Isle firm faces
tax trial Nov. 16

The government has no evidence of any tax violation against a local engineering firm charged with falsely reporting taxable income by deducting reimbursements to its officers for making campaign contributions, the company's attorney says.

"This is an absolutely unfounded tax case," said Stephen Pingree, attorney for Thermal Engineering Corp., whose president Ken Mashima was also charged in an eight-count indictment filed Sept. 9.

The corporation and Mashima, represented by attorney David Hall, separately pleaded not guilty yesterday in U.S. District Court to charges of filing a false tax return. Trial was set for Nov. 16.

The indictment alleges that the corporation and Mashima reimbursed its officers for $59,000 in campaign contributions made to local candidates between 1997 and 2000 and deducted the contributions as officer compensation, lowering the corporation's taxable income.

Pingree said what the company did was legal and does not rise to a federal income tax violation. He noted they are prepared to go to trial as scheduled.

Hall, who represents Mashima only for yesterday's arraignment, and Mashima declined comment on the charges.

In 2002 the engineering firm pleaded no contest to a misdemeanor charge of making a political donation under false name to Mayor Jeremy Harris' campaign.

The firm was fined $31,000 by the state Campaign Spending Commission but was granted a deferral of its no-contest plea on condition that it remain out of trouble for a year. The case is expected to be dismissed Nov. 23, Pingree said.

Pingree said the federal indictment does not charge the corporation or Mashima with making illegal contributions or campaign violations because it is not a federal offense.

"I believe the government, through its own motives, has brought the indictment trying to salvage something by way of the prosecution when unable to make an indictment with some of the more prominent politicians in town," he said.

Assistant U.S. Attorney Michael Purpura declined comment.

Mashima will remain free while awaiting trial after posting a $50,000 unsecured bond. The government did not ask that Mashima be detained, on the condition he agree to the higher bond.