Labor leader Anthony “Tony” Rutledge, left, waits outside federal court today with state Rep. Romeo Mindo and Rutledge’s son, Aaron. Richard Ambo • The Honolulu Advertiser

The Rutledges were indicted on Aug. 20.

Tony Rutledge was free on a $50,000 unsecured bond but Magistrate Barry Kurren ordered him to surrender his passport and to abide by a no-contact order list of persons to be provided by prosecutors.

The list will continue to include his son although both live in the same residence.

Assistant U.S. Attorney Ted Groves today questioned whether there is a conflict of interest pertaining to the Rutledges’ lawyers.

Los Angeles-based attorney Jeff Rawitz and local attorney William McCorriston are representing Tony Rutledge; Michael Green is Aaron Rutledge’s attorney; and David Gierlach is counsel for Star-Beachboys Inc.

Groves said in court that money for the fees may be coming from Unity House.

The trial is scheduled for Dec. 2 before Judge David Ezra.

The indictment alleges that the defendants and the late Art Rutledge, Tony’s father, skimmed more than $350,000 in daily cash receipts from the Star-Beachboys concession from 1992 to 1997 and put the cash in four safe deposit boxes. Arthur Rutledge died in September 1997.

By using the safe deposit boxes the Rutledges were able to deposit and withdraw money without generating a record, the indictment said. The scheme continued up until August 2003, according to the indictment.

When federal investigators became aware of the scheme, Tony and Aaron Rutledge allegedly tried to conceal their participation from their accountants, tax preparers and the federal government by not reporting the existence of the stolen money, according to the indictment.

Tony Rutledge was charged with one count each of conspiracy to defraud the U.S. Treasury and Internal Revenue Service, and aiding and assisting in filing a false tax return. Aaron Rutledge was charged with conspiracy to defraud the U.S. Treasury and IRS, and subscribing to a false income tax return. Aaron Rutledge also was reindicted on a witness-tampering charge that was filed in October 2002.

If convicted, Tony Rutledge, 57, faces up to eight years in prison and $500,000 in fines. Aaron Rutledge, 33, could be sentenced to 13 years in prison and fined $750,000.

Star-Beachboys faces maximum penalties of $1 million in fines and 10 years of probation. The company held a license to operate a beach concession in Waikiki until 1999.

As head of the Local 5 and Unity House, Tony Rutledge is accused of conducting administrative activities of Star-Beachboys out of his union office and using union employees to perform services that benefitted himself, his son and Art Rutledge.

Local 5 was founded in 1938 by Art Rutledge and represents about 10,000 employees. Rutledge served as union president for 40 years.

From 1986 until 2000, Tony Rutledge was the financial secretary and treasurer of Local 5. He also heads Unity House, which was formed by his father in 1951 to provide assistance to union members and retirees.