District of Hawaii
Press releases recorded for this federal judicial district.
Maui Man Convicted of Methamphetamine DistributionRead the Press Release
HONOLULU – After a four-day trial in United States District Court in Honolulu, a federal jury today found James K. Tagupa, 33, of Wailuku,Maui, guilty of conspiring to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine in August, 2012 as well as possessing 444 grams of methamphetamine with the intent to distribute.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said the evidence presented at trial showed that Tagupa agreed with other individuals to distribute methamphetamine sent from Maui to Molokai on private vessels. The evidence established that Tagupa delivered 444 grams of pure methamphetamine which was intercepted during a traffic stop conducted by the Maui Police Department. Tagupa was also intercepted over a court authorized wiretap conducted by the Federal Bureau of Investigation (FBI) discussing how to conceal the methamphetamine for transport by boat to Molokai.
Tagupa was taken into custody immediately after the verdicts and faces up to life in prison with a mandatory minimum ten year term of imprisonment and will be sentenced by U.S. District Judge J. Michael Seabright on April 6, 2015.
The investigation which resulted in the charges in the case was conducted by the FBI and Maui Police Department. Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
Waipahu Man Charged with Producing and Possessing Child PornographyRead the Press Release
HONOLULU -- A federal grand jury returned an indictment today charging Derek M. West, 32, a resident of Waipahu, Hawaii, with three counts of producing child pornography, and one count of possessing child pornography. West was arraigned following the indictment and pled not guilty before Magistrate Judge Kevin S.C. Chang, who ordered West detained without bail pending trial, scheduled for February 17, 2015 before District Judge Derrick K. Watson.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to a complaint and affidavit signed on December 16, 2014, the case began with a report to the Honolulu Police Department (HPD) that child pornography had been found on West’s cellular telephone. The affidavit alleges HPD detectives obtained a search warrant for the telephone, and found approximately 482 images that depicted children engaged in sexually explicit conduct, including a two year-old engaged in a sexual act with a person identified as West. HPD detectives then contacted the Federal Bureau of Investigation (FBI) because some images were found in a computer application based in Canada. West was arrested on December 16, 2014 by FBI agents and HPD officers.
If convicted of the charges in the indictment, West faces a minimum of 15 years and a maximum of 30 years as to each of the three production of child pornography counts, and up to ten years as to the possession of child pornography count. The charges in the indictment are merely accusations, and West is presumed innocent until proven guilty.
The arrest and charges resulted from a joint investigation conducted by the HPD, FBI and Homeland Security Investigations. The case is being prosecuted by Assistant U.S. Attorney Larry Tong.
Honolulu Businessman Indicted on Tax ChargesRead the Press Release
HONOLULU – A federal grand jury today indicted Albert S.N. Hee of Honolulu on seven counts of corrupt interference with the administration of the Internal Revenue laws and six counts of submitting a false tax return for the years 2007, 2008, 2009, 2010, 2011, and 2012. The indictment superseded a prior one-count indictment in September 2014, which had charged the false tax return for 2007 alone.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said the superseding indictment alleges that:
- from 2002 to 2012, Hee caused Waimana Enterprises Inc. (WEI), a company incorporated by Hee and the stock of which is owned by Hee, to pay a total of $4,063,294.39 of his personal expenses, including $718,559.09 used to pay for tuition, books and rent payments for Hee’s three college age children; a purchase of a house in Santa Clara, CA for $1,313,261.34 and used exclusively by Hee’s two children; $33,523.00 of college tuition payments for Hee’s child; $92,000.00 in payments for personal massages for Hee; $121,878.87 in personal credit card charges by Hee; $722,550.39 in false wages paid to Hee’s three children who did no work for WEI; $590,201.56 of false wages paid to Hee’s wife who did no work for WEI; $443,103.64 of false employment benefits paid on behalf of Hee’s three children and wife who did no work for WEI, and $28,216.50 of cash withdrawals by Hee.
- Albert Hee instructed an employee of WEI to pay some of these expenses, and classify them as business educational expenses. Hee’s return preparer then reclassified the expenses as loans.
- Albert Hee did not claim the $4,063,294.39 in personal expenses that WEI paid, which should have been reported as income on his personal tax returns filed for the years 2002 to 2012, resulting in personal federal taxes due in the amount of $425,988.00.
- Because Hee improperly deducted some of the personal expenses as business expenses, WEI underpaid its Federal corporate taxes in the amount of $140,651.00.
If convicted, Hee faces up to three years imprisonment and a fine of up to $250,000 on each of the 13 charges. The charges and allegations contained in the superseding indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.
The investigation of this case was conducted by the Internal Revenue Service -- Criminal Investigation. The prosecution is being handled by Assistant U.S. Attorney Leslie E. Osborne, Jr.
Kailua-Kona Man Sentenced to 155 Months Imprisonment for Distributing Methamphetamine on the Big IslandRead the Press Release
HONOLULU – Senior United States District Judge Alan C. Kay yesterday sentenced Kali Lotoaiki Laulea, 33, of Kailua-Kona, Hawai’i County, to 155 months imprisonment for three counts of methamphetamine distribution. A federal jury found Laulea guilty of the three charges in August of this year after a five-day trial.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that the evidence presented at trial showed that Laulea knowingly distributed a total of 484 grams of pure crystal methamphetamine over the course of three drug transactions that Laulea conducted in Kailua-Kona during August 2013.
The investigation that resulted in the charges against Laulea was conducted by the Federal Bureau of Investigation, with the assistance of the Hawaii County Police Department and the Drug Enforcement Administration. Assistant United States Attorneys Andrea Hattan and Mark Inciong handled the prosecution.
Maui Resident Sentenced for Fraud and Tax Charges Related to Debt Elimination SchemeRead the Press Release
HONOLULU -- A federal judge sentenced Mahealani Ventura-Oliver, 44, formerly of Maui, to 78 months of imprisonment on December 1, for her role in marketing a debt elimination and tax scheme between 2008 and 2009. District Judge J. Michael Seabright also ordered Ventura-Oliver to pay $424,534 in restitution to the victims of her offenses. In October 2013, after an 11-day trial, the jury found Ventura-Oliver guilty of conspiring to use fictitious financial instruments, 15 counts of mail fraud, one count of money laundering, one count of conspiring to submit false tax returns seeking $1.5 million in refunds from the IRS, and submitting one false tax return.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to evidence produced in court, Ventura-Oliver and others were part of a group known as Ko Hawaii Pae Aina, the Registry and Hawaiiloa Foundation. Between 2008 and 2009, the group held weekly seminars on Maui, where Ventura-Oliver and others spoke about Hawaiian history and culture, and royal land patents. The evidence showed that, in return for the payment of a fee, the group offered to provide distressed homeowners with “bonds” and other documents that would pay off their mortgages and forestall collection efforts. The “bonds” purportedly directed the United States Treasury Department or the State of Hawaii Comptroller of the Currency to make payments on behalf of the homeowners.
According to evidence presented at the trial, Hawaiiloa Foundation collected approximately $468,000 from approximately 200 individuals who went through the debt elimination process. Many of the individuals tried to use the bonds but ultimately lost their homes through foreclosure, or had to renegotiate loans. The government presented evidence that, as part of its process, the Hawaiiloa Foundation also promoted a tax program whereby participants supposedly could seek refunds from the IRS for debts paid off with the purported bonds.
At yesterday’s sentencing hearing, Judge Seabright said Ventura-Oliver portrayed herself as an expert in Hawaiian culture and history, and “sold herself as wanting to help Native Hawaiians.” The judge found that Ventura-Oliver actually knew that her program did not work but preyed on the vulnerabilities of her participants.
Ventura-Oliver was the last of four defendants sentenced in the case. Her estranged husband, John Oliver, who pled guilty, and Pilialoha Teves were previously sentenced to jail terms of 42 months, and Lehua Hoy was sentenced to a three year term of probation. The court earlier had ordered that certain property derived from the offenses be forfeited to the United States. The property included approximately $84,000 in cash, more than $18,000 seized from bank accounts, gold coins worth over $36,000, and vehicles.
The investigation of this case was conducted jointly by the Federal Bureau of Investigation, the Internal Revenue Service -- Criminal Investigation, the United States Postal Inspection Service, and the Maui Police Department. The prosecution was handled by Assistant U.S. Attorney Larry Tong and former Assistant U.S. Attorney Michael Nammar.
U.S. Attorney's Office Collects $6.5 Million in Civil and Criminal Actions for Taxpayers in 2014Read the Press Release
HONOLULU – U.S. Attorney Florence T. Nakakuni announced today that the U.S. Attorney’s Office in the District of Hawaii collected $6,500,657 in criminal and civil actions in Fiscal Year 2014. Of this amount, $5,673,133 was collected in criminal actions and $827,524 was collected in civil actions. Additionally, the District of Hawaii worked with other U.S. Attorneys’ offices and components of the Department of Justice to collect an additional $1,305,216.77 in civil cases pursued jointly with these offices.
Attorney General Eric Holder announced on November 19, 2014, that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”
This past May, the District of Hawaii recovered $2,799,3778 in restitution as part of the criminal prosecution and conviction of Syed Qadri and others in a fraudulent investment scheme using two Honolulu based companies, Amasse Capital and Solomon & Co., which purportedly invested in high yield bonds. In reality, investments were used to pay back earlier investors and converted to Qadri’s own use in what amounted to a Ponzi scheme.
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Oahu Men Charged with Operating Gambling BusinessRead the Press Release
HONOLULU – Three Oahu residents made their initial appearance before Magistrate Judge Richard L. Puglisi today after being charged in a criminal complaint with conducting an illegal gambling business from approximately January to the present. Delvin Phuong Pham, age 48, Ken Truong, age 33, and Cam Lam, age 38, had been arrested on November 7, and were released on unsecured bonds by Judge Puglisi pending their preliminary hearing on November 24.
Florence T. Nakakuni, Untied States Attorney for the District of Hawaii, said that according to allegations contained in the affidavit in support of the criminal complaint filed in court, Pham and Truong received proceeds from the operation of an illegal gambling business on Smith Street in downtown Honolulu, which contained approximately seven illegal gambling machines.
The affidavit further alleges that Pham opened a room where illegal baccarat betting occurred on Pauahi Street in downtown Honolulu on October 7, 2014. The affidavit recounts that the Smith Street location made a profit of approximately $109,000 from July 7 through September 22, 2014, and the baccarat room made a profit of $28,000 in ten days. The affidavit also alleges that Pham, in an effort to have police stay away from and protect gambling establishments, paid two Honolulu Police Department officers a total of $3,600, plus an additional $4,000 for an expected return of gambling machines seized by HPD from his establishments. The two HPD officers only pretended to assist Pham and were actually furthering the criminal investigation.
