Tony Rutledge, son plead not guilty to federal charges
By Rod Ohira
Advertiser Staff Writer
Richard Ambo • The Honolulu Advertiser
Labor leader Anthony "Tony" Rutledge and his son, Aaron, pleaded not guilty yesterday to federal charges accusing them of skimming hundreds of thousands of dollars from a corporation they headed and filing false tax returns on behalf of Star-Beachboys Inc., a beach equipment rental company.
Tony Rutledge, former leader of Local 5, leaves federal court, where he pleaded not guilty to charges accusing him of skimming money and filing false tax returns.
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 yesterday questioned whether there is a conflict of interest pertaining to the Rutledges' lawyers and where the money for their fees is coming from.
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.
Aaron Rutledge
The defense attorneys have reserved comment until Groves prepares the formal paperwork. McCorriston, however, said he has not accepted any fees from Unity House and is not party to the conflict-of-interest issue.
Magistrate Barry Kurren ordered Groves to present documents on the conflict issue to the court and defense attorneys and file a pretrial motion by the end of next week.
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 in 1992-97 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 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, would face 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 would face 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 benefited himself, his son and Art Rutledge.
Local 5 was founded in 1938 by Art Rutledge. From 1986 until 2000, Tony Rutledge was Local 5's financial secretary and treasurer. Unity House provides assistance to union members and retirees.
Reach Rod Ohira at 535-8181 or rohira@honoluluadvertiser.com.
