FOR IMMEDIATE RELEASE |
MONDAY, JULY 18, 2005
TDD (202) 514-1888
HAWAII BUSINESSMAN CONVICTED OF TAX EVASION
AND FILING FALSE RETURNS
WASHINGTON, D.C. - Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division, Nancy Jardini, Chief, Internal Revenue Service (IRS) Criminal Investigation Division, and Edward H. Kubo, Jr., United States Attorney for the District of Hawaii, announced that on Friday, July 15, 2005, a jury found Hawaii businessman, Michael H. Boulware, 57, guilty of filing false tax returns and tax evasion.
After almost seven days of evidence, a federal jury took less than one day of deliberations to find Boulware, the founder of Hawaiian Isles Enterprises, Inc. (HIE), guilty of five counts of filing a false income tax return for the years of 1989 through 1993, and four counts of tax evasion for the years of 1994 through 1997.
“People who evade their tax obligations and hide income and assets from the IRS should expect to be prosecuted and convicted, and to serve time in federal prison,” said Assistant Attorney General O’Connor.
U.S. Attorney Kubo said, “Tax evasion is based on personal greed, and the Department of Justice will always aggressively investigate these cases and make sure that those who engage in such criminal conduct will be held accountable.” Kubo also thanked the Tax Division, the investigators, and the trial attorneys for their hard work in the case.
“This verdict should send a loud message that business practices like these are not acceptable and that individuals who evade their tax obligations will be held accountable,” commented Nancy Jardini, Chief, IRS Criminal Investigation. “Our mission at the IRS is to apply the tax law with integrity and fairness to all. That means that all taxpayers should pay their fair share.”
According to the evidence introduced at trial, from 1989 through 1997, Boulware received considerable annual compensation from HIE, a tobacco, coffee, water and vending machine business with sales of approximately $85 million a year. During those years, although he reported much of the compensation earned, Boulware utilized various schemes to divert approximately $10.2 million dollars that he received from HIE. He failed to report any of the $10.2 million dollars on his federal income tax returns and failed to pay the taxes he owed on that income.
According to the trial evidence, from 1989 through 1993, Boulware directed various HIE customers to pay him directly for the delivery of HIE goods. He also took the daily receipts from sales of various tobacco goods and deposited them into bank accounts over which he had sole control and custody.
The government also established that in 1992, Boulware-along with a third-party, caused false invoices to be submitted to GECC Financing. Those invoices indicated that HIE had purchased various video games from a Hawaii video game supplier. No such games had been purchased and all of the money received from GECC was ultimately delivered to Boulware.
The evidence showed also that, in 1994 Boulware incorporated a nominee corporation that submitted fake invoices to HIE, which Boulware ordered that the company pay. The government’s evidence also established that, from 1995 through 1997, Boulware received unreported income in excess of $1.7 million from nominee entities and bank accounts located in the Kingdom of Tonga and Hong Kong.
The criminal investigation was conducted by the Internal Revenue Service, Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation. The investigation was spearheaded by Special Agent Jerry Yamachika of the IRS. The trial prosecution was handled by Assistant U. S. Attorney Leslie E. Osborne, Jr., and Trial Attorney Jared E. (Jed) Dwyer of the U. S. Department of Justice, Tax Division, Western Criminal Enforcement Section.