If indicted and convicted, each defendant faces up to five years in prison and a fine of up to $250,000. The charge in the complaint, as well as the information in the complaint affidavit, are merely accusations, and each defendant is presumed innocent until proven guilty.
The case resulted from an investigation by Homeland Security Investigations and the Honolulu Police Department. The case is being prosecuted by Assistant U.S. Attorney Chris A. Thomas.
U.S. Citizen Pleads Guilty to Traveling to Thailand to Engage in Sexually Explicit Conduct with MinorsRead the Press Release
WASHINGTON – A U.S. citizen residing in Thailand pleaded guilty today to one count of sexually exploiting a minor before U.S. Magistrate Judge Richard L. Puglisi of the District of Hawaii.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Florence T. Nakakuni of the District of Hawaii made the announcement.
Ronny Lee Waldrip, 63, traveled to Honolulu, Hawaii on Feb. 13, 2012. Upon his arrival in Honolulu, law enforcement discovered Waldrip brought a laptop computer that contained photos and videos depicting minors engaged in sexually explicit conduct, including videos of Waldrip engaging in sexually explicit conduct with minor females. According to admissions in his plea agreement, from May 2010 through October 2011, Waldrip used a hidden camera to record his sexually explicit conduct with minor females in Thailand. The minor victims named in the indictment were 14 and 15 years old at the time of the abuse. Waldrip will be sentenced on May 7, 2015, by Senior District Judge Helen Gillmor.
This case was investigated by Immigration and Customs Enforcement’s Homeland Security Investigations. This case is being prosecuted by Trial Attorneys Sarah Chang and Michael Grant of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Ronald G. Johnson of the District of Hawaii, with help from the Criminal Division’s Office of International Affairs.
U.S. Attorney Appoints Election OfficerRead the Press Release
HONOLULU – United States Attorney Florence T. Nakakuni announced today that Assistant United States Attorney (AUSA) Lawrence L. Tong will lead the efforts of her office in connection with the Justice Department's nationwide Election Day Program for the upcoming November 4, 2014, general elections. AUSA Tong has been appointed to serve as the District Election Officer (DEO) for the District of Hawaii and in that capacity is responsible for overseeing the USAO's handling of complaints of election fraud and voting rights abuses in consultation with Justice Department headquarters in Washington.
United States Attorney Nakakuni said, "Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. The Department of Justice will act promptly and aggressively to protect the integrity of the election process."
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department's long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. In order to respond to complaints of election fraud or voting rights abuses on November 4, 2014, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Nakakuni stated that AUSA/DEO Tong will be on duty in this District while the polls are open. He can be reached by the public at the following telephone number: (808) 541-2850.
In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day. The local FBI field office can be reached by the public at (808) 566-4300.
Complaints about ballot access problems or discrimination can be made directly to the Civil Rights Division's Voting Section in Washington at 1-800-253-3931 or (202) 307-2767.
United States Attorney Nakakuni said, "Ensuring free and fair elections depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my office, the FBI, or the Civil Rights Division."
Fishing Vessel Master Pleads Guilty and Is Sentenced for Sleeping While Vessel UnderwayRead the Press Release
HONOLULU – Kevin Lam, age 43, a resident of Oahu, pled guilty to eight charges of operating a commercial fishing vessel in a grossly negligent manner on Friday, October 24, and received a sentence of one-year probation and 60 hours of community service from Magistrate Judge Barry M. Kurren. The offenses occurred from September 7 through 14, 2011, one on each day. During the probationary period, Lam may not serve as Master or Person in Charge of any commercial vessel. Further, in order to serve as Master of any commercial vessel in the future, Defendant Lam must attend Coast Guard approved training.
Florence T. Nakakuni, United States Attorney for Hawaii, said that according to information produced in court, on multiple occasions, Lam, while Master of the commercial fishing vessel, the Lady Ann Margaret, slept for extended periods of time while the vessel was underway, with no other lookout or helmsman on watch. The prosecution alleged that Lam’s behavior risked the lives not only of his crew and a National Oceanic and Atmospheric Administration observer on board, but also other mariners at sea.
Judge Kurren remarked to Lam, "You are pretty fortunate that this didn't result in some catastrophe." Captain Shannon Gilreath, Commander, U.S. Coast Guard Sector Honolulu, supported the observation, saying “Mariners who intentionally sleep while on watch or abandon the wheelhouse after setting the helm on autopilot put the lives of their crews and other mariners at risk.”
The Coast Guard previously assessed a civil penalty of $2,500 against Lam within the year preceding the charged offenses for negligent operation of his vessel because he was asleep with no other watch. During that incident Lam’s vessel actually collided with another vessel.
This case was investigated by the Coast Guard Investigating Service (CGIS). Assistant United States Attorney Thomas J. Brady and Special Assistant United States Attorney Angela A. Cook prosecuted this case.
Former Manager of "TheBus" Credit Union Sentenced to Jail for EmbezzlementRead the Press Release
HONOLULU – On September 18, 2014, Dona Takushi, age 54, a former Oahu Transit Services Employees Federal Credit Union (OTSEFCU) employee and manager, was sentenced on one felony count of embezzlement and misapplication of funds and two felony counts of false entries into the books of the OTSEFCU in a proceeding before United States District Judge Helen Gillmor. Takushi was sentenced to fifteen (15) months imprisonment and ordered to pay restitution in the amount of over $78,000. OTSEFCU is the credit union for current and former employees and family members of the Oahu Transit Services, the entity that operates “TheBus”.
United States Attorney Florence T. Nakakuni said that, according to the charging documents, Takushi obtained online access to the VISA payment system for OTSEFCU and falsely inputted VISA payments for herself and a family member. From approximately 2010 to 2012, Takushi made entries crediting her own account and that of her family member with $40,000 in payments which were not actually made.
Additionally, from approximately 2007 to 2012, Takushi made one hundred and fifty-three (153) false entries into the books of the OTSEFCU so that she and an associate could obtain over $55,000 in loans that they could not qualify for under OTSEFCU policies. Lastly, in 2009, Takushi falsely recorded entries concerning a 2008 Subaru Forester that a customer relinquished to OTSEFCU because he could no longer afford the OTSEFCU loan payments on the car. Takushi falsely charged-off this over $18,000 car loan and intentionally did not log the car into the repossessed collateral inventory records of OTSEFCU so that she could execute a transfer of title placing herself and her daughter on the car title as owners, all without providing any payment to OTSEFCU.
Takushi was the third former OTSEFCU employee to be sentenced for embezzlement offenses. Jenny Nishida, age 41, was sentenced to thirteen (13) months imprisonment for one felony count of embezzlement and misapplication of funds. Nicole Cheung was also sentenced to 20 days imprisonment for one felony count of embezzlement and misapplication of funds. Information has not been presented to the court linking the three together in their criminal activity.
The case was investigated by the Federal Bureau of Investigation. The prosecution was handled by Assistant United States Attorney Cynthia Lie.
Hawaii Man Sentenced to 87 Months Imprisonment for Communicating Classified National Defense Information to Unauthorized PersonRead the Press Release
WASHINGTON – Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Florence T. Nakakuni for the District of Hawaii announced today that Benjamin Pierce Bishop, 60, a former Honolulu, Hawaii, civilian defense contractor and retired lieutenant colonel in the U.S. Army, was sentenced today by U.S. District Judge Leslie E. Kobayashi to serve 87 months imprisonment and three years’ supervised release for willfully communicating classified national defense information to a person not authorized to receive it and unlawfully retaining classified national defense information at his home.
Bishop pleaded guilty to the two charges on March 13, 2014. In a plea agreement filed with the court and during court proceedings, Bishop admitted that, on March 12, 2012, he e-mailed classified information to a 27-year-old Chinese woman with whom he had a romantic relationship and who was present in the United States as a graduate student on a J1 Visa.
The classified information related to joint training and planning sessions between the United States and the Republic of Korea and was classified at the SECRET level. Bishop also admitted to unlawfully retaining at his residence multiple classified documents that related to the national defense, including the U.S. Armed Forces Defense Planning Guide for years 2014 through 2018, a document entitled Optimizing U.S. Force Posture in the Asia Pacific, the U.S. Department of Defense China Strategy, the 2010 Guidance for Employment of Force (GEF) and a classified photograph of a Chinese naval asset that Bishop retrieved from classified sources based on a request from the Chinese woman. The documents had been removed from Bishop’s workplace at U.S. Pacific Command.
“Willfully communicating national defense information to a person not entitled to receive it is a serious threat to our national security,” said Assistant Attorney General Carlin. “In committing this crime, Bishop violated his oath to protect the classified information with which he was entrusted. This conduct is unacceptable and we will continue to investigate and seek to hold accountable those who engage in it.”
“We remain steadfast and resolute in our pursuit of those who violate their sworn security agreements and divulge our nation’s secrets to foreign nationals and others,” said U.S. Attorney Nakakuni. “This is the second major espionage case prosecuted in the District of Hawaii, and is particularly troublesome because it involves the communication of classified information to a citizen of the People’s Republic of China.”
This case was investigated by the FBI and the Naval Criminal Investigative Service. The case was prosecuted by Assistant U.S. Attorney Ken Sorenson of the U.S. Attorney’s Office for the District of Hawaii and Senior Trial Attorney Robert E. Wallace Jr. of the Counterespionage Section of the Justice Department’s National Security Division.
Attorney General Recognizes Hawaii AttorneyRead the Press Release
HONOLULU – Assistant U.S. Attorney (AUSA) Kenneth M. Sorenson of the U.S. Attorney’s Office in the District of Hawaii and Senior Trial Attorney (STA) Robert E. Wallace of the National Security Division of the Department of Justice were two of 243 members of the Department of Justice recognized by Attorney General Eric Holder and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 30th annual Director’s Awards Ceremony today in Washington D.C.
The District of Hawaii was one of 44 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.
In his prepared remarks to awardees, Attorney General Holder said, “Locally, nationally, and internationally, you represent the very best that this Department has to offer. Your work embodies our ongoing commitment – not merely to win cases, but to do justice; to protect our fellow citizens from crime, violence, and terrorism; to empower the most vulnerable among us; and to uphold the rule of law.”
EOUSA Director Monty Wilkinson echoed those sentiments, saying to the recipients, “You have persevered, and remained focused and motivated – achieving remarkable results in work that makes a difference in the lives of citizens across our great country. The vast scope of your collective accomplishments is nothing short of exceptional.”
