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Kailua couple guilty
of cheating IRS,
lying on returns

The two face up to 14-year
terms for hiding $880,000
in illegal-fireworks sales

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By Debra Barayuga
Star-Bulletin

The IRS became suspicious that a Kailua couple was hiding proceeds from the sale of fireworks when relatives made large cash deposits and then wrote checks for the same amounts to the two.

Ronald and Annyse Cloutier's relatives had made deposits of $10,000 or less into personal accounts and then turned over about $225,000 to the Cloutiers, said Assistant U.S. Attorney Larry Tong.

A federal court jury yesterday found the Cloutiers guilty of conspiring to cheat the IRS and of three counts of lying on their income tax returns in 1992, 1993 and 1994 -- hiding about $880,000 from the sale of illegal fireworks.

Under federal statutes, they each face up to five years on the conspiracy count and three years on each count of failure to report income.

The Cloutiers were local representatives for Pyrodyne America Corp., a mainland fireworks supplier and the biggest distributor of fireworks in Hawaii.

Through their company, Beehive Fireworks, the couple sold legal fireworks to local retail outlets and through their own stands, but also sold illegal fireworks to friends and family members, Tong said.

Attorneys for the couple could not be reached for comment.

At trial, the couple's attorneys had argued that the Cloutiers were very busy during the tax season so any mistakes were inadvertent, not intentional, Tong said.

The couple's tax preparer relied on schedules prepared by Annyse Cloutier that only reflected the fireworks sold at stands. "So we contended she prepared incomplete schedules knowing they would be used to prepare false tax returns," Tong said.

The couple will remain free on bond until sentencing Jan. 29.

The two continue to operate their fireworks business but no longer sell illegals, Howard Chang, attorney for Ronald Cloutier, told the court.