Judge upholds Unity
House seizure ruling

Evidence said to show Rutledge
political clout is unsealed in court

A federal judge upheld the government's seizure of Unity House Inc., ordering the indicted labor leader Tony Rutledge to divorce himself from the nonprofit organization.

U.S. District Judge David Ezra said yesterday that he would have barred Rutledge and son Aaron Rutledge from returning to Unity House even if he had dissolved an order placing Unity House under receivership.

Ezra also increased the Rutledges' bail to $750,000 from $500,000 and placed them on a 9 p.m.-to-6 a.m. curfew. Ezra lifted a previous order that the Rutledges wear electronic ankle bracelets to monitor their whereabouts by satellite.

"Mr. Rutledge will have nothing to do with Unity House until these allegations are resolved," Ezra said.

The ruling came as prosecutors unsealed evidence that they said shows that the Rutledges used their political clout for their benefit.

A declaration by Internal Revenue Service agent Greg Miki noted that Tony Rutledge met 11 times with Gov. Linda Lingle's Chief of Staff Bob Awana, who was previously an outside contractor to Unity House.

Unity House also helped funnel political contributions to Awana, former state Rep. Romy Mindo and state Sen. Colleen Hanabusa.

Hanabusa, who was Awana's lawyer, said Awana worked for Unity House before Lingle was elected and that none of the political contributions were made illegally. She added that Awana cooperated with investigators.

Rutledge, who was charged with fraud and tax evasion, said the government is not looking after the interests of Unity House's beneficiaries.

"I got a lot of reaction, but I have to hold my tongue," Rutledge said. "I have a lot of reaction because I think it's all bull--."

John Cline, Rutledge's attorney, argued that the government is relying on a novel legal theory that stretches its forfeiture powers.

"If it was the law, it would give the government powers that are unimaginable," Cline said.

Prosecutors argued that the Rutledges were running Unity House into the ground. The nonprofit organization was founded to serve members and retirees of the Teamsters Union and the Local 5 Hotel Employees and Restaurant Employees union.

Miki testified that had an audit been conducted, the IRS would have found the labor organization was an investment vehicle for the Rutledges, jeopardizing the group's tax-exempt status.

Miki cited the role of local consultant Rudy Tam, who is tied to several failed Unity House business ventures. According to Miki, Tam and Rutledge are board members of Hoana Technologies LLC., a high-tech start-up in which Unity House invested $1 million and in which Rutledge invested $200,000 of his own money.

Unity House received state tax credits for investing in Hoana but as a nonprofit it is not entitled to do so, Miki said.

Tam also heads a company known as Investment Group LLC., which purchased a Kaneohe apartment building using Unity House money.

According to Miki, Tam's company receives $38,000 a month in rent but pays Unity House $20,000 a month in mortgage payments.

Miki noted that some Unity House board members were in the dark about the organization's finances. He noted that former Unity House director Randolph Borges put it this way: "Is it a well-run organization? In my opinion, I don't know, it is loony tunes down there."