AUSA Sorenson and STA Wallace are recognized for their excellence in prosecuting Noshir Gowadia, a bellwether case for the Department of Justice. Gowadia, an engineer who participated in the development of the B-2 “stealth” bomber for the United States, assisted the People’s Republic of China (PRC) in the design and testing of a stealthy cruise missile. He also communicated national defense and classified information to the PRC. After a four-month trial in United States District Court in Honolulu, Gowadia was convicted of conspiracy to design and test a stealthy cruise missile for the PRC, multiple espionage violations, tax fraud, and money laundering. On January 24, 2011, Chief District Judge Susan Oki Mollway sentenced Gowadia to 32 years in prison. The conviction and sentence were affirmed by the United States Court of Appeals for the Ninth Circuit on July 28, 2014.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that the challenges facing AUSA Sorenson and STA Wallace in presenting the Gowadia case were remarkably complex and daunting. Hundreds of classified documents, facts and critical design concepts underlying one of our nation's most critical defense capabilities, stealth, were either required to prove the elements of the multiple espionage counts, or were designated as necessary evidence by the defense. The proof required complex classified engineering, military and classification concepts to be presented in an understandable fashion.
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
TheBus Former Credit Union Employee Sentenced for EmbezzlementRead the Press Release
HONOLULU – On September 8, 2014, Jenny Nishida, age 41, former Oahu Transit Services Employees Federal Credit Union (OTSEFCU) employee, was sentenced on one felony count of embezzlement and misapplication of funds in a proceeding before Chief United States District Judge, Susan Oki Mollway. Nishida was sentenced to thirteen (13) months imprisonment and ordered to pay restitution in the amount of $330,459.99. OTSEFCU is the credit union for current and former employees and family members of the Oahu Transit Services, the entity that operates “TheBus”.
United States Attorney Florence T. Nakakuni said that, according to the charging documents, the defendant obtained online access to the VISA payment system for OTSEFCU and falsely inputted VISA payments for herself and a family member. These VISA payments were false in that the payments were never actually made to OTSEFCU, but the defendant credited her and the family member’ accounts, as if these payments were made. From approximately 2006 to 2012, Nishida falsely inputted 122 false VISA payments totaling $358,685.
On May 5, 2014, a former OTSEFCU co-worker, Dona Takushi, age 54, former OTSEFCU manager, pled guilty to one felony count of embezzlement and misapplication of funds, and two felony counts of making false entries. Takushi will be sentenced on September 11, 2014, at 10:30 a.m. Another former OTSEFCU co-worker, Nicole Cheung, has already been sentenced to 20 days imprisonment for one felony count of embezzlement and misapplication of funds. Information has not been presented to the court linking the three together in their criminal activity.
The case was investigated by the Federal Bureau of Investigation. The prosecution was handled by Assistant United States Attorney Cynthia Lie.
Former NFL Player and Wife Sentenced to Tax ChargesRead the Press Release
HONOLULU – Charles Loewen (“Loewen”), age 57, the owner of Paradise Stone & Tile, resident of Maui, and former National Football League player for the San Diego Chargers, was sentenced to 37 months imprisonment, 3 years supervised release, a $10,000 fine, and $235,288 in restitution for felony charges for conspiring to defraud the United States and filing a false claim for tax refund today before United States District Judge Derrick K. Watson. Judge Watson also sentenced Paula Loewen, age 56, to three years probation, a $5,000 fine, and $5,034 in restitution for failing to file taxes in 2007.
United States Attorney Florence T. Nakakuni said that, according to the First Superseding Indictment, Loewen conspired to use a scheme in which he and his wife falsely claimed tax refunds from the Internal Revenue Service (“IRS”) totaling $2,353,173.22. Loewen, who has a Master’s Degree in Business Administration, created fake supporting tax documentation, specifically, phony 1099-OID Forms, to make it appear as if the IRS owed him a large tax refund, when in fact the IRS did not.
According to information produced in court, Loewen conspired with Gerald Poynter, a/k/a Brother Jerry Love, a 1099-OID scheme promoter who was charged and sentenced in a 1099-OID fraud scheme in Kansas City, in the Western District of Missouri, involving a $96 million fraud.
Also according to information produced in court, after the State of Hawaii Department of Taxation levied two of Loewen’s Territorial Savings Bank accounts, he closed these accounts. Loewen directed his wife to open an Arizona bank account in her name only, in order to conceal his income, and he then began depositing his Paradise Stone & Tile business income into this Arizona account. Loewen later submitted false federal tax returns to the IRS claiming that he earned zero net income for three tax years, when in fact he had earned net income for those years. Loewen has failed to pay the over $127,000.00 in taxes that he owes the State of Hawaii for Tax Years 2004, 2005, 2006, 2007, and 2008. Loewen ignored past due notices from the IRS or sent frivolous correspondence to tax authorities for tax years going back to 1995.
Also according to information produced in court, Loewen recently disclosed a net worth with his wife of over $1.5 million dollars to federal authorities, including $260,000 in tools and gold bullion and $695,000 in an offshore account.
The case was investigated by the Internal Revenue Service -- Criminal Investigation. The prosecution was handled by Assistant United States Attorney Cynthia Lie.
Second Brother Sentenced to Prison in Methamphetamine ConspiracyRead the Press Release
HONOLULU – Joshua Lew, age 28, of Waialua, was sentenced today by United States District Judge J. Michael Seabright to 97 months imprisonment for being a member of a conspiracy to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine. Lew’s brother and co-defendant, Jacob Drummondo-Farias, 31, also of Waialua, was previously sentenced on February 24, 2014 to 324 months in prison for being a manager and supervisor of the conspiracy.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to information presented in court, Lew and Drummondo-Farias agreed with other individuals to distribute methamphetamine that was sent from California, via express mail services, to Honolulu during 2011 and 2012. Pursuant to that agreement, Lew and Drummondo-Farias orchestrated the shipment of 890 grams of methamphetamine which was intercepted at the Honolulu Airport on January 26, 2012 by federal law enforcement authorities. Authorities arrested Lew after he returned to Hawaii from the Marshall Islands.
The investigation which resulted in the prosecution was conducted by the Drug Enforcement Administration Hawaii Airport Task Force and the United States Postal Service. Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
Accountant Sentenced to ImprisonmentRead the Press Release
HONOLULU – U.S. District Court Judge Leslie E. Kobayashi today sentenced Dennis Duban, a Los Angeles-based accountant and tax return preparer, to 24 months imprisonment for conspiracy to defraud the Internal Revenue Service (IRS) and assisting in the filing of a false federal income tax return before in Honolulu, Hawaii. She also ordered Duban to pay a fine of $30,000 and perform 600 hours of community service. Duban pled guilty to those offenses in October 2012.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, and Kathryn Keneally, Assistant Attorney Genral for the Tax Division of the Department of Justice, said that according to information produced in court:
- Duban was a Certified Public Accountant who ran an accounting firm called Duban Sattler and Associates, LLP (formerly Duban Accountancy, LLP), in Los Angeles, California. Duban provided accounting and tax planning services to Hawaii residents Charles Alan Pflueger, James Pflueger, and some of the Hawaii-based entities they controlled, including Pflueger, Inc. and Pflueger Properties.
- Beginning as early as 2003, Duban knew that personal expenses of Pflueger, Inc. owner Charles Alan Pflueger were being paid for by Pflueger, Inc. and illegally deducted on corporate income tax returns as business expenses. Duban also knew that some personal expenses of another co-defendant were being paid for and illegally deducted by Pflueger, Inc.
- In preparing tax returns for Charles Alan Pflueger and another co-defendant from at least 2003 to 2006, Duban did not include as additional items of income all personal expenses of which he was aware were paid for by Pflueger, Inc. and constituted income to the taxpayers.
- In connection with the 2007 sale of Hacienda, a San Diego, California investment property owned by Pflueger Properties, Duban agreed with another co-defendant to file a false Pflueger Properties 2007 partnership income tax return and false individual income tax return which falsely reported the gain on the sale of the property, which sold for $27,500,000. In particular, Duban reported the basis of Hacienda as approximately $7 million higher than its actual basis.
- Prior to the sale of the Hacienda property, Duban and others assisted the same co-defendant in creating a nominee Cook Islands trust and opening a bank account at Wegelin Bank in Switzerland in the name “Southpac Trustee International, Inc., as Trustee of the Vista Pacifica Trust.” Proceeds of the Hacienda sale, over $14 million, were sent to the Wegelin account. Duban and a New York-based firm served as investment managers for the account. Duban and the co-defendant did not timely report the co-defendant’s beneficial interest in the Swiss account on Schedule B of a Form 1040 individual income tax return or by filing a Report of Foreign Bank Account (“FBAR”).
- Duban had an interest in other foreign bank accounts that he failed to properly report to the government. For at least 2006 and 2007, Duban failed to report his interest in at least one New Zealand account, held in the name of Lookout Point Limited, on Schedule B of his individual income tax returns or by filing an FBAR.
Three of Duban’s codefendants, Alan Pflueger, Randall Kurata, and Julie Kam previously pleaded guilty. Alan Pflueger pleaded guilty to willfully filing his own false 2005 Form 1040. In his plea agreement he admitted that from 2003 through 2005, personal expenses were paid for on his behalf by Pflueger, Inc., and Pacific Auto Distributors, LLC, another entity he owned, and his personal tax returns did not report these personal expenses as income. Randall Kurata, CFO of Pflueger, Inc., pleaded guilty to willfully filing a false 2003 Form 1120, U.S. Corporation Income Tax Return, for Pflueger, Inc., which improperly deducted as business expenses significant personal expenses of Alan Pflueger. Julie Kam, Alan Pflueger’s executive assistant, pleaded guilty to willfully filing her own 2004 Form 1040, which did not report personal expenses paid to her through Pacific Auto Distributors. Judge Kobayashi sentenced Alan Pflueger to 15 months’ imprisonment, while Randall Kurata and Julie Kam were both sentenced to terms of probation.
The indictment resulted from an investigation conducted by IRS - Criminal Investigation. Assistant United States Attorney Leslie E. Osborne, Jr. and Tax Division Trial Attorneys Timothy J. Stockwell and Dennis R. Kihm, handled the prosecution.
Leader of Internet Gambling Operation Sentenced to PrisonRead the Press Release
HONOLULU – Felix Gee Wan Tom, age 40, of Honolulu, was sentenced today by Chief United States District Judge Susan Oki Mollway to six months of imprisonment for transmission of wagering information, money laundering and filing a false tax return. Tom also forfeited over $4 million in assets, including two condominiums in Honolulu and a house in Las Vegas, and was ordered to pay $118,601 in taxes owed. The sentencing is the last of 27 Oahu residents prosecuted for a variety of gambling and other offenses related to internet gambling. The other defendants received sentences ranging from probation to 10 months in prison.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that starting in 2009, the Federal Bureau of Investigation, the Internal Revenue Service, Homeland Security Investigations and the Honolulu Police Department conducted a joint undercover investigation into a large-scale internet gambling operation established by Allen Yamada and led by Tom. According to information produced in court, the investigation revealed that, between 2005 and 2012, the illegal operation placed gross wagers totaling over approximately $670 million through internet websites based in Costa Rica.
