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The Honolulu Advertiser

Posted on: Friday, December 17, 2004

Rutledges defrauded nonprofit, feds allege

By Jim Dooley
Advertiser Staff Writer

A new, 13-count criminal indictment against Anthony "Tony" Rutledge Sr. and his son, Aaron, alleges the two misused funds belonging to the non-profit labor organization they head, including a $40,000 loan to a former state representative.

Tony Rutledge

The federal indictment, unsealed yesterday, does not charge former state Rep. Romeo Mindo, who also worked for Unity House, with any crime. It states the loan was made after Mindo introduced legislation in 2003 designed to strengthen Tony Rutledge's control over Unity House. Mindo could not be reached for comment last night.

The indictment states Tony Rutledge, Unity House's president, had a $40,000 check issued to Mindo in January 2004 "without prior knowledge or authorization" of other Unity House