Posted on: Saturday, April 28, 2001

Financial counselor faces new charges

By David Waite
Advertiser Staff Writer

Legal troubles continue to grow for Honolulu businessman Michael Haxton, who was indicted Thursday on federal charges that accuse him of having guns while possessing or using illicit drugs.

Haxton, a recognized personal financial expert, and his wife, Yvonne, were indicted on similar charges on Feb. 7.

The latest indictment against Haxton resulted from an April 12 search of Haxton's Kailua home and his North King Street office at Hawaii Credit Counseling Services, which he headed until recently.

Federal agents reported finding a 9 mm handgun hidden in a false-bottom shelf in the closet at the business office and Haxton's identification cards, a pipe and heroin in a "fanny pack" lying next to the bed in the master bedroom of the Haxtons' home on Kainui Drive in Kailua.

While they have not been charged with the crime, an affidavit by federal investigators filed to support their request for a warrant for the searches also accuses the Haxtons of laundering drug money through the credit counseling business.

In what nearly became a shouting match with federal Magistrate Judge Barry Kurren earlier this week, Michael Haxton's attorney, David Bettencourt, denounced the affidavit saying it was rife with errors, misrepresentations and fabrications.

While Haxton remains in federal custody while awaiting trial, Bettencourt told Kurren that his client has never failed a urine test to detect drugs. Many of the allegations against Haxton were made by a former disgruntled employee of Hawaii Credit Counseling Services who quit to start a competing company, Bettencourt said.

"There are a lot of things in the affidavit that are completely false, now that we've had time to review it more completely," Bettencourt said yesterday.

The affidavit alleges that Yvonne Haxton last year began renting a house her father owns for $2,000 a month to four men from Mexico.

On Dec. 12, U.S. Customs agents arrested a man attempting to smuggle nearly seven pounds of heroin and a like amount of cocaine into the U.S. from Mexico, according to the affidavit. The man who was arrested has already pleaded guilty to narcotics, immigration and money-laundering charges and is awaiting sentencing.

After his arrest, the Mexican man began cooperating with federal investigators, providing then with information about the Haxtons, according to the affidavit.

The man admitted selling heroin in Hawai'i since 1999, said he sold heroin to Yvonne Haxton at least 10 times and claimed that Michael Haxton used drugs as well, the affidavit said.

It states that the Mexican man told investigators he exchanged $10 and $20 bills with Yvonne Haxton to make the cash from drug transactions less bulky to carry. An IRS criminal investigator quoted in the affidavit said $1 million in $20 bills would weigh about 100 pounds.

The Mexican who pleaded guilty to the federal charges told investigators that Yvonne Haxton charged $100 for every $10,000 that was exchanged, according to the affidavit.

Two federal investigators interviewed the Haxtons on Dec. 20 at their home in Kailua, at which time Yvonne Haxton acknowledged buying heroin from one of the Mexican men and smoking it with her husband in October or November 2000, according to the affidavit. Yvonne Haxton also told the investigators she exchanged $20 bills for $100 bills, the affidavit states.

It goes on to claim that clients of Hawaii Credit Counseling Services, whose principal purpose was to help people get out of debt, were told to make payments to the company in large denominations.

Large amounts of cash flowed through the company, and the Haxtons, who had sole control of the money, ignored suggestions from their employees to use an armored car service to make the deposits, according to the affidavit.

Last July, the Haxtons filed a complaint with the Honolulu Police Department saying someone had broken into their Lincoln Navigator and stolen $200,000 in cash, and later revised the figure upward to $315,000, according to the affidavit.

In August, three people were charged with the theft of the $315,000. Police learned the money was stolen from the Haxtons because those charged with the theft knew the Haxtons were using cash to buy cars, clothing, jewelry, weapons and large quantities of crystal methamphetamine, according to the affidavit.