U.S. Attorney Nakakuni said that according to law enforcement investigations, in the last several years, dozens of internet bookmakers have come into existence, many of whom are located in foreign countries where bookmaking activities are not illegal. These bookmakers direct their activities toward bettors in America, who are interested in gambling on American sporting events such as baseball, football, and basketball.
The prosecution identified Tom as the master agent for in excess of 20 agents located primarily on Oahu. As a master agent, Tom recruited, trained, and supervised the agents and provided agents with login credentials (username/password) for use by players to access his internet sports betting websites. Tom also collected gambling losses from and made payments on gambling winnings to his agents, and split profits with agents. The investigation also revealed that many agents also recruited sub-agents (lower-level bookies or runners), who also had their own client base.
The following defendants pled guilty to Transmission of Wagering Information, Money Laundering, and Filing False Tax Return, in addition to Tom:
Darin Fujimori, age 39 (Forfeiture $266,600, tax $127,395);
Jeffrey Ibara, age 36 (Forfeiture $217,666, tax $6,791);
Anh Phuong Lam, age 31 (Forfeiture $140,000 + house in Las Vegas $175,000, tax $19,226);
Vietanh J. Tran, age 33 (Forfeiture $607,423, tax $82,410);
Allen Yamada, age 41 (Forfeiture $793,136, tax $45,120);
Ponciano Erice, age 39 (Forfeiture $190,000, tax $64,779)
The following defendants pled guilty to Money Laundering:
Jason Chang, age 38 (Forfeiture $83,466)
Thomas Ky, age 47 (Forfeiture $1,336,500)
James Striker, age 56 (Forfeiture $145,600)
The following defendants pled guilty to Transmission of Wagering Information and Filing False Tax Return:
Chad Rees, age 41 (Forfeiture $20,000, tax $14,644);
Terrence Ching, age 41 (Forfeiture $636,115, tax $25,173);
Dane Amii, age 40 (Tax $3,113);
Harry Endo, age 46 (Forfeiture $253,536, tax $61,118);
Chad Fujiwara, age 44 (Forfeiture $310,000, tax $37,601);
Dean Horie, age 39 (Forfeiture $749,000, tax $25,753);
Dax Migita, age 34 (Forfeiture $102,773, tax $15,344);
Phalakone Oshiro, age 39 (Forfeiture $76,000, tax $19,338);
Jerome Romano, age 41 (Forfeiture $33,932, tax $29,515).
The following defendants pled guilty to Transmission of Wagering Information and Failing to File Monthly Tax Return for Wages:
Justyn Tabaniag, age 25 (Tax $14,045);
Troy Sakata, age 47 (Forfeiture $40,868, tax $6,113);
James Hayden, age 29 (Forfeiture $14,870, Tax $14,045);
Chad Iwamoto, age 41 (Forfeiture $104,850, tax $48,373);
Alvin Ngo, age 27 (Forfeiture $54,371, tax $58,059);
Jack Shizuru, age 65 (Forfeiture $3,794, tax $5,586);
Mathew Verdugo, age 30 (Forfeiture $8,155, tax $42,401).
The case was prosecuted by Assistant U.S. Attorney Larry Butrick.
Waste Management of Hawaii Inc. and Managers Indicted for Violations of Clean Water Act, Conspiracy, Making False StatementsRead the Press Release
Millions of Gallons of Medical Waste-Contaminated Storm Water Released into Hawaii’s Coastal Waters
HONOLULU – A federal grand jury in Honolulu returned a 13-count indictment today charging Waste Management of Hawaii Inc. (WMH); Joseph R. Whelan, WMH’s General Manager and a vice president of WMH; and Justin H. Lottig, WMH’s environmental protection manager, with multiple felonies, including knowing violations of the Clean Water Act, conspiracy and making false statements to the Hawaii Department of Health and the U.S. Environmental Protection Agency (EPA), the Justice Department announced today.
The charges stem from alleged illegal discharges of contaminated storm water from the Waimanalo Gulch Sanitary Landfill into Hawaii’s coastal waters after heavy rainfalls in December 2010 and January 2011. WMH was permitted to discharge storm water from the landfill to the Pacific Ocean under a National Pollutant Discharge Elimination System (NPDES) permit issued by the Hawaii Department of Health Clean Water Branch (DOH-CWB). The storm water was required to go through the landfill’s storm water management system to ensure that it did not come into contact with waste in the landfill before being discharged to Hawaii’s coastal waters. The NPDES permit prohibited WMH from causing or contributing to a violation of Hawaii’s state water quality standards.
The indictment alleges that from April 19, 2010 until Dec. 23, 2010, WMH Environmental Protection Manager Lottig conspired with employees from an environmental consulting firm to submit false and outdated information to DOH-CWB in June, August and September 2010. The purpose of the conspiracy was to convince DOH-CWB that the landfill had an adequate storm water management system in place in order to renew its NPDES storm water discharge permit.
The indictment also alleges that from Oct. 27 to Dec. 23, 2010, Lottig and WMH violated the permit by knowingly failing to inform DOH-CWB of material changes in the storm water management system that would have alerted the DOH-CWB that an inadequate system was in place.
On Dec. 19, 2010, a heavy rainstorm struck Oahu, and Cell E6, which contained millions of pounds of waste including raw sewage, sewage sludge and medical waste, was flooded with millions of gallons of storm water from up canyon. The indictment alleges that from December 20 to 23, WMH pumped millions of gallons of contaminated storm water from Cell E6 into coastal waters near the Ko Olina Resort. The indictment alleges that on December 20 and 23, Lottig falsely stated to DOH-CWB inspectors that any storm water being discharged from the landfill had not come into contact with waste from Cell E6.
On the evening of Jan. 12, 2011, another heavy rainstorm struck Oahu. The indictment alleges that unbeknownst to DOH-CWB, Whelan and WMH caused the discharge of millions of gallons of contaminated storm water to the coastal waters near the Ko Olina beach resort for several hours that evening and/or into the morning of January 13 without authorization from DOH-CWB. The pollutants included large amounts of medical waste, including blood vials, syringes and catheters, raw sewage and sewage sludge. The indictment alleges that on Jan. 13 and 20, 2011, an engineer from WMH falsely stated to DOH-CWB inspectors that the manhole which WMH used for the unauthorized discharges had been closed when in fact he knew that it had been left open to serve as an overflow drain.
The indictment also alleges that Whelan and WMH submitted false material statements and concealed material information in written submissions to DOH-CWB on April 21, 2011 and to the EPA on Aug. 1, 2011.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
If convicted, WMH faces a maximum criminal fine of $500,000 for each count. If convicted of the count charging failing to inform DOH-CWB of material changes in the storm water diversion system, WMH faces a maximum fine of $50,000 per day of the alleged violation.
If convicted, Lottig faces a maximum sentence of five years in prison for each count of conspiracy and for each count of making a false statement to DOH-CWB; a maximum of three years for failing to inform DOH-CWB of material changes in the storm water diversion system plus a fine of $50,000 per day of the alleged violation; a maximum of two years for each count of providing false information to DOH-CWB; and a maximum of three years for each count of illegal discharges in violation of the Clean Water Act. If convicted, Lottig also faces a maximum criminal fine of $250,000 for each count.
If convicted, Whelan faces a maximum sentence of three years for each count alleging illegal discharges in violation of the Clean Water Act and a maximum of two years for each count of making false statements to DOH-CWB and EPA; and a maximum criminal fine of $250,000 for each count.
The case is being prosecuted by Assistant U.S. Attorney Marshall Silverberg of the U.S. Attorney’s Office for the District of Hawaii and Senior Trial Attorney Daniel Dooher of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division. It was investigated by U.S. Environmental Protection Agency-Criminal Investigation Division, with the assistance of the DOH-CWB.
Roger and Sherryanne Christie Sentenced to PrisonRead the Press Release
HONOLULU – Defendants Roger Cusick Christie, 64, and Sherryanne L. Christie, 62, husband and wife, were sentenced today by U.S. District Judge Leslie E. Kobayashi. Roger Christie was sentenced to 60 months imprisonment, to be followed by a term of supervised release of four years. Sherryanne Christie was sentenced to a 27 month imprisonment term, to be followed by a term of supervised release of three years.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that Roger Christie had also asked the Court to permit him to possess and use marijuana for religious purposes during his term of supervised release, but the Court refused to do so, imposing the standard conditions of release on him, which prohibited the use or possession of controlled substances. In addition, while Roger Christie may participate in Ministry functions that do not involve the use or possession of controlled substances, the court also ordered that he was prohibited from associating with other persons who were using or possessing such drugs. A similar condition was imposed for Sherryanne Christie’s term of supervised release.
Last September, Roger Christie had pled guilty to conspiring to manufacture, distribute, and possess with intent to distribute marijuana, involving 100 or more marijuana plants and two separate tax counts for failure to file federal income tax returns for calendar years 2008 and 2009. Sherryanne Christie had pled guilty to conspiring to manufacture, distribute, and possess with intent to distribute marijuana, involving 50 or more marijuana plants. Under the terms of their plea agreements, both Christies reserved their right to seek appellate review of the District Court’s denial of four pretrial motions, including the Court’s finding that enforcement of marijuana trafficking laws against them did not violate the Religious Freedom Restoration Act (RFRA).
The prosecution resulted from the combined efforts from 2008-2010 of the Drug Enforcement Administration; the Internal Revenue Service - Criminal Investigations; Homeland Security Investigations; the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Postal Inspection Service; the U.S. Marshals Service; the National Park Service; the Sheriff’s Office, Department of Public Safety; the Hawaii Police Department; and the Honolulu Police Department. The case was prosecuted by Assistant U.S. Attorney Michael K. Kawahara.
Kapolei Man Sentenced to 15 Years for Methamphetamine TraffickingRead the Press Release
HONOLULU – Ernesto Hernandez, 51, of Kapolei, was sentenced today to 180 months imprisonment for conspiring to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine from April to May 2013 as well as possessing methamphetamine with the intent to distribute.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that the evidence presented at trial in January 2014 showed that Hernandez agreed with other individuals to distribute methamphetamine that was sent from California, via express mail service, to Honolulu in early May 2013. The evidence also established that Hernandez arranged the shipment of 213 grams of pure methamphetamine which was intercepted at the Honolulu Airport on May 7, 2013 by Federal Express security personnel. Hernandez was also found to be in possession of methamphetamine, with the intent to distribute, when the Drug Enforcement Administration executed a search warrant at a Kapolei residence on May 8, 2013.
