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TAX TROUBLE IN PARADISE

April 06, 2004

Today's friendly tax compliance reminder from the Department of Justice tells the story of a member of the Hawaii state legislature who sought to outsource his tax liabilities:

   Mr. Suzuki admitted that he was
   employed until 1994 as comptroller of 
   Hawaiian Isles Enterprises, Inc. (HIE), a 
   company owned by his co-conspirator, 
   Michael H. Boulware. Until 1994, he also 
   prepared Mr. Boulware’s income tax 
   returns. HIE and its related entities 
   generate gross sales of approximately 
   $80 million dollars per year and are 
   engaged in the sales of tobacco, 
   coffee, and vending machine products 
   throughout the State of Hawaii. 

   Mr. Suzuki admitted, in his plea 
   agreement and open court, to his role 
   in creating offshore corporations and 
   bank accounts in the Kingdom of Tonga 
   and the Hong Kong Special 
   Administrative Region (HKSAR). The 
   corporations and bank accounts were 
   intended to obstruct a criminal 
   investigation being conducted by 
   Internal Revenue Service. Mr. Suzuki 
   admitted that Mr. Boulware 
   transferred approximately $3 million 
   dollars belonging to HIE to the Hong 
   Kong accounts. The concealed funds 
   included monies earmarked by Mr. 
   Boulware for an unsuccessful attempt 
   to purchase a bank in Ecuador. 

Mr. Suzuki apparently made use of his legislative perks:

   Mr. Suzuki admitted sending faxes in 
   furtherance of the scheme from his fax 
   machine located at the Hawaii State 
   Legislature. 

Mr. Suzuki pleaded guilty to conspiracy to defraud the Internal Revenue Service from June 1993 through February 2000. He is scheduled to be sentenced July 28. The charge carries a maximum penalty of five years in prison and a $250,000 fine.

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