EDWARD H. KUBO, JR. #2499
United States Attorney
District of Hawaii
EDWARD E. GROVES
Trial Attorney
U.S. Department of Justice, Tax Division
950 Pennsylvania Avenue, NW, Room 4132
Washington, D.C. 20530
Telephone: (202) 514-5193
Facsimile: (202) 514-9623
e-mail: edward.e.groves©usdoj.gov
THOMAS J. KRYSA
Trial Attorney
U.S. Department of Justice, Tax Division
950 Pennsylvania Avenue, NW, Room 4132
Washington, D.C. 20530
Telephone: (202) 514-5547
Facsimile: (202) 514-9623
e-mail: thomas.j.krysa@usdoj.gov
Attorneys for Plaintiff
UNITED STATES OF AMERICA
IN THE UNITED STATES DISTRICT
COURT
FOR THE DISTRICT OF HAWAII
UNITED STATES OF AMERICA, CR. NO. 02-00438 DAE
Plaintiff, SECOND SUPERSEDING INDICTMENT
vs.
AARON A. RUTLEDGE, (01) Count 1: 18 U.S.C. § 371;
ANTHONY A. RUTLEDGE, SR., (02) Count 2: 18 U.S.C. §
a/k/a “TONY” RUTLEDGE,
1512(b) (2) (A)&(B);
STAR-BEACHBOYS, INC. (03) Count 3: 26 U.S.C. § 7206(1);
Defendants. Count 4: 26 U.S.C. § 7206 (2);
Count 5: 26
U.S.C. § 7206 (2)
SECOND SUPERSEDING INDICTMENT
COUNT 1
(18 U.S.C. § 371)
(Conspiracy to Defraud
the United States of America)
The Grand
Jury charges:
I. GENERAL ALLEGATIONS
PARTIES, PERSONS AND ENTITIES
At all times relevant and material
to this Second Superseding Indictment:
1). Defendant STAR-BEACHBOYS, INC. was incorporated on May 19, 1972, in the State of Hawaii. Since that time and continuing
until in or about March 1999, Defendant STAR BEACHBOYS, INC. held a license to
operate a beach concession stand on Waikiki Beach in Honolulu, Hawaii, renting
out surfboards, kayaks, boogie boards, and other beach equipment to tourists
and local residents and from which surfing instructors provided private
lessons. During the years at issue, the beach concession stand was exclusively
a cash business. In or about March 1999, Defendant STAR-BEACHBOYS, INC. lost
its license to operate the beach concession stand on Waikiki Beach, however, the corporation is still in existence and
continues to have substantial assets. During the years at issue, Defendant STAR
BEACHBOYS, INC. utilized a fiscal year ending June 30 for financial accounting
and tax purposes and filed federal income tax returns as a “Subchapter C”
corporation under the Internal Revenue Code.
2). During the years at issue, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE, Defendant AARON A. RUTLEDGE, and Defendant
STAR-BEACHBOYS, INC. (hereinafter sometimes referred to collectively as
“Defendants”) conspired with the late Arthur A. Rutledge, and other individuals
known and unknown to the Grand Jury, to defraud the United States Department of
Treasury, Internal Revenue Service, in the collection and assessment of income
taxes. The conspiracy included, among other conduct, that during at least a
five-year period, Defendants and the late Arthur A. Rutledge skimmed in excess
of $350,000.00 in cash receipts that were earned through the beach concession
stand on Waikiki Beach in Honolulu, Hawaii. As part of the scheme, Defendants concealed the skimmed
cash by placing the currency into at least four different safe deposit boxes
under their control at banks in Honolulu, Hawaii. Defendants used the skimmed cash
as a slush fund, having unrestricted access to the cash through the use of the
safe deposit boxes. By using the safe deposit boxes, Defendants were able to
deposit and withdraw cash without generating a record of the amount of currency
deposited or withdrawn thereby facilitating the tax fraud scheme. For at least
the fiscal years ending June
30, 1993, June 30, 1994, June 30, 1995, June
30, 1996, and June 30, 1997, Defendants and the late Arthur
A. Rutledge failed to report the skimmed cash on federal and State of Hawaii
income and excise tax returns for Defendant STAR BEACHBOYS, INC. Defendants and
the late Arthur A. Rutledge repeatedly failed to inform their accountants,
bookkeepers, tax return preparers, and others of the existence of the skimmed
cash that was concealed in the safe deposit boxes.
