May 6, 2002
For Immediate Release
P R E S S R E L E A S E
Edward H. Kubo, Jr., United States Attorney for the District of Hawaii, and Eileen J. O'Connor, Assistant Attorney General of the United States Department of Justice Tax Division in Washington, D.C., announced that Hawaii businessman MICHAEL H. BOULWARE, age 54, was sentenced today in Honolulu, Hawaii, by Senior United States District Court Judge Edward Rafeedie to a term of 51 months of incarceration, a fine in the amount of $25,000, and, upon his release from prison, BOULWARE must complete a term of supervised release totaling 36 months.
Judge Rafeedie found that the combined tax loss to the Internal Revenue Service and the State of Hawaii totaled $8,105,714. Judge Rafeedie also imposed a forfeiture money judgment against BOULWARE in the sum of $495,814.80. BOULWARE was released pending his appeal of the jury's verdict.
On November 29, 2001, a federal jury found BOULWARE guilty of four (4) counts of federal income tax evasion, (5) five counts of filing false income tax returns, and one (1) count of conspiracy to make a false statement in order to influence a federally insured financial institution during a seven day trial. BOULWARE, the founder of Hawaiian Isles Enterprises, Inc. (HIE), was convicted of tax violations over a nine (9) year period from 1989 through 1997. The prosecution introduced evidence at trial that BOULWARE failed to report federal income in excess of $10 million during those same nine (9) tax years.
According to the trial evidence, while BOULWARE received annual compensation in the amounts of $1,095,419, $370,283, $1,367,356 and $1,444,704 during the years 1994 through 1997, he diverted millions more to himself from Hawaiian Isles Enterprises (HIE), a tobacco, coffee, water, and vending machine business with sales of approximately $85 million a year. Furthermore, evidence at the trial reflected that 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, and also attempted to purchase a bank in the South American country of Ecuador.
Evidence was also presented during trial that from 1989 through 1995 BOULWARE personally directed a monthly underpayment of tobacco taxes due to the State of Hawaii in the total amount of $21 million, purportedly to recoup tobacco taxes. At trial, BOULWARE admitted that the State of Hawaii was never consulted about or aware of BOULWARE's actions, and former State Attorney General Margery S. Bronster testified that this method of alleged recoupment was not proper.
According to evidence introduced during trial, BOULWARE instructed an unindicted co-conspirator to prepare and submit fictitious invoices reflecting the sale of arcade games, pool tables, and jukeboxes to GECC, so that GECC would pay for the equipment listed on the invoices. Trial evidence reflected that GECC released $495,814.80, which was diverted to BOULWARE and his co-conspirator.
This eight-year criminal investigation was conducted by the Internal Revenue Service, Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation.
The trial prosecution was handled by Special Attorney Edward E. (Ted)
Groves of the United States Department of Justice, Tax Division, Western
Criminal Enforcement Section, and Assistant United States Attorney Leslie
E. Osborne, Jr.
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