U.S. District Judge J. Michael Seabright found Hernandez’s dishonesty during his testimony at trial to be an aggravating factor in determining his sentence. Hernandez also faces deportation to Mexico upon the conclusion of his prison sentence.
The investigation which resulted in the charges in the case was conducted by the Drug Enforcement Administration and Hawaii Airport Task Force.
Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
Former Army Soldier Convicted of Felony Murder of His Five Year Old DaughterRead the Press Release
HONOLULU - A federal jury today found former Army soldier Naeem Williams, 34, guilty of the felony murder of his five year old daughter, Talia Williams, on Wheeler Army Airfield. The jury found Williams guilty of killing his daughter on July 16, 2005, by engaging in child abuse that included beating and punching her. Williams was also convicted of participating, along with his wife, Delilah Williams, in a pattern and practice of assault and torture from December, 2004, until July 16, 2005, that resulted in Talia’s death. In addition, Williams was convicted of conspiring to engage in a pattern and practice of assault and torture leading to death, obstructing justice, and making false statements to Army Criminal Investigation Division agents on the night of his arrest in July, 2005.
Williams is potentially eligible for the death penalty. The penalty phase is scheduled to begin on April 29, 2014. If the jury finds Williams eligible for death, it will then deliberate on whether he should receive the death penalty.
Florence Nakakuni, United States Attorney for the District of Hawaii, said the government will not be able to comment on the verdict until all proceedings have been completed.
The case was investigated by the Federal Bureau of Investigation and the Army Criminal Investigation Division. The case is being prosecuted by Assistant United States Attorney Darren Ching and Trial Attorney Steve Mellin from the Capital Case Section of the Justice Department’s Criminal Division.
Oahu Man Indicted for Firearms ViolationRead the Press Release
HONOLULU - A federal grand jury returned an indictment yesterday charging Brian Ancho, age 35, with two counts of being an unlawful user of or addicted to a controlled substance and a convicted felon in possession of a firearm. Count 1 of the indictment alleges that Ancho, an Oahu resident, possessed a Charter Arms Corporation revolver, and Count 2 alleges possession of a Beretta pistol, both on March 13, 2014.
Florence T. Nakakuni, Untied States Attorney for the District of Hawaii, said that according to allegations contained in a criminal complaint previously filed in court, Ancho was approached by two Honolulu Police Department Crime Reduction Unit officers on March 13, 2014. After the officers identified themselves, Ancho attempted to run away from the officers but was apprehended and arrested. Thereafter, officers conducted a pat-down search of Ancho’s waistband and discovered that Ancho had a Charter Arms Corporation revolver in his waistband. Law enforcement officers later that day recovered a Beretta pistol during a search of a vehicle driven by Ancho.
If convicted, Ancho faces up to ten years in prison and a fine of up to $250,000 on each count. The charges in the indictment, as well as the information contained in the criminal complaint, are merely accusations, and the Defendant is presumed innocent until proven guilty.
The Defendant is being prosecuted as part of the Honolulu Violent Incident Crime Task Force/ Frontline Initiative, a collaborative effort by federal, state, and local law enforcement agencies and prosecutors and communities to prevent, deter, and prosecute gun crime. The case is being investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives; Homeland Security Investigations; and the Honolulu Police Department, with cooperation from the City and County of Honolulu Department of the Prosecuting Attorney. The case is being prosecuted by Assistant U.S. Attorney Michael Nammar.
Maui Businessman Pleads Guilty to Tax FeloniesRead the Press Release
HONOLULU – On March 20, 2014, Charles Loewen (“Loewen”), age 57, the owner of Paradise Stone & Tile and resident of Maui, today pled guilty to conspiring to defraud the United States and filing a false claim for tax refund before United States District Judge Derrick K. Watson. Loewen faces a maximum term of imprisonment of five years on each of the two charges when he is sentenced on July 3, 2014 at 9:30 a.m.
United States Attorney Florence T. Nakakuni said that, according to the First Superseding Indictment, Loewen conspired to use a scheme in which he and his wife falsely claimed tax refunds from the Internal Revenue Service (“IRS”) totaling $2,353,173.22. He created fake supporting tax documentation, specifically phony 1099-OID Forms to make it appear as if the IRS owed him a large tax refund, when in fact the IRS did not.
According to information produced in court, Loewen further conspired to conceal his Paradise Stone & Tile business income from the IRS. After the State of Hawaii Department of Taxation levied two of Loewen’s Territorial Savings Bank accounts, he closed these accounts. Loewen’s wife opened an Arizona bank account, and Loewen began depositing his Paradise Stone & Tile business income into this Arizona account. Loewen later submitted false federal tax returns to the IRS claiming that he earned zero net income for three tax years, when in fact he had earned net income for those years.
The case was investigated by the Internal Revenue Service -- Criminal Investigation. The prosecution was handled by Assistant United States Attorney Cynthia Lie.
Hawaii Man Pleads Guilty to Communicating Classified National Defense Information to an Unauthorized PersonRead the Press Release
HONOLULU – Benjamin Pierce Bishop, 60, a Honolulu, Hawaii defense contractor and former Lt. Colonel in the U.S. Army, pleaded guilty today in federal court to willfully communicating classified national defense information to a person not authorized to receive it and willfully retaining classified national defense information. The guilty plea was announced by Florence T. Nakakuni, U.S. Attorney for the District of Hawaii, and John P. Carlin, Acting Assistant Attorney General of the National Security Division of the Department of Justice.
Bishop was arrested on March 15, 2013 on charges that he communicated classified information to a person identified as a 27 year old Chinese woman with whom he had a romantic relationship during the year preceding the charges. According to the criminal complaint, during Bishop’s relationship with the woman, further identified as a graduate student in the United States on a J1 Visa, he communicated classified information concerning U.S. national defense systems and removed classified information from his work space at U.S. Pacific Command which he then kept at his Honolulu area residence. In his plea agreement filed with the Court, Bishop admitted that on or about May 12, 2012, he “willfully communicated, in an email attachment entitled “Comments on Extending Deterrence from the Triad”, to PERSON 1, classified U.S. national defense information related to joint training and planning sessions between the United States and the Republic of Korea, which information related to the national defense and was classified at the SECRET level.” Bishop also admitted to willfully retaining multiple classified documents at his residence related to U.S. national defense, including the U.S. Armed Forces Defense Planning Guide for years 2014-2018; a document entitled: Optimizing U.S. Force Posture in the Asia-Pacific; the U.S. Department of Defense China Strategy; and the 2010 Guidance for Employment of Force (GEF).
When sentenced on June 26, 2014 by United States District Judge Leslie E. Kobayashi, Bishop will face a maximum sentence of 10 years in prison, a fine of up to $250,000, and three years of supervised release for each of the two counts of conviction.
U.S. Attorney Florence T. Nakakuni stated: “This case once again demonstrates our commitment and unwavering resolve to pursue and prosecute individuals who violate their security oaths and endanger our national security by unlawfully communicating sensitive and damaging classified national defense information to persons who are not entitled to receive it.”
This case was investigated by the FBI and the Naval Criminal Investigative Service. This case was prosecuted by Assistant U.S. Attorney Ken Sorenson of the U.S. Attorney’s Office for the District of Hawaii and Senior Trial Attorney Robert E. Wallace Jr., of the Counterespionage Section of the Justice Department’s National Security Division.
Former Hilo Resident Sentenced to 87 Months in Jail for Fraud and Tax OffensesRead the Press Release
HONOLULU – Justin Wade Smith, age 32, formerly of Hilo, was sentenced to 87 months in federal prison on March 10, 2014 for engaging in an “advance fee” fraud scheme that netted him more than $1.2 million, and failing to file income tax returns.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that, according to information presented in court, Smith earlier pled guilty to two counts of wire fraud, based on his solicitation of money from others through false representations. Smith’s false statements included telling others that (1) he would inherit money from a sizable family trust, once he paid certain fees and costs, and (2) he was a contractor for a law enforcement agency, and could generate large fees through drug seizures. In court proceedings, Smith admitted asking people to “advance” money to him, and promising to repay the amounts with substantial interest once he obtained money from the family trust or law enforcement agency. Smith admitted that he was not an heir to a large trust, or a law enforcement contractor, and that he used the money received from others to support his own lifestyle.
According to the court documents, Smith ran his scheme from 2006 through 2012 in Hawaii and elsewhere, and obtained more than $1.2 million in cash, Western Union or Moneygram wire transfers, and the “loading” of a prepaid debit card belonging to Smith.
During court proceedings, Smith also pled guilty to willfully failing to file a tax return for the calendar year 2012, during which he received approximately $233,995 from his wire fraud scheme. Under the plea agreement, Smith admitted failing to report total income of $1,024,196 between 2007- 2012, and that the resulting tax liability was $185,386.
At sentencing, United States District Judge J. Michael Seabright imposed a term of incarceration of 87 months on the wire fraud counts, and 12 months on the failure to file offense, with the terms to run concurrently. Judge Seabright also ordered Smith to pay restitution of $1,262,930 to the 33 victims of his wire fraud scheme, and to pay back taxes of $185,386 to the Internal Revenue Service.
Smith has been in custody since his arrest on August 22, 2013.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service -- Criminal Investigation, with the assistance of the Hawaii County Police Department. The prosecution was handled by Assistant United States Attorney Larry Tong.
Tax Preparer Indicted for Preparing Returns with Fraudulent Claims and Filing Own False Tax ReturnsRead the Press Release
HONOLULU - A federal grand jury yesterday indicted Melanau Fohe Haiola, age 52, for preparing false tax returns for her clients and for failing to report income she earned. The indictment charges that Haiola, of Kahuku, prepared 17 Federal Income Tax returns that fraudulently claimed the American Opportunity Credit, a deduction for undergraduate education expenses; personal property rental expense deductions; or medical, dental, or employee expenses. In addition, the indictment charges that Haiola filed false tax returns for herself for the 2009 and 2010 tax years by underreporting her income by a total of $114,315.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to the indictment, Haiola, as owner and operator of Nau’s Tax Preparation, personally prepared, and supervised others in the preparation of, hundreds of federal income tax returns, many of which claimed the American Opportunity Credit and the personal property rental expense deduction when neither was legally applicable.
If convicted, Haiola faces up to three years in prison and a fine of up to $250,000 for each of the 19 charges. The charges in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The prosecution resulted from an investigation conducted by the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Marshall Silverberg.
