising him as he sat in a downtown office during a scheduled meeting with creditors.

Government officials said multiple agents were needed in the arrest in case of a confrontation, since Sia is known to travel with several body guards.

Alm said the FBI took advantage of a rare appearance by Sia in Honolulu.

The creditors meeting, which began at about 9:30, was interrupted at about 11 a.m. when the agents entered the room and led the surprised Sia away.

"I got to about one-tenth of the questions I wanted to ask," said Steve Jones, an attorney hired by the bankruptcy trustee to investigate Sia's holdings. "I've got a lot more questions to ask."

Jones said Sia's arrest on criminal charges will have no effect on his bankruptcy, or on the trustee's continuing efforts to unearth hidden assets.

Sia's 1998 bankruptcy filing, initially a Chapter 11 reorganization, listed more than $296 million in debts and 9.3 million in assets. The Nov. 8 filing came a month after his arrest in Las Vegas for bouncing $13.5 million in checks at several casinos. The bankruptcy was converted to a Chapter 7 liquidation last May.

Before the bankruptcy, Sia was the majority owner of the Bank of Honolulu, Hawaii's smallest bank.

The bankruptcy trustee gained control of Sia's 76 percent stake in the bank. Sia resigned his post of bank chairman shortly before the bankruptcy filing.

The trustee for several months has been looking for a buyer for Sia's shares through Sheshunoff & Co., a Texas bank broker.

Sia in September asked the U.S. Bankruptcy Court to dismiss the case, saying his worldwide creditors would be better off pursuing individual claims against him in Asian, European and American civil courts than trying to divide his meager bankruptcy assets.

But trustee Guido Giacometti, arguing against dismissal, charged Sia was hiding assets in undisclosed safe deposit boxes, unrecorded bank stocks, and millions of dollars in mortgage assets transferred to an offshore company in the British Virgin Islands.

According to yesterday's indictment, Sia chaneled $7.8 million from the roughly $18 million sale of a Gulfstream G-IV aircraft to Gulfstream Aerospace Corp. to four companies he did not disclose in bankruptcy filings. The companies are Arton PTE, Ltd.; Elevator Holding, Ltd.; Cyber Enterprises, Ltd.; and A-B-C Pacific, Ltd.

According to a filing in bankruptcy court last year, A-B-C was an insolvent corporation in Tortola, British Virgin Islands, controlled by insiders associated with Sia's numerous business interests.

The transactions took place in December of 1997, 11 months before Sia filed for bankruptcy in Honolulu in November of 1998. Under U.S. bankruptcy law, all transactions within a year of a bankruptcy filing are subject to the court's authority.

The grand jury indictment also alleges that Sia spent two state tax refund checks totaling $757,249 that were supposed to be deposited into the account of his bankruptcy estate.

One of the checks, for $468,338, was deposited into Sia's account at First American Bank on April 24, the government says.

According to the indictment, Sia's attorney, David Neale, explained in a July 5 letter to the trustee that "Sia had received the refund, believed it was his, kept it, spent it and cannot immediately pay it back."

Besides the Bank of Honolulu, Sia's local dealings also included selling the state the old Aloha Motors site on Kapiolani, where the Hawaii Convention Center now sits.

E-mail to Business Editor

Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]

© 2000 Honolulu Star-Bulletin