Isle businessmanBusinessman Michael Boulware did not intentionally fail to report nearly $10 million in personal income because he believed it belonged to his company and did not know it was taxable to him personally, his defense attorney said yesterday.
in not reporting
$10 million income
Michael Boulware is on trial in
federal court for 14 tax counts
By Debra Barayuga
The president of Hawaiian Isles Enterprises -- a major player in the wholesale coffee, bottled water, vending machine and cigarette distribution business -- went on trial yesterday in U.S. District Court for allegedly failing to report nearly $10 million in income that he diverted from his company for his benefit.
Boulware is charged with 14 counts, including conspiracy and bank fraud, which occurred over a nine-year period from 1989 to 1997.
Assistant U.S. Attorney Edward Groves said Boulware diverted money to himself through bogus overseas entities created with the help of associates, including state Rep. Nathan Suzuki (D, Aliamanu-Salt Lake-Moanalua), who was a former comptroller at Hawaiian Isles. Groves said Boulware concocted fraudulent leasing schemes and hid sales of coffee and tobacco products to support his wife, a pending divorce and a girlfriend. Suzuki was not available for comment.
When asked by Internal Revenue Service agents in 1993 why he hadn't filed his personal income taxes for the previous five years, he told them he was lazy and that his wife had been bugging him because she thought they would be receiving a refund, Groves said.
Groves said Boulware treated his company as his "personal candy store," keeping his wife on salary as a secretary and allowing her to earn as much as $300,000 in 1992 when all she did was "talk up" Hawaiian Isles Enterprises.
Defense attorneys describe Boulware as a visionary and entrepreneur who went from humble beginnings to build a successful business with gross revenues of $1 million in 1982 to $88 million in 1996.
While his methods were unconventional, they were all legal, said defense attorney Vincent Marella.
The money the government is talking about involved loans and other legal efforts by Boulware to satisfy his wife's claims against Hawaiian Isles before she would agree to a divorce, Marella said.
Boulware believes that the money belonged to Hawaiian Isles Enterprises, were reported by the company as income and were spent for valid company purposes, Marella said. He relied on the advice of his lawyers and didn't believe he had to report it on his personal income taxes.
Bank fraud is punishable by a maximum 30 years in prison and a $1 million fine. Tax evasion and conspiracy are punishable by a maximum five years imprisonment, while filing false returns carries a maximum three-year imprisonment.