IRS agent testifies in union trial
By David Waite
Advertiser Courts Writer
The last of the prosecution witnesses in the ongoing trial of Hawai'i labor leader Gary Rodrigues said in federal court yesterday that he believes Rodrigues laundered more than $377,000 between 1996 and 2000 through two businesses owned by his daughter.
Lance Okamoto, a special agent with the Internal Revenue Service, traced the flow of consulting fees paid by companies that furnished dental and medical insurance plans to members of the United Public Workers union, which Rodrigues heads.
Okamoto prepared a summary of hundreds of documents that were introduced during the past three weeks at the trial of Rodrigues and his daughter, Robin Rodrigues Sabatini, on federal charges of mail fraud, conspiracy to defraud a healthcare benefit program and money laundering. Rodrigues alone is charged with embezzling labor organization assets and accepting kickbacks in connection with an employee welfare benefit plan.
Prosecutors contend the consulting fees were included in contracts with health insurance providers without the knowledge of the union's board of directors or the rank and file.
But lawyers for Rodrigues and Sabatini claim that the money paid to Sabatini for consulting came out of the insurance carriers' profits and had no effect on what union members paid for health or dental insurance.
During his testimony yesterday, Okamoto also tracked cash withdrawals from the checking account of Herb Nishida, the life insurance agent who sold policies to UPW members during the 1990s. During his testimony during the second day of Rodrigues' trial, Nishida said he visited Rodrigues at his union office on North School Street several times a year and gave him envelopes stuffed with hundred-dollar bills. Nishida said he gave the money to Rodrigues to thank him for his help in getting the UPW members' business.
The summary sheet of Nishida's cash withdrawals presented by Okamoto yesterday showed between three and five large cash withdrawals a year, each over $5,000, through 1998. But in response to questions from Rodrigues' lawyer, Doron Weinberg, Okamoto acknowledged there was nothing to document how any of the money Nishida withdrew was actually spent.
And while dozens, if not hundreds, of checks were sent by the insurance carriers for consulting fees to Sabatini's companies, there were no notations on the checks nor were there any other documents to link Sabatini directly with the UPW, Okamoto agreed reluctantly.
The trial will resume Tuesday, at which time U.S. District Judge David Ezra will hear arguments by Weinberg, and Sabatini's lawyer, Richard Hoke, that some or all of the charges against the two should be dropped on the grounds of insufficient evidence.
If Ezra does not dismiss all of the charges, the trial will resume Wednesday with the defense presenting its case.
Reach David Waite at 525-8030, or e-mail at dwaite@honoluluadvertiser.com.
