Posted on 06/28/2002 9:57:13 PM PDT by Spyder
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By Debra Barayuga
dbarayuga@starbulletin.com
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.
The 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.
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