State rep cheated A federal grand jury has indicted state Rep. Nathan Suzuki for allegedly lying on his federal income tax returns and for allegedly failing to disclose that he had control over overseas accounts linked to the defendant in one of the largest tax evasion cases successfully prosecuted in the United States.
on taxes, feds say
A grand jury indicts Rep. Suzuki,
charging him with hiding foreign accountsBy Debra Barayuga
dbarayuga@starbulletin.comThe indictment handed down in U.S. District Court yesterday charged Suzuki, 54, with three counts of filing false personal income tax returns for 1996, 1997 and 1998. Two other counts stem from his alleged failure to disclose interests in corporations in Hong Kong and the kingdom of Tonga in 1997 and 1998.
The five-count indictment stems from the prosecution of convicted isle businessman Michael Boulware. He was sentenced last month in U.S. District to four years and three months for lying on his tax returns and failing to report $10 million in personal income that he funneled from his own company for personal use. Boulware is free pending appeal.
Suzuki faces maximum penalties of three years in prison and $20,000 in fines for each count of filing false returns. He faces 10 years each and $500,000 on the charges of failing to disclose his financial interests in the foreign entities while committing another offense, or as a pattern of illegal activity.
Neither Suzuki nor his attorney could not be reached for comment. Suzuki is expected to be arraigned in U.S. District Court sometime next week.
Suzuki (D, Aliamanu-Moanalua Gardens-Moanalua Valley-Salt Lake), a certified public accountant, was a former comptroller for Boulware's company, Hawaiian Isles Enterprises, and prepared personal income tax returns for Boulware from 1989 to 1994.
According to the indictment, Suzuki had interests in Harvest International King Coffee Ltd., which had accounts in the Hong Kong and Shanghai Banking Corp., and in Pacific Vendors Equipment Ltd. with accounts at the ANZ Banking Group Ltd. in the kingdom of Tonga.
The indictment said Suzuki transferred money into accounts located in Tonga, Switzerland and elsewhere on behalf of an individual identified only by the initials M.H.B. -- presumed to be Boulware.
Suzuki also used his state Capitol fax machine to authorize some disbursements from the Tongan accounts of Pacific Vendors, the indictment alleged.
At Boulware's trial last November, prosecutors contended that Suzuki was a secret majority shareholder in Pacific Vendors, through which Boulware was accused of laundering money to avoid personal tax liability.
During trial the court quashed a request by the government to have Suzuki testify about tax returns he prepared for Boulware because the U.S. Department of Justice had recommended criminal charges be filed against the lawmaker.
Suzuki's attorney Robert Klein said at the time that prosecutors had informed them they intended to charge Suzuki at some point.
In documents opposing the subpoena and unsealed by the court, Klein disclosed that Suzuki agreed to be a majority shareholder to help Boulware in establishing Pacific Vendors. It was hoped Suzuki's position as a state legislator would help move along the company's incorporation in Tonga in 1994, the documents said.
According to the indictment, Harvest International saw deposits of $3.76 million from 1995 to 1997 and disbursements of $3.73 million during that same period. Harvest International also transferred $1.09 million to Pacific Vendors' accounts between 1995 to 1997.
Suzuki failed to file his interests the previous year in the foreign entities on or before June 30 in 1997 and 1998, according to the indictment. Financial interest in foreign accounts valued at more than $10,000 must be reported.
Ted Groves, special attorney with the U.S. Department of Justice, Tax Division, would not comment on the case.
State lawmakers expressed surprise at the latest development.
Maui Democratic Rep. Joe Souki said Suzuki attended a Democratic caucus this morning and made no mention of any legal problems.
"It is too early to say what all this about. He has merely been indicted," former House Speaker Souki said. "He was a good legislator and very productive in the areas of finance."
His comments were echoed by Rep. Mindy Jaffe, (R, Kaimuki-Kapahulu), who said she was "stunned" by the news.
"Wow, he was such a quiet guy, and he worked so hard," Jaffe said. "He seems like the most straight and narrow, boring kind of accountant type."
"I am sorry to hear it. He is a decent man," Jaffe said.
Suzuki was first elected to the House in 1992. He has had an uneventful political career. Two years ago and in 1996, he ran without any opposition in either the primary or general election.
In this election, he has possible opposition from Democrat Priscilla Kubota and Republican Brad Sakamoto.
Six elected officials have been convicted of criminal charges in recent years: 6 elected officials recently convicted
>> James Aki: The former state senator received a deferred acceptance of his no-contest plea to gambling charges in 1997, which means his record will be wiped clean if he stays out of trouble for five years. Aki leased property to a church group that used it for illegal bingo games.
>> Daniel Kihano: The former state House speaker was found guilty in U.S. District Court in October 1997 of 17 criminal counts, including money laundering, obstruction of justice and filing a false income tax return. He was sentenced in June 1998 to two years in a mainland prison. The sentence was later reduced to one year after he suffered a heart attack. U.S. attorneys say Kihano illegally spent campaign funds for personal use and tried to cover up the theft. He died in 2000.
>> Milton Holt: The former state senator pleaded guilty in U.S. District Court in August 1999 to one count of mail fraud involving the use of campaign contributions for personal purposes. He was sentenced to one year in a federal prison in December 1999. Holt admitted to receiving cash back after writing a check to a Honolulu printing firm when, in reality, no work was done.
>> Andy Mirikitani: The former city councilman was found guilty in U.S. District Court in July 2001 of bribery, theft, extortion, wire fraud and two counts of witness tampering. In December he was sentenced to four years and three months in a federal prison. U.S. attorneys say Mirikitani received more than $7,000 in kickbacks from aides whom he gave bonuses and then tried to cover up the activities.
>> Marshall Ige: The former state senator pleaded guilty in state District Court in January to theft, tax evasion and failing to file tax returns. He was sentenced last month to six months in jail. State attorneys say he improperly took $7,000 from a Windward Oahu farmer after threatening to evict him from leased land and that he improperly took $30,000 from an elderly California couple and laundered the proceeds.
>> Rene Mansho: The former city councilwoman pleaded guilty in state Circuit Court in April to two counts of theft and was sentenced this week to one year in jail, five years' probation and a $25,000 fine. Prosecutors say Mansho misused campaign funds and forced her Council staff to work on her campaign and other noncity business such as Aloha Boat Days during working hours.
Star-Bulletin reporter Richard Borreca contributed to this report.