3). Arthur A. Rutledge, who died on September 22, 1997 at the age of ninety (90), was a labor leader in
the State of Hawaii. Since its incorporation in 1972,
Arthur A. Rutledge exerted influence and direction over the operations of STAR
BEACHBOYS, INC. until his health declined with repeated hospitalizations and
incapacitating illnesses in the years preceding his death.
4). Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE was
born on July 21, 1946, and is the son of the late Arthur A. Rutledge. During
the years at issue, Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE
was sole- stockholder in STAR-BEACHEOYS, INC. and he exercised influence and
control over the operations of the corporation. At various times, Defendant
ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE served as a Director and Officer
of Defendant STAR-BEACHBOYS, INC., including President, Vice President, and
Secretary- Treasurer.
5). Defendant AARON A. RUTLEDGE was born March 17, 1970, and is the son of Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE. During the years at issue, Defendant AARON A. RUTLEDGE
ran the daily operations of the beach concession stand on Waikiki Beach for Defendant STAR-BEACHBOYS, INC. At times, he served as
a Director and Officer of the corporation, including Vice President and
Secretary-Treasurer.
6). From 1992 through April 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE and the late Arthur A. Rutledge co-rented two safe
deposit boxes numbers 1313 and 1314 at First Hawaiian Bank in Honolulu, Hawaii.
7). From on or about April 14, 1997 and continuing until in or about
October 1997, Defendants ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE and
AARON A. RUTLEDGE co-rented a safe deposit box number 877 at Bank of America in
Honolulu, Hawaii. On or about October 6, 1997,
Defendant AARON A. RUTLEDGE rented safe deposit box number 818 at Bank of
America in Honolulu, Hawaii.
8). The Hotel Employees and Restaurant Employees, Local 5 (sometimes
referred to “Local 5”), which was founded in 1938, is a union that includes the
membership of hotel and restaurant employees in the Honolulu, Hawaii area. The late Arthur A. Rutledge was a founder of Local
5, and served as its President for 40 years. From approximately 1986 until April 5, 2000, Defendant ANTHONY A. RUTLEDGE,
SR. a/k/a “TONY” RUTLEDGE was the elected head (i.e., Financial
Secretary-Treasurer) of Local 5.
9). Unity House, Inc., which was founded by Arthur A. Rutledge in
1951, is a Honolulu-based nonprofit, federal tax-exempt organization that is
funded with the monetary contributions of union employees for the stated
purpose of providing educational assistance, childcare, disaster assistance and
other services to union members and retirees. Since 1991, Defendant ANTHONY A.
RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE has been the head of Unity House, Inc.
II. THE CONSPIRACY
From a precise date unknown to the
Grand Jury, but starting by approximately 1992, and continuing thereafter up
and until the date of this Second Superseding Indictment, in the District of
Hawaii and elsewhere, defendants AARON A. RUTLEDGE, ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE, and STAR-EEACHBOYS, INC., and others known and unknown
to the Grand Jury, did unlawfully, willfully, and knowingly conspire, combine,
confederate, and agree together and with each other, and with others both known
and unknown to the Grand Jury, to defraud the United States of America by
dishonest and deceitful means for the purpose of impeding, impairing,
obstructing and defeating the lawful functions of the United States Department
of Treasury, Internal Revenue Service, in the ascertainment, computation,
assessment and collection of taxes.
III. THE MANNER AND MEANS BY WHICH
THE CONSPIRACY WAS CARRIED OUT
The dishonest and deceitful manner
and means by which the conspiracy to defraud the United States of America was sought to be accomplished
included, among other things, the following:
1). Beginning on a precise date unknown to the Grand Jury,
Defendants, the late Arthur A. Rutledge, and others known and unknown to the
Grand Jury, participated in a scheme to skim a large portion of the daily cash
receipts of Defendant STAR-BEACHBOYS, INC. that it earned through the beach
concession stand on Waikiki Beach in Honolulu, Hawaii. As part of the
conspiracy, Defendants and the late Arthur A. Rutledge skimmed in excess of
$350,000.00 from the beach concession stand and concealed the skimmed cash by
placing the currency into at least four different safe deposit boxes located at
banks in the State of Hawaii. As part of the conspiracy,
Defendants and the late Arthur A. Rutledge maintained complete control over the
safe deposit boxes and used the skimmed cash as a slush fund, having
unrestricted access to the cash through the use of the safe deposit boxes. By
using the safe deposit boxes, Defendants and the late Arthur A. Rutledge were
able to deposit and withdraw currency from the boxes without generating a
record of the amount of cash deposited or withdrawn thereby facilitating the
tax fraud scheme.
