Tax fraud earns local
businessmen 5 years probation

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By Debra Barayuga
dbarayuga@starbulletin.com

The owners of a local trucking company who filed fraudulent tax returns were each sentenced to five years probation and ordered to pay restitution of $476,556 and fines totaling $12,000.

Thomas W.K. Kam, 69, and Herbert W.S. Kam, 65, owners of Kam's Express Inc. in Mapunapuna, each pleaded no contest in February to second-degree theft.

The theft stems from refunds each received for claiming credits for withholding when they knew nothing had been withheld.

The company pleaded no contest to three counts each of failing to file public service company tax returns and withholding tax returns from 1995 to 1997.

During this period, Kam's Express had gross receipts of $7.8 million, according to the state Tax Department. The company also withheld more than $208,000 from its employees and did not pay over the taxes withheld to the Tax Department.

"Given the amount of the taxes not paid and the period of time over which withholding taxes and public service taxes were not paid ... means you cheated not only the state, but employees as well," said Circuit Judge Gail Nakatani.

The brothers both apologized to the court and to the people of Hawaii for their conduct.

Nakatani said it was clear from pre-sentencing reports and the brothers' assets that their motivation was to enhance their personal wealth "at the expense of the citizens of Hawaii."

"The theft is substantial and your crime is very serious," she said.

For those reasons, she denied their requests to defer their pleas, which means their convictions will remain on their records.

The state had asked that the Kams be sentenced to 30 days' imprisonment because their conduct had occurred over a long period.

"It's been going on for years," said Deputy Attorney General Rick Damerville.

While the state could only charge Kam's Express with about 100 counts -- one count for each month the company failed to file tax returns and pay withholding taxes -- because the statute of limitations had run, "it still shows the conduct was egregious."

The Kams' attorney, Howard Chang, opposed any jail time, saying it would serve no purpose.

The Kams are first-time offenders, have expressed remorse for the wrongfulness of their conduct and are not likely to commit another crime, he said.