Judge gives prison hitches to bid riggers

One of the state's largest fraud cases began when auditors noticed the huge price tag for four plywood planters for holiday poinsettias at the airport: $14,000.

It ended yesterday when two former state officials and a contractor received prison terms.

U.S. Judge David Ezra called the scheme that cost taxpayers more than $3.8 million an example of "unmitigated greed" but also blamed the state:

"This was an opportunity due to the laxness of contracts at the state Airports Division, which allowed individuals to take advantage of the contracting process and, for over a decade, steal money from the pockets of Hawaii state taxpayers."

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A federal judge yesterday slapped stiff sentences on two former state officials and a contractor who bilked taxpayers for a decade through a bid-rigging conspiracy involving airport work.

Citing harm to the public's trust, U.S. District Judge David Ezra sentenced former Honolulu Airport maintenance superintendent Dennis Hirokawa, 65, to nine years in prison.

"The defendant treated the airport contracting process as if it was his own piggy bank," Ezra said.

The judge also sentenced Richard Okada, 66, director of the Honolulu Visitor Information Program, to the statutory maximum of five years' imprisonment, and contractor Michael Furukawa, 75, to six years and three months.

The sentences wrap up a joint federal-state investigation that began more than seven years ago when airport auditors were struck by the high price tag -- $14,000 -- for four plywood planter boxes for holiday poinsettias.

Ezra called the scheme that cost taxpayers $3.8 million from 1997 to 2002 an example of "unmitigated greed," but he also blamed the state.

"This was an opportunity due to the laxness of contracts at the state Airports Division, which allowed individuals to take advantage of the contracting process and, for over a decade, steal money from the pockets of Hawaii state taxpayers and place it in their own," Ezra said.

After completing their prison terms, all three defendants will be placed on three years of supervised release. Okada and Hirokawa are jointly liable with the others to repay more than $4.5 million in restitution to the state. Furukawa is liable for more than $3.9 million. They also are liable for investigative costs totaling $689,000.

A fourth defendant, contractor Wesley Uemura, was sentenced Wednesday to three years and five months in prison.

"The common characteristic these four defendants shared was a sense of misplaced loyalty to each other and an arrogance in thinking they could get away with this," said Assistant U.S. Attorney Larry Tong, who prosecuted the case with state Deputy Attorney General Larry Goya.

All four were convicted by a federal jury last October of conspiracy and multiple counts of mail fraud.

Hirokawa used his position as operations maintenance engineer to circumvent state procurement laws by awarding a select group of contractor jobs in exchange for kickbacks or political donations, Tong said. When jobs came up, according to testimony, Hirokawa wrote the name of a pre-selected contractor on a Post It note before the bidding began and directed a subordinate to contact the contractor and have him submit inflated bids along with two bogus complementary bids.

Furukawa, for his part, submitted bogus bids at inflated prices to obtain jobs, then recruited other contractors to join in the scheme to spread around the work and to conceal their activities by the appearance of competition, Tong said.

Furukawa's companies and a company owned by Uemura obtained $3.4 million in state contracts during the five-year period.

While Okada had no role in the awarding of contracts, he was a political facilitator who lobbied the Legislature and pressured contractors for cash and donations that he claimed were for politicians, Tong said.

"No politicians were identified by name, but we were able to establish the donations and many times the purchases coincided with Legislature openings and other such events," he said.

Arthur Inada, a contractor who pleaded guilty in state court, testified at the federal trial that he paid $129,000 in cash to Okada over a two-year period, which coincided with Legislature openings. Okada also brought airport employees to Costco and Marukai to purchase goods and had Inada pay for the items, telling Inada the goods were for legislators.

Okada's attorney, Dana Ishibashi, said Okada's bank records show he did not pocket any of the money from the contractors.

Attorney Keith Shigetomi described Hirokawa as a career public servant who lived a humble lifestyle and who has become a born-again Christian since his retirement.

The defendants must turn themselves in on Jan. 15 to the U.S. Bureau of Prisons. Ezra denied each defendant's request to remain free on bail pending their appeals.