Waipahu Man Sentenced to over 15 Years Imprisonment for Federal Drug OffensesRead the Press Release
HONOLULU – Mario Cesar Torres, age 57, of Waipahu, was sentenced today by United States District Judge J. Michael Seabright to 188 months imprisonment for conspiring to distribute and possess with intent to distribute, 50 grams or more of methamphetamine as well as three additional counts of distributing 50 grams or more of methamphetamine. A federal jury found Torres guilty of the four drug offenses in February 2013.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that Torres was found to be responsible for distributing 1,285 grams of actual methamphetamine from August 2010 through January 2011. According to evidence produced during the trial, during that time period, Torres delivered approximately one pound quantities of methamphetamine on two occasions and was the driver on a third transaction in which a passenger in his vehicle delivered approximately one pound of methamphetamine. Torres had faced a mandatory minimum sentence of ten years imprisonment on each count.
The case was the result of a joint investigation by Homeland Security Investigations, the Federal Bureau of Investigation and the Honolulu Police Department. Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
Laie Woman Sentenced to 12 Months Imprisonment for Bankruptcy FraudRead the Press Release
HONOLULU – Senior United States District Judge Helen Gillmor today sentenced Michelle Malufau, age 47, of Laie, Oahu, to 12 months and 1 day imprisonment, 400 hours of community service, 3 years supervised release, a $200 special penalty assessment, and restitution to her various creditors in the amount of $33,252.14 for two counts of bankruptcy fraud related to the Chapter 7 bankruptcy that she filed in 2011. During today’s sentencing hearing, Judge Gillmor found that Malufau had repeatedly lied when she testified before the jury during her criminal trial. A jury convicted Malufau on November 12, 2013, of making false statements under penalty of perjury on documents filed in that 2011 bankruptcy, and also of testifying falsely under oath at a hearing in that same proceeding.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that the evidence presented at trial showed that Malufau knowingly and fraudulently concealed at least three assets that she owned and/or controlled during her 2011 bankruptcy: a house on the North Shore of Oahu, which had over $322,000 in equity in it; a bank account; and rental income. Malufau received a discharge of over $1 million of debt through that proceeding.
The charges resulted from an investigation conducted by the Internal Revenue Service - Criminal Investigation, with assistance from the Federal Bureau of Investigation. Assistant United States Attorneys Michael Nammar and Andrea Hattan handled the prosecution.
Drug Felon Sentenced to Twenty-Seven Years ImprisonmentRead the Press Release
HONOLULU – Jacob Drummondo-Farias, age 31, of Waialua, was sentenced yesterday by United States District Judge J. Michael Seabright to 324 months imprisonment for being a manager and supervisor of a conspiracy to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine between 2011 and January, 2012. Drummondo-Farias’ brother and co-defendant, Joshua Lew, 28, also of Waialua, earlier pled guilty to the same offense and will be sentenced on April 21, 2014.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that a federal jury found Drummondo-Farias, who has a prior federal felony drug conviction for distributing methamphetamine, guilty in November 2013, and that according to information presented at that trial Drummondo-Farias and Lew agreed with other individuals to distribute methamphetamine that was sent from California, via express mail services, to Honolulu during 2011 and 2012. The evidence also reflected that Drummondo-Farias arranged to have an express mail parcel with 890 grams of methamphetamine delivered to a Honolulu apartment in January 2012, but it was intercepted at the Honolulu International Airport by federal law enforcement authorities.
Drummondo-Farias faced a mandatory minimum sentence of 20 years imprisonment due to his prior federal drug felony conviction. The investigation which resulted in the charges in the case was conducted by the Drug Enforcement Administration, Hawaii Airport Task Force and the United States Postal Inspection Service. Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
Government Contractor Pays $229,060 to Resolve Allegations of Improper ClaimsRead the Press Release
HONOLULU – J.M. Waller Associates, Inc. (“JMWA”), a corporation headquartered in Fairfax, Virginia, will pay $229,060 to settle certain civil claims under the federal False Claims Act in an agreement signed on February 5, 2014. The United States had alleged that JMWA submitted false or fraudulent claims for payment to the United States Air Force in connection with a professional services contract which required JMWA to provide design architect-engineering services and inspection services in connection with various construction projects located on Joint Base Pearl Harbor-Hickam in Honolulu.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to the settlement agreement, the United States alleged that during the period from October 1, 2008, through November 30, 2010, JMWA submitted false or fraudulent claims for payment that included (1) JMWA’s alleged use of inappropriate labor categories and billing rates for certain tasks; (2) JMWA’s alleged billing for inspection services on days when no construction had been performed; and (3) JMWA’s billing of time charged to a particular task order for work that allegedly was outside the scope of that task order. While JMWA agreed to the settlement, it did not admit that the allegations were correct.
USA Nakakuni noted that under the federal False Claims Act, the United States can seek up to triple damages, plus penalties, for false and fraudulent claims for payment that are submitted in connection with all government contracts: She stated: “As the Air Force and our other military services enter into thousands of contracts for goods and services in support of our military efforts both at home and abroad, we will work tirelessly with our military law enforcement partners to protect the taxpayers’ money and combat procurement fraud.”
This civil investigation was initiated after the Air Force contracting office identified billing discrepancies while processing claims submitted by JMWA. The investigation, conducted by the Air Force Office of Special Investigations, included a review of thousands of pages of documents and numerous witness interviews during the course of the three-year investigation. The Defense Contract Audit Agency auditors and Air Force contracting officers shared their expertise and provided critical support to the investigation. The case was handled by Assistant U.S. Attorney Rachel Moriyama.
Oahu Man Sentence to Six Years in Prison for Drug Offense, Identity Theft, and Naval Exchange TheftRead the Press Release
HONOLULU – Chief U.S. District Judge Susan Oki Mollway sentenced defendant Ashon L. Fain-Farias, age 25, on January 13, 2014, to an imprisonment term of six years following a plea to (i) one count of possession with intent to distribute five grams or more of methamphetamine; (ii) one count of conspiring to steal government property; and, (iii) one count of aggravated identity theft. These offenses occurred in December 2012 at Joint Base Pearl Harbor-Hickam, Hawaii, and the theft and aggravated identity theft offenses involved two other co-defendants, Joseph Routt, age 37, and Chanice Viloria, age 20, who were sentenced to 14 months and ten days imprisonment, respectively, for their roles in the conspiracy. All three are Oahu residents.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to information produced to the court, Fain-Farias, Routt, and Viloria attempted to steal over $17,000 of high-value electronic items from the Navy Exchange at Pearl Harbor (NEX) by using a military identification card obtained from a military retiree to gain access to the NEX on December 18 and 19, 2012. All three, however, were apprehended on December 19. During the ensuing search of Fain-Farias’ car by Naval Security Forces, a bag containing over 35 grams of methamphetamine, 17 grams of cocaine base, and drug distribution material were recovered from the trunk.
Fain-Farias sentence consisted of terms of four years imprisonment for the drug and theft conspiracy charges, to be served concurrently, and a mandatory two-year term of imprisonment for identity theft which must be served consecutively to the four-year terms, for a total of six years imprisonment.
The charges resulted from an investigation conducted by the Naval Criminal Investigative Service, Drug Enforcement Administration, and Naval Security Forces. Special Assistant U.S. Attorney Robert Singer and Assistant U.S. Attorney Michael Kawahara prosecuted this case.
Honolulu Tax Preparer Sentenced for Tax Crimes Related to Hawaii Clients and Her Own Tax ReturnRead the Press Release
HONOLULU - United States District Court Judge J. Michael Seabright today sentenced Honolulu tax preparer Merla Balubar, age 59, to 24 months imprisonment for falsifying information on an income tax return she prepared for another person and for falsifying her own tax return. Judge Seabright ordered Balubar to pay restitution totaling $326,799 to the United States.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said according to documents filed in connection with the case:
- Balubar a resident of Ewa Beach, provided tax preparation services while doing business as Filcom Tax Services LLC. Balubar would prepare returns for clients for a fee and her activities covered tax years 2006 through 2009, with specific returns being prepared and submitted to the Internal Revenue Service (IRS) from 2007 through 2010. The returns contained materially false information that resulted in refunds, to which the clients were not entitled, or reduced the tax liability for the filer. This was accomplished by including within the returns false overstatements of deductible expenses.
- Balubar also prepared a Joint United States Individual Income Tax Return, Form 1040, for herself and her husband, for tax year 2007. This tax return contained materially false statements of fact by under reporting income from business operation, income from rental property, and gambling income. In addition, the return also contained false itemized deductions. Balubar also admitted to filing false returns for tax years 2008 and 2009.
The case resulted from an investigation conducted by IRS - Criminal Investigation. Assistant United States Attorney Ronald G. Johnson handled the prosecution.
Honolulu Women Arraigned on Indictment for Fraudulent Debt Elimination SchemeRead the Press Release
HONOLULU – After a five-day trial in the United States Court in Honolulu, a federal jury found Matthew Zmuda, 29, of Kauai, guilty on Friday, January 10, of conspiring to distribute and possess with intent to distribute, 50 grams or more of methamphetamine from January to April 2012, as well as attempting to possess 50 grams or more of methamphetamine with the intent to distribute. The jury also found him guilty of conspiring to distribute and possess with intent to distribute a detectable amount of heroin.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to the evidence presented at trial Zmuda agreed with other individuals to have methamphetamine and heroin sent from California, through a delivery service, to Kauai in February, March, and April 2012. Zmuda was the intended recipient of 447 grams of methamphetamine seized by law enforcement at the Honolulu International Airport on April 3, 2012, and was addressed to a hotel in Kauai. He had also arranged to meet at that hotel to receive the methamphetamine and the heroin from the provider.
Zmuda faces up to life in prison with a mandatory minimum 20 year term of imprisonment when he is sentenced by Senior U.S. District Judge Helen Gillmor on May 12, 2014.
The investigation which resulted in the charges in the case was conducted by the Drug Enforcement Administration and Hawaii Airport Task Force, assisted by the efforts of the Kauai Police Department. Assistant U.S. Attorney Tony R. Roberts handled the prosecution.
Kapolei Man Convicted of Methamphetamine TraffickingRead the Press Release
HONOLULU – After a three-day trial in United States District Court in Honolulu, a federal jury today found Ernesto Hernandez, 51, of Kapolei guilty of conspiring to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine from April to May, 2013 as well as possessing methamphetamine with the intent to distribute.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that the evidence presented at trial showed that Hernandez agreed with other individuals to distribute methamphetamine that was sent from California, via express mail service, to Honolulu in early May 2013. The evidence also established that Hernandez arranged the shipment of 213 grams of pure methamphetamine which was intercepted at the Honolulu Airport on May 7, 2013 by Federal Express security personnel. Hernandez was also found to be in possession of methamphetamine, with the intent to distribute, when the Drug Enforcement Administration executed a search warrant at a Kapolei residence on May 8, 2013.