2). It was also part of the conspiracy that Defendants and the late
Arthur A. Rutledge caused the filing of false federal income tax returns and
State of Hawaii income and excise tax returns f or Defendant STAR-BEACHBOYS,
INC. by failing to report the skimmed cash receipts. Defendants and the late
Arthur A. Rutledge repeatedly failed to inform their accountants, bookkeepers,
tax return preparers, and others of the existence of the skimmed cash that was
concealed in the safe deposit boxes.
3). In furtherance of the conspiracy, after the execution of federal
search warrants in or about October and November 1997, and with knowledge of
the ongoing criminal investigation, Defendants concealed their participation in
the cash skim scheme from their accountants, bookkeepers, tax return preparers,
the U.S. Department of the Treasury, Internal Revenue Service, and others. In
order to further conceal their participation in the conspiracy, after his death
on September 22, 1997, Defendants falsely blamed the cash skim scheme solely on
the actions of the late Arthur A. Rutledge in legal pleadings and otherwise.
4). As part of the conspiracy and following the death of Arthur A.
Rutledge and the execution of Federal search warrants on or about October 30,
1997, Defendants ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE and AARON A.
RUTLEDGE deposited $589,214.00 in cash at First Hawaiian Bank on or about
November 5, 1997, and falsely stated to a bank employee that the cash was found
at the residence of the late Arthur A. Rutledge.
5). In furtherance of the conspiracy, after the execution of federal
search warrants in or about October and November 1997, and with knowledge of
the ongoing criminal investigation, Defendants ANTHONY A. RUTLEDGE, SR. a/k/a
“TONY’ RUTLEDGE and AARON A. RUTLEDGE failed to disclose to their accountants,
tax return preparers, and others their participation in the conspiracy and the
true extent of the amount of cash they had skimmed from Defendant
STAR-BEACHBOYS, INC. in the prior years, which caused the filing of a false
U.S. Corporation Income Tax Return for the fiscal year ending June 30, 1999.
6). As part of the conspiracy, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE withdrew in excess of $200,000.00 in funds from Defendant
STAR-EEACHBOYS, INC. purportedly as loans, when in fact the loans were not bona
fide loans that he intended to repay in full. As part of the conspiracy,
Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE failed to meet the
terms of the loans that he established himself on behalf of Defendant
STAR-BEACHBOYS, INC. in his capacity as President and Sole-Stockholder of the
corporation.
7). As part of the conspiracy, 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,
Local 5 in Honolulu, Hawaii, which included the use of salaried employees of
Local 5 to perform services that benefited himself, Defendant STAR-BEACHBOYS,
INC., Defendant AARON A. RUTLEDGE, and the late Arthur A. Rutledge.
8). As part of the conspiracy, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE caused funds from Unity House, Inc. to be used for the
benefit of Defendant STAR BEACHBOYS, INC. and himself.
IV. OVERT ACTS
In furtherance of the conspiracy,
and to effect the object thereof, the following overt acts, among others, were
committed in the District of Hawaii and elsewhere:
1). On or about April 21, 1992,
Arthur A. Rutledge and Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE
co-rented safe deposit box number 1314 at First Hawaiian Bank.
2). On or about June 16, 1992, Arthur A. Rutledge and Defendant
ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE co—rented safe deposit box
number 1313 at First Hawaiian Bank.
3). On or about February 22, 1993, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
4). On or about March 30, 1993,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
5). On or about April 8, 1993,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
6). On or about April 15,1993,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
7). On or about May 7, 1993,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
8). On or about July 12, 1993,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
9). On or about July 28, 1993,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
10). On or about August 2, 1993,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
11). On or about August 23, 1993,
Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE entered safe deposit
box number 1314 and First Hawaiian Bank.
12). On or about September 21, 1993, Arthur A. Rutledge visited safe deposit box number 1314 at First
Hawaiian Bank.
13). On or about October 14, 1993, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
14). On or about November 5, 1993, Arthur A. Rutledge entered safe deposit box number 1314 at First
Hawaiian Bank.
15). On or about December 21, 1993, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
16). On or about January 11, 1994, Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian
Bank.
17). On or about February 14, 1994, Defendants and the late Arthur A.
Rutledge caused the filing of a false U.S. Corporation Income Tax Return for
the fiscal year ending June 30, 1993 for Defendant STAR-BEACHBOYS, INC., said
tax return being false in that it reported gross rents at line 6 of $90,100,
which substantially understated the true amount by failing to report cash
skimmed from the beach concession stand.
