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Kailua couple sentenced
for hiding illegal
fireworks income

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By Debra Barayuga
Star-Bulletin

A federal judge sentenced a Kailua couple to a federal prison camp for hiding about $880,000 from the IRS in proceeds from the sale of illegal fireworks over three years.

U.S. District Judge David A. Ezra ordered Ronald Cloutier to serve 24 months and his wife, Annyse Cloutier, to 30 months.

A federal jury found the couple guilty in October on three counts of filing false income tax returns in 1992, 1993 and 1994 and for conspiracy to defraud the U.S. government.

The Cloutiers were local representatives of Pyrodyne America Corp., the biggest distributor of fireworks in Hawaii. They operated fireworks stands and sold legal fireworks to local retail outlets.

Most of the money they failed to report was from the sale of illegal fireworks, said Assistant U.S. Attorney Larry Tong.

Woman committed perjury

While both were convicted on identical charges, Annyse Cloutier received a longer sentence because she had perjured herself at trial, Tong said.

Annyse Cloutier had testified she was very busy during the tax season and that the mistake was unintentional.

But Tong argued she was not that busy that the couple were able to claim charitable contributions as little as $10.

She also denied she tried to hide income from the IRS by making bank deposits under $10,000, saying giving the bank large amounts of cash would make it difficult for bank employees to count. Evidence at trial showed even the bank advised her to not to do it, Tong said.

Testimony at trial also showed she had money deposited into relatives' accounts reportedly because she couldn't get bank deposit slips.

The relatives later wrote checks to the Cloutiers for the same amount of the deposits.

In seeking a lower sentence for the Cloutiers, their attorney Howard Chang noted they are actively involved in charity and civic works. Friends regard the couple as "good, honest people," and the conduct they were charged with was an "aberration," Chang said.

In letters supporting the couple, friends noted their contributions and work on behalf of the Hawaii Foodbank, Links to Literacy, the Muscular Dystrophy Association and the Kailua community, Chang said.

But Ted Groves, trial attorney with the U.S. Department of Justice Tax Division, noted that breaking the law allowed the Cloutiers to be generous. "People who don't pay taxes and don't report income can be more charitable."

$135,000 owed in taxes

Groves said the actual amount due and owing from the Cloutiers is $135,000.

The amount includes federal, state and general excise taxes the couple failed to report and pay from the $880,000 of unreported income.

While Ezra recognized the couple as decent and caring individuals who made "exceptional" community and civic contributions, he noted evidence of their guilt at trial was overwhelming. And Annyse Cloutier's explanations to justify and escape liability "didn't ring true to me and the jury because it wasn't true."

The Cloutiers declined to make a statement in court and left the courthouse without commenting.

A jury deliberated for only three hours after a 10-day trial to convict them.