August 20, 2003
For Immediate Release
P R E S S R E L E A S E
Eileen J. O'Connor, Assistant Attorney General of the United States Department of Justice Tax Division, in Washington, D.C., and Edward H. Kubo, Jr., United States Attorney for the District of Hawaii, announced today that a federal grand jury returned an indictment against ANTHONY A. RUTLEDGE, SR., a/k/a "Tony" RUTLEDGE, AARON A. RUTLEDGE, and STAR-BEACHBOYS, INC., a Hawaii-based "Subchapter C" corporation under the Internal Revenue Code which held a license to rent out surfboards, kayaks, boogie boards, and other beach equipment on Waikiki Beach in Honolulu, Hawaii.
As alleged in the indictment, ANTHONY A. RUTLEDGE, SR., a/k/a "Tony" RUTLEDGE, age 57, and his son, AARON A. RUTLEDGE, age 33, are charged together with the corporate defendant, STAR-BEACHBOYS, INC., in a conspiracy to defraud the United States Department of Treasury, Internal Revenue Service, that began on or about 1992 until the date of this indictment and involved the skim of a large portion of the daily cash receipts which were concealed by placing the currency into at least four different safe deposit boxes located at banks in the State of Hawaii.
As alleged in the indictment, to further the conspiracy, defendants ANTHONY A. RUTLEDGE, SR., a/k/a "Tony" RUTLEDGE, AARON A. RUTLEDGE, and STAR-BEACHBOYS, INC. falsely blamed the cash skim scheme solely on the actions of former labor leader Arthur A. Rutledge, who died on September 22, 1997, at the age of ninety (90) years old. According to the indictment, gross rents or gross receipts from the STAR-BEACHBOYS, INC. business were falsely reported in filed tax returns in the amounts of $90,100, $77,900, $96,900, $65,000, and $85,305 for the respective fiscal years ending June 30, 1993, June 30, 1994, June 30, 1995, June 30, 1996, and June 30, 1997. It is alleged in the indictment that defendant ANTHONY A. RUTLEDGE, SR., a/k/a "Tony" RUTLEDGE, conducted administrative activities of STAR-BEACHBOYS, INC. out of his elected office at the Hotel Employees and Restaurant Employees, AFL-CIO, Local 5, in Honolulu, Hawaii, including the use of salaried employees of Local 5 to perform services that benefitted himself, defendants STAR-BEACHBOYS, INC., AARON A. RUTLEDGE, and the late Arthur A. Rutledge.
Defendants ANTHONY A. RUTLEDGE, SR., a/k/a "Tony" RUTLEDGE, and AARON A. RUTLEDGE are separately charged in the indictment for their roles in filing a false U.S. corporation income tax return on behalf of the corporate defendant STAR-BEACHBOYS, INC. by substantially understating reported gross receipts earned by the corporation.
Defendant ANTHONY A. RUTLEDGE, SR., a/k/a "Tony" RUTLEDGE, faces maximum penalties of up to eight (8) years of imprisonment and $500,000 in fines for aiding and assisting in the filing of a false federal income tax return and the charged conspiracy. As charged in the indictment, AARON A. RUTLEDGE faces maximum penalties totaling thirteen (13) years of imprisonment and $750,000 of fines for the charges of conspiracy, witness tampering and filing a false corporate income tax return. The corporate defendant, STAR-BEACHBOYS, INC., faces maximum penalties totaling $1,000,000 in fines and ten (10) years of probation upon conviction for the charged conspiracy to defraud the United States Government and for aiding and assisting in the filing of a false U.S. corporate income tax return.
Ms. O'Connor and Mr. Kubo stated that indictments are not evidence of guilt, and that all defendants are presumed innocent until and unless proven guilty.
This criminal investigation was conducted by the Internal Revenue Service,
Criminal Investigation, United States Department of Treasury. The prosecution
is being handled by Special Attorneys Edward E. (Ted) Groves and Thomas
J. Krysa of the United States Department of Justice, Tax Division, Western
Criminal Enforcement Section, Washington, D.C.
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