Hernandez faces up to life in prison with a mandatory minimum ten year term of imprisonment when he is sentenced by U.S. District Judge J. Michael Seabright on April 28, 2014.
The investigation which resulted in the charges in the case was conducted by the Drug Enforcement Administration and Hawaii Airport Task Force.
Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
United States Attorney's Office Collects over $2.4 Million for Taxpayers in 2013Read the Press Release
HONOLULU – U.S. Attorney Florence T. Nakakuni announced today that her office collected $2,475,370 in criminal and civil actions in Fiscal Year (FY) 2013. Of this amount, $1,543,259 was collected in criminal actions and $932,110 was collected in civil actions. Additionally, the District of Hawaii worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $193,281,585 in civil cases pursued jointly with these offices.
Attorney General Eric Holder announced today that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The Department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the Department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
This past August, for example, the District of Hawaii recovered $451,428 from Wahiawa General Hospital ("WGH") to settle two lawsuits alleging that WGH improperly billed the Medicare program, the State of Hawaii Medicaid program, and TRICARE, the federal health benefits program for military dependents. The settlement grew out of civil "whistleblower" lawsuits brought under the federal and State of Hawaii False Claims Acts in federal and state court. WGH agreed to the settlement but did not admit liability.
The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s Office in Hawaii, working with partner agencies and divisions, collected over $7.95 million in asset forfeiture actions in FY 2013, including over $4.79 million deposited into the Department of Justice Asset Forfeiture Fund. Deposits into the Department’s Asset Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Honolulu Women Arraigned on Indictment for Fraudulent Debt Elimination SchemeRead the Press Release
HONOLULU - Jennifer McTigue, age 46, and Sakara Blackwell, a/k/a: Dawn Sakaguchi, age 38, both of Honolulu, were arraigned today in United States District Court after a federal grand jury returned a forty-five (45) count indictment against them and Marc Melton, age 43, for fraud, money laundering and other offenses relating to a debt elimination scheme to defraud lending institutions, buyers of real property and escrow companies through a process of filing fraudulent mortgage release documents with the Hawaii Bureau of Conveyances. Both defendants pled not guilty. The indictment was returned on January 3, 2014, and was unsealed upon the arrests of McTigue, Melton, and Blackwell today.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to the indictment, McTigue, Melton and Blackwell operated a scheme which involved filing fraudulent “satisfaction of mortgage” forms with the State of Hawaii Bureau of Conveyances which caused lending institutions holding the mortgages not to be paid on the outstanding debts when the defendants sold the properties, resulting in substantial profits. The debt elimination scheme resulted in the defrauding of not only mortgage lenders, but also innocent buyers who unwittingly bought properties subject to the fraudulently released mortgages.
The Indictment describes transactions involving seven specific properties and alleges that McTigue, Melton and Blackwell fraudulently obtained the releases of over $4.5 million in mortgages or other financial liens against those properties. The indictment alleges that the defendants then sold the properties for prices totaling over $3.3 million.
The defendants are charged with 27 counts of mail or wire fraud each of which carry maximum penalties of 30 years imprisonment and a fines of $1,000,000. McTigue, Melton, and Blackwell are respectively charged with seven, five, and four counts of money laundering, i.e., engaging in monetary transactions of a value greater than $10,000 in criminally derived property, each of which carry maximum penalties of ten years imprisonment and a fine of $250,000. All three defendants are charged with conspiring to commit mail and wire fraud and conspiring to launder funds derived from mail and wire fraud. The maximum penalties for the conspiracies are five years imprisonment and a fine of $250,000, for the former and ten years imprisonment and a fine of $250,000 for the latter. The indictment also seeks forfeiture of property derived from proceeds of the mail and wire fraud, as well as property involved in the money laundering offenses.
The charges in the indictment are merely accusations and each defendant is presumed innocent until proven guilty. United States Magistrate Judge Barry M. Kurren set a trial date of March 11, 2014, before Senior United States District Judge Helen Gillmor.
The prosecution resulted from an investigation conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Ken Sorenson is handling the prosecution.
Hilo Man Pleads Guilty to Fraud and Tax ChargesRead the Press Release
HONOLULU – Justin Wade Smith, age 32, formerly of Hilo, pled guilty on December 19, 2013 in federal court to two counts of wire fraud, and one tax charge, growing out of his operation of an “advance fee” scheme.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that, according to information presented in court, Smith engaged in a scheme to defraud involving the solicitation of money through various false representations. Smith’s false statements included telling others that (1) he would inherit money from a sizable family trust, once he paid certain fees and costs, and (2) he was a contractor for a law enforcement agency, and could generate large fees through drug seizures. In court proceedings, Smith admitted asking people to “advance” money to him, and promising to repay the amounts with substantial interest once he obtained money from the family trust or law enforcement agency. Smith admitted that he was not an heir to a large trust, or a law enforcement contractor, and that he used the money received from others to support his own lifestyle.
According to the court documents, Smith ran his scheme from 2006 through 2012 in Hawaii and elsewhere, and obtained more than $1 million in cash, Western Union or Moneygram wire transfers, and the “loading” of a prepaid debit card belonging to Smith.
During court proceedings, Smith also pled guilty to willfully failing to file a tax return for the calendar year 2012, during which he received approximately $233,995 from his wire fraud scheme. Under the plea agreement, Smith admitted failing to report total income of $1,024,196 between 2007-2012, and that the resulting tax liability was $185,386.
Smith will be sentenced on March 31, 2014 by United States District Judge J. Michael Seabright, and will face maximum penalties of 20 years of imprisonment on each of the wire fraud counts, and up to one year of imprisonment on the failure to file tax return charge. Smith will also be ordered to pay restitution to the victims of his wire fraud scheme, and to pay up to $185,386 in back taxes, plus interest and penalties to the Internal Revenue Service.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service -- Criminal Investigation, with the assistance of the Hawaii County Police Department. The prosecution was handled by Assistant United States Attorney Larry Tong.
Pearl City Man Sentenced to 13 Years in Jail for Child Pornography OffensesRead the Press Release
HONOLULU – Kyle Tom Kamaiopili, 40, a resident of Pearl City, was sentenced in federal court on December 13, 2013 to a jail term of 13 years for five federal child pornography offenses. Kamaiopili previously pled guilty to four counts of distributing child pornography over the Internet, and to one count of possessing approximately 4,300 still images and 125 videos of child pornography at his residence.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to information presented in court, federal agents learned of Kamaiopili’s identity following the arrest of a Tennessee individual for exchanging child pornography. A review of the Tennessee individuals’ email accounts revealed that he had exchanged images with Kamaiopoli. Agents then searched Kamaiopili’s Pearl City residence, and recovered computers and storage media containing child pornography files. Kamaiopili was arrested on May 24, 2013, and has been in custody since then.
During sentencing proceedings, the government pointed out that Kamaiopili had admitted viewing and collecting child pornography since 2001, including a five year period when he was serving a state probationary sentence for a negligent homicide case arising out of an incident in which he drove a vehicle while intoxicated. Kamaiopili also exchanged non-graphic images of a nine-year old girl who was the daughter of his friend. Chief U.S. District Judge Susan Oki Mollway imposed a jail term of 156 months, following which he will be on supervised release for ten years, during which he will be monitored by the probation office and have restrictions on his access to the Internet.
The case was investigated by the Federal Bureau of Investigation, and was prosecuted by Assistant U.S. Attorney Larry Tong.
Fishing Boat Captain Pleads Guilty and Is Fined for Attempted Sale of Shark FinsRead the Press Release
HONOLULU – Matthew Brian Case, age 46, a fishing boat captain formerly based in Hawaii, pled guilty on December 6, 2013 in federal court for attempting to sell shark fins to a Honolulu restaurant, a violation of the federal Lacey Act. Case entered the plea before United States Magistrate Judge Kevin S.C. Chang, who sentenced him to a $100 fine.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said it is a violation of federal law to sell, or attempt to sell, shark fins, if a person knows that the fins were removed from the bodies of sharks at sea, and then possessed aboard a fishing vessel. According to information produced in court, Case was the captain of the “Hokuao,” a long-line fishing vessel which operated out of Honolulu. During a month-long fishing trip that began in February 2013, Case instructed his crew to engage in “shark finning,” which involved catching sharks, removing their fins aboard the vessel, and disposing of the carcasses in the ocean. Case concealed approximately 100 shark fins in a hidden compartment in the vessel, and transported them back to Honolulu.
During court proceedings, Case admitted trying to sell the shark fins to a restaurant in the Ala Moana area on March 8, 2013. According to Nakakuni, Case thought the fins could be sold for approximately $600, but the restaurant declined to buy the illegal fins. Case, who now lives in Mexico, voluntarily appeared in Honolulu to answer the criminal charge. During arguments presented to the court, the government recommended a $100 fine, based on various factors, including Case’s immediate and continued cooperation with authorities, lack of profit, and willingness to return from Mexico to enter the plea.
United States Attorney Nakakuni said that “shark finning” is prohibited not only by the Lacey Act, but also by the Federal Shark Conservation Act of 2010. That act prohibits persons subject to the jurisdiction of the United States to remove fins from sharks at sea, to possess such unattached fins in their vessels, and then bring the fins to land.
The prosecution resulted from an investigation conducted by the National Oceanic & Atmospheric Administration, Office of Law Enforcement, with assistance from the Coast Guard, Immigration and Customs Enforcement -- Homeland Security Investigations, and the State of Hawaii Department of Conservation and Resources Enforcement. The prosecution was handled by Assistant U.S. Attorney Thomas Brady.
Waialua Brothers Convicted of Methamphetamine TraffickingRead the Press Release
HONOLULU – After a five day trial in United States District Court in Honolulu, a federal jury today found Jacob Drummondo-Farias, 30, of Waialua, guilty of conspiring to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine between 2011 and January, 2012. Earlier during the trial, on November 8, 2013, Drummondo-Farias’ brother and co-defendant, Joshua Lew, 28, also of Waialua, pled guilty to conspiring to distribute and possess, with intent to distribute, 50 grams or more of methamphetamine. The jury acquitted Drummondo-Farias of a second charge of a distribution of approximately 54 grams of methamphetamine in December 2010.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to evidence presented at trial Drummondo-Farias and Lew agreed with other individuals to distribute methamphetamine that was sent from California, via express mail services, to Honolulu during 2011 and 2012. The evidence also reflected that Drummondo-Farias and Lew orchestrated the shipment of 852 grams of methamphetamine which was intercepted at the Honolulu Airport on January 26, 2012 by federal law enforcement authorities.