18). On or about March 28, 1994,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
19). On or about April 11, 1994,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
20). On or about May 31, 1994,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
21). On or about August 17, 1994,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
22). On or about August 23, 1994,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
23). On or about September 17, 1994, Defendants and the late Arthur
A. Rutledge caused the filing of a false U.S. Corporation Income Tax Return for
the fiscal year ending June 30, 1994 for Defendant STAR-BEACHBOYS, INC., said
tax return being false in that it reported gross rents at line 6 of $77,900,
which substantially understated the true amount by failing to report cash
skimmed from the beach concession stand.
24). On or about October 20, 1994, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
25). On or about December 23, 1994, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
26). On or about January 6, 1995,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
27). On or about March 14, 1995,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
28). On or about April 11, 1995,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
29). On or about May 8, 1995,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
30). On or about June 7, 1995,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
31). On or about August 11, 1995,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
32). On or about September 11, 1995, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
33). On or about September 19, 1995, Defendants and the late Arthur
A. Rutledge caused the filing of a false U.S. Corporation Income Tax Return for
the fiscal year ending June 30, 1995 for Defendant STAR-BEACHBOYS, INC., said
tax return being false in that it reported gross rents at line 6 of $96,900,
which substantially understated the true amount by failing to report cash skimmed
from the beach concession stand.
34). On or about October 31, 1995, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
35). On or about November 7, 1995, Arthur A. Rutledge entered safe deposit box number 1314 at First
Hawaiian Bank.
36). On or about December 21, 1995, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
37). On or about January 3, 1996,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
38). On or about February 14, 1996, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
39). On or about March 15, 1996,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
40). On or about March 25, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
41). On or about April 8, 1996,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
42). On or about May 10, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
43). On or about June 4, 1996,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
44). On or about June 18, 1996,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
45). On or about June 27, 1996, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 1314 at First Hawaiian
Bank.
46). On or about July 5, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
47). On or about July 10, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
48). On or about July 15, 1996, Arthur A. Rutledge entered safe
deposit boxes numbers 1313 and 1314 at First Hawaiian Bank.
49). On or about July 31, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
50). On or about August .1, 1996, Arthur A. Rutledge entered safe
deposit box number 1313 at First Hawaiian Bank.
51). On or about August 12, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
52). On or about September 10, 1996, Defendant ANTHONY A. RUTLEDGE,
SR. a/k/a “TONY” RUTLEDGE entered safe deposit box number 1313 at First
Hawaiian Bank.
53). On or about September 11, 1996, Defendants and the late Arthur
A. Rutledge caused the filing of a false U.S. Corporation Income Tax Return for
the fiscal year ending June
30, 1996 for
Defendant STAR-BEACHBOYS, INC., said tax return being false in that it reported
gross receipts at line la of $65,000, which substantially understated the true
amount by failing to report cash skimmed from the beach concession stand.
54). On or about September 20, 1996, Defendant ANTHONY A. RUTLEDGE,
SR. a/k/a “TONY” RUTLEDGE entered safe deposit box number 1314 at First
Hawaiian Bank.
55). On or about September 26, 1996, Arthur A. Rutledge entered safe
deposit box numbers 1313 and 1314 at First Hawaiian Bank.
56). On or about October 2, 1996,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
57). On or about October 14, 1996, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
58). On or about November 1, 1996, in his capacity as Financial
Secretary-Treasurer of Local 5, Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY”
RUTLEDGE caused L. P., an individual known to the Grand Jury, to begin
providing services for the benefit of himself, Defendant STAR-BEACHBOYS, INC.,
Defendant AARON A. RUTLEDGE, and the late Arthur A. Rutledge while being paid by
the Hotel Employees and Restaurant Employees, Local 5.
59). On or about November 6, 1996, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 1314 at First Hawaiian
Bank.
60). On or about December 27, 1996, Arthur A. Rutledge entered safe deposit box number 1313 at First
Hawaiian Bank.
61). On or about January 2, 1997,
Arthur A. Rutledge entered safe deposit box number 1313 at First Hawaiian Bank.
62). On or about January 9, 1997,
Arthur A. Rutledge entered safe deposit box number 1314 at First Hawaiian Bank.
63). On or about January 17, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 1314 at First Hawaiian
Bank.
64). On or about February 4, 1997, Arthur A. Rutledge entered safe deposit box number 1314 at First
Hawaiian Bank.
65). On or about April 9, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 1314 at First Hawaiian
Bank.
66). On or about April 14, 1997, Defendant AARON A. RUTLEDGE and
Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE opened safe deposit
box number 877 at Bank of America.
67). On or about April 14, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 877 at Bank of America.
68). On or about April 18, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered and closed two safe deposit boxes numbers 1313
and 1314 at First Hawaiian Bank.
69). On or about April 21, 1997,
Defendant AARON A. RUTLEDGE entered safe deposit box number 877 at Bank of
America.
70). On or about May 3, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 877 at Bank of America.
71). On or about May 14, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 877 at Bank of America.
72). On or about June 3, 1997,
Defendant AARON A. RUTLEDGE entered safe deposit box number 877 at Bank of
America.
73). On or about June 6, 1997, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE entered safe deposit box number 877 at Bank of America.
74). On or about July 1, 1997,
Defendant AARON A. RUTLEDGE entered safe deposit box number 877 at Bank of
America.
75). On or about July 22, 1997, Defendants caused the filing of a
false U.S. Corporation Income Tax Return for the fiscal year ending June 30,
1997 for Defendant STAR-BEACHBOYS, INC., said tax return being false in that it
reported gross receipts at line la of $85,305, which substantially understated
the true amount by failing to report cash skimmed from the beach concession
stand.
76). On or about August 4, 1997,
Defendant AARON A. RUTLEDGE entered safe deposit box number 877 at Bank of
America.
77). On or about September 3, 1997, Defendant AARON A. RUTLEDGE entered safe deposit box number 877 at
Bank of America.
78). On or about October 6, 1997,
Defendant AARON A. RUTLEDGE entered safe deposit box number 877 at Bank of
America.
79). On or about October 6, 1997, Defendant AARON A. RUTLEDGE opened
and entered safe deposit box number 818 at Bank of America.
80). On or about October 25, 1997, Defendant AARON A. RUTLEDGE entered safe deposit boxes numbers 818
and 877 at Bank of America.
81). On or about October 30, 1997, Defendant AARON A. RUTLEDGE telephoned D. S., whose full name is
known to the Grand Jury, and caused the destruction of evidence reflecting
income earned by Defendant STAR-BEACHBOYS, INC.
82). On or about November 5, 1997, Defendants AP A. RUTLEDGE and
ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE deposited $589,214.00 in cash at
First Hawaiian Bank and stated to a bank employee that the cash was found at
the residence of the late Arthur A. Rutledge.
83). On or about May 13, 1998, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE caused a $175,000 check from an account in the name of
Defendant STAR-BEACHBOYS, INC. to be made payable to “Michael J. Green Client
Trust Account” and to be treated on the financial statements and tax returns of
Defendant STAR-BEACHBOYS, INC. as a loan to himself.
84). On or about May 13, 1998, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE executed a promissory note in the amount of $175,000 in
favor of Defendant STAR-BEACHBOYS, INC.
85). On or about July 13, 1998, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE issued a check made payable to Defendant STAR-BEACHBOYS,
INC. in the amount of $355,592 from bank account number 482833 at Prudential
Securities Bank in the name of “Mr. Anthony A. Rutledge, Personal
Representative of the Estate of Mr. Arthur A. Rutledge” and caused such amount
to be recorded as income on the financial statements of the corporation,
knowing that such amount did not reflect the true extent of cash skimmed from
the corporation in the preceding years.
86). On or about December 14, 1998, Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE caused
Defendant STAR—BEACHBOYS, INC. to make a $250,000 investment in Capital West
Advisors, L.L.C.
87). On or about February 28, 1999, in pleadings filed in U.S.
District Court for the District of Hawaii, Defendant STAR-BEACHBOYS, INC.
falsely blamed the cash skim scheme solely on the actions of the late Arthur A.
Rutledge stating in part, “this matter is really about an infirm, 91-year- old
man, who for a reason none involved will ever be certain, determined to divert
this cash, over a five-year period, from the hands of a 1egitimate business.”
88). On or about October 17, 1999, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE and Defendant AARON A. RUTLEDGE caused the filing of a false
U.S. Corporation Income Tax Return for the fiscal year ending June 30, 1999 for
Star-Beachboys Inc., said tax return being false in that it understated gross
receipts at line 1c by failing to report the true extent of the cash skimmed
from the corporation in the preceding years.
89). On or about March 16, 2000, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE withdrew $10,000 in corporate funds from Defendant
STAR-BEACHBOYS, INC. and caused the transaction to be treated on the financial
statements and tax returns of Defendant STAR-BEACHBOYS, INC. as a loan to
himself.
90). On or about April 16, 2000, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE withdrew $45,000 in corporate funds from Defendant
STAR-BEACHBOYS, INC. and caused the transaction to be treated on the corporate
financial statements and tax returns of Defendant STAR-BEACHBOYS, INC. as a
loan to himself.
91). On or about June 30, 2000, Defendant ANTHONY A. RUTLEDGE, SR.
a/k/a “TONY” RUTLEDGE executed a promissory note in the amount of $216,017.17
in favor of Defendant STAR BEACHBOYS, INC.
All in violation of Title 18, United States Code, Section 371.
COUNT 2
(18 U.S.C. § 1512(b) (2) (A) & (B))
(Witness Tampering)
The Grand Jury further charges:
On or about October
30, 1997, in the
District of Hawaii, Defendant AARON A. RUTLEDGE did knowingly corruptly
persuade, and attempt to persuade, an individual known to the Grand Jury with
the intent to cause and induce said person to (A) withhold a record, document
and other object from an official proceeding, to wit: a Federal grand jury
proceeding and its related criminal investigation, and (B) alter, destroy,
mutilate and conceal objects with intent to impair the objects’ integrity and
availability for use in such official proceeding.
All in violation of Title 18, United States Code, Section 1512(b)(2)(A)&(B).
COUNT 3
(26 U.S.C. § 7206 (1))
(Subscribing to a False Income Tax
Return)
The Grand Jury further charges:
On or about July 22, 1997, in the
District of Hawaii, Defendant AARON A. RUTLEDGE, did willfully make and
subscribe a Form 1120 United States Corporation Income Tax Return for the
entity known as Star-Beachboys Inc., in his capacity as Secretary-Treasurer of
that corporation for the tax year ending June 30, 1997, which was verified by a
written declaration that it was made under the penalties of perjury, which was
filed with the Internal Revenue Service and was false as to a material matter,
which said income tax return he did not believe to be true and correct as to
every material matter in that Line 1A reported gross receipts totaling
$85,305.00, whereas defendant AARON A. RUTLEDGE then and there well knew and
believed that the total gross receipts as reported on said income return were
substantially understated.
All in violation of Title 26,
United States Code, Section 7206(1).
COUNT 4
(26 U.S.C. § 7206(2))
(Aiding & Assisting in Filing
a False Income Tax Return)
The Grand Jury further charges:
On or about July 22, 1997, in the
District of Hawaii, Defendant ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE,
did willfully aid and assist in and procure, counsel and advise the preparation
and presentation to the Internal Revenue Service of a Form 1120 United States
Corporation Income Tax Return for the entity known as Star-Beachboys, Inc., for
the tax year ending June 30, 1997, which was false as to a material matter, in
that Line 1A reported gross receipts totaling $85,305.00, whereas Defendant
ANTHONY A. RUTLEDGE, SR. a/k/a “TONY” RUTLEDGE then and there well knew and
believed that said income tax return substantially understated reported gross
receipts.
All in violation of Title 26,
United States Code, Section 7206(2).
COUNT 5
(26 U.S.C. § 7206 (2))
(Aiding & Assisting in Filing
a False Income Tax Return)
The Grand Jury further charges:
On or about July 22, 1997, in the District of Hawaii,
defendant STAR-BEACHBOYS, INC., did willfully aid and assist in and procure,
counsel and ,advise the preparation and presentation to the Internal Revenue
Service of a Form 1120 United States Corporation Income Tax Return for the tax
year ending June 30, 1997, which was false as to a material matter, in that
Line 1A reported gross receipts totaling $85,305.00, whereas defendant
STAR-BEACHBOYS, INC. then and there well knew and believed that said income tax
return substantially understated reported gross receipts.
All in violation of Title 26,
United States Code, Section 7206(2).
DATED: August 20, 2003, at Honolulu, Hawaii.
A TRUE BILL
/SIGNED/________________
FOREPERSON, GRAND JURY
EDWARD H. KUBO, JR.
United States Attorney
District of Hawaii
/SIGNED/_________________
EDWARD E. GROVES
Trial Attorney
U.S. Department of Justice, Tax Division
/SIGNED/_________________
THOMAS J. KRYSA
Trial Attorney
U.S. Department of Justice, Tax Division
United States of America v. Aaron A. Rutledge; Anthony A. Rutledge,
Sr. a/k/a “Tony” Rutledge & Star-Beachboys, Inc.; Second Superseding Indictment;
Cr. No. 02-00438 DAE