Lew faces up to life in prison with a mandatory minimum ten year term of imprisonment. Drummondo-Farias also faces up to life in prison, however, because he was previously convicted of a federal drug felony, he faces a mandatory minimum sentence of 20 years imprisonment. Both defendants will be sentenced by U.S. District Judge J. Michael Seabright on February 24, 2014.
The investigation which resulted in the charges in the case was conducted by the Drug Enforcement Administration and United States Postal Service. Assistant U.S. Attorney Mark A. Inciong handled the prosecution.
Maui Business Owner Sentenced to 12 Months Imprisonment for Tax Evasion and StructuringRead the Press Release
HONOLULU – United States District Judge Leslie E. Kobayashi today sentenced Roger Santos, age 54, of Kahului, Maui to 12 months and 1 day imprisonment, 6 months home confinement, 3 years supervised release, 100 hours of community service and restitution to the Internal Revenue Service in the amount of $317,599.00 for one count of income tax evasion and one count of structuring. Santos pled guilty to these offenses on May 22, 2013.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to documents filed in connection with the case, in 2008, Santos diverted approximately $959,883 from the checking account of the business he operated, Paradise Asian Foods, Inc., .into multiple personal checking accounts. He then reported as income only the money that was deposited into the business account. These actions fraudulently lowered his taxable income by approximately $365,267 for the 2008 tax year.
Information produced to the court also reflected that Santos deposited $30,000 in currency into multiple bank accounts on the same day in order to evade certain regulations relating to currency transactions. Under federal law, a Currency Transaction Report must be filed by a financial institution with the Internal Revenue Service in regard to any currency transaction over $10,000. It is illegal to structure transactions with financial institutions in order to avoid this filing requirement.
The charges resulted from an investigation conducted by IRS - Criminal Investigation. Assistant United States Attorney Leslie E. Osborne, Jr. handled the prosecution.
Jury Finds Laie Woman Guilty of Bankruptcy FraudRead the Press Release
HONOLULU –A jury in United States District Court found Michelle Malufau, 47, of Laie, Oahu, guilty today of bankruptcy fraud related to the Chapter 7 bankruptcy that she filed in 2011. Specifically, after a four day trial and less than an hour of deliberation, the jury convicted Malufau of making false statements under penalty of perjury on documents filed in that 2011 bankruptcy, and also of testifying falsely under oath at a hearing in that same proceeding.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that the evidence presented at trial showed that Malufau knowingly and fraudulently concealed at least three assets that she owned and/or controlled during her 2011 bankruptcy: a house on the North Shore of Oahu, which had over $322,000 in equity in it; a bank account; and rental income. Malufau received a discharge of over $1 million of debt through that proceeding.
Malufau faces up to five years in prison on each charge when she is sentenced by Senior United States District Judge Helen Gillmor on February 27, 2014.
The investigation that resulted in the charges against Malufau was conducted by the Internal Revenue Service - Criminal Investigation, with assistance from the Federal Bureau of Investigation. Assistant United States Attorneys Michael Nammar and Andrea Hattan handled the prosecution.
Two Maui Residents Found Guilty of Fraud Charges Related to Debt Elimination SchemeRead the Press Release
HONOLULU -- A federal jury yesterday found Mahealani Ventura-Oliver, 44, and Pilialoha K. Teves, 52, both of Maui, guilty of conspiracy and mail fraud offenses arising out of their marketing of a debt elimination scheme between 2008 and 2009. The jury also found Ventura-Oliver guilty of conspiring to submit false tax returns, and of submitting a false tax return.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to evidence produced in court, Ventura-Oliver and Teves were part of a group known as Ko Hawaii Pae Aina, the Registry and Hawaiiloa Foundation. Between 2008 and 2009, the group held weekly seminars on Maui, where Ventura-Oliver and others spoke about Hawaiian history and culture, and royal land patents. The evidence showed that, in return for the payment of a fee, the group offered to provide distressed homeowners with “bonds” and other documents that would pay off their mortgages and forestall collection efforts. The “bonds” purportedly directed the United States Treasury Department or the State of Hawaii Comptroller of the Currency to make payments on behalf of the homeowners.
According to evidence presented at trial, Hawaiiloa Foundation collected approximately $468,000 from approximately 200 individuals who went through the debt elimination process. Many of the individuals tried to use the bonds, but ultimately lost their homes through foreclosure, or had to renegotiate loans.
The government presented evidence that, as part of its process, the Hawaiiloa Foundation also promoted a tax program whereby participants supposedly could seek refunds from the IRS for debts paid off with the purported bonds.
Following an 11 day trial, the jury found Ventura-Oliver guilty of conspiring to use fictitious financial instruments, 15 counts of mail fraud, one count of money laundering, one count of conspiring to submit false tax returns seeking $1.5 million in refunds from the IRS, and submitting one false tax return with her estranged husband, John Oliver, who pled guilty and testified at trial. Teves was convicted of conspiring to use fictitious financial instruments, and of 12 counts of mail fraud, and was acquitted of three counts of mail fraud.
Ventura-Oliver and Teves will be sentenced on February 10, 2014 by United States District Judge J. Michael Seabright. Ventura-Oliver faces the following penalties at sentencing: (1) a maximum sentence of five years on each of the conspiracy offenses, and the false claim offense; (2) up to 20 years on each of the 15 mail fraud offenses; and (3) up to 10 years on the money laundering offense of which she was convicted. Teves faces a maximum sentence of five years on the conspiracy charge, and up to 20 years on each of the 12 mail fraud offenses of which she was convicted. Each charge also carries a potential fine of up to $250,000.
The court will also have a hearing on whether the United States can forfeit property seized during the investigation of the case. The property includes approximately $84,000 in cash, more than $18,000 seized from bank accounts, gold coins worth over $36,000, and vehicles.
The investigation of this case was conducted jointly by the Federal Bureau of Investigation, the Internal Revenue Service -- Criminal Investigation, the United States Postal Inspection Service, and the Maui Police Department. The prosecution was handled by Assistant United States Attorneys Larry Tong and Michael Nammar.
Big Island Marijuana "Ministry" Operator Pleads Guilty to Drug and Tax OffensesRead the Press Release
HONOLULU – Defendants Roger Cusick Christie (age: 64) and Sherryanne L. Christie (age: 62), husband and wife, pled guilty today in U.S. District Court before U.S. Magistrate Judge Richard L. Puglisi to marijuana trafficking and tax offenses. Roger Christie pled guilty to conspiring to manufacture, distribute, and possess with intent to distribute marijuana, involving 100 or more marijuana plants and two separate tax counts for failure to file federal income tax returns for calendar years 2008 and 2009. Sherryanne Christie pled guilty to conspiring to manufacture, distribute, and possess with intent to distribute marijuana, involving 50 or more marijuana plants. Their sentencings have been set on January 22 (Roger Christie) and January 27, 2014 (Shierryanne Christie), before United States District Judge Leslie E. Kobayashi.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said, “this prosecution demonstrated the effectiveness of cooperative efforts among federal, state, and local law enforcement authorities in addressing persistent, significant illegal drug trafficking activity.” According to information produced to the court:
- From at least about 2000 up through July 8, 2010, the Christies operated the “THC Cannabis Ministry” in Hilo, Hawaii. In 2008, an undercover law enforcement officer was introduced to Roger Christie and on three separate occasions at the Ministry, Christie sold quantities of marijuana to him (the largest being one-half pound).
- Thereafter, a court-authorized wiretap on three telephone lines used by Roger Christie from April – July 2009 resulted in the interception and recording of numerous telephone conversations involving Roger and Sherryanne Christie, Ministry employees, and other persons.
- In 2009, the Ministry was open three days a week from 2:00 – 5:00 p.m. During this three hour period, there were up to 70 customers served, and the Christies sold over one-half pound of marijuana “sacrament,” making about $1,000 or more in profit. They estimated that about 90 percent of the customers were Ministry members, while the remaining ten percent had state medical marijuana cards.
- In order to join the Ministry, prospective members were supposed to sit through an orientation session with Roger Christie. However, Roger Christie said he scheduled membership sessions with passengers on visiting cruise ships who were in Hilo for one day, and one could also join by ordering a Ministry “sanctuary kit” by mail for a $250 donation.
- The Christies instituted an “express” procedure in early 2009, which made it unnecessary for prospective members to meet with the Christies or to receive any spiritual blessing/advice from them in order to receive their marijuana “sacrament.” Rather, as long as the customer could pay the full amount of the “donation” price and had someone’s membership card or state medical marijuana card, that person could acquire “sacrament.”
- There were “suggested donation” prices such as $50 for one-eighth ounce, $100 for one-quarter ounce, and $400 for one ounce. When one customer complained during an intercepted call that the quoted “donation price” of $400 an ounce was rather high, Roger Christie justified this amount, stating “It’s retail”, and “Normal retail. You know, we buy it, you know, at forty-five hundred, five grand a pound, so….”
- On July 8, 2010, both Christies and 12 other defendants were arrested in this case. As a result of Roger Christie’s arrest and his ensuing court-ordered pretrial detention without bond, the Ministry was effectively shut down in Hilo and it has not re-opened since that time.
- Both Christies admitted in their respective plea agreements to being leaders and organizers of the charged marijuana trafficking activities.
At the time of sentencing, Roger Christie faces up to 20 years imprisonment on the marijuana charge, with a mandatory minimum term of five years. The maximum term of imprisonment on each tax offense is one year. Sherryanne Christie can receive up to 20 years imprisonment. The Christies also agreed to forfeit to the United States $21,494.00 in U.S. currency (proceeds from their marijuana distribution activities), and a condominium apartment in Hilo owned by Roger Christie (which was used to facilitate their marijuana trafficking activities).
Under the terms of the plea agreement, both Christies have reserved their right to seek appellate review of the District Court’s denial of four pretrial motions, including one asking the Court to find that enforcement of marijuana trafficking laws against them constituted a violation of the Religious Freedom Restoration Act (RFRA). District Judge Kobayashi denied all four of the Christies’ pretrial motions, ruling that enforcement of federal marijuana trafficking laws against the Christies was not a violation of RFRA. The court ordered Roger Christie’s continued detention pending sentencing; Sherryanne Christie remained released on bond.
The prosecution resulted from the combined efforts from 2008-2010 of the Drug Enforcement Administration; the Internal Revenue Service - Criminal Investigations; Homeland Security Investigations; the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Postal Inspection Service; the U.S. Marshals Service; the National Park Service; the Sheriff’s Office, Department of Public Safety; the Hawaii Police Department; and the Honolulu Police Department. The case was prosecuted by Assistant U.S. Attorney Michael K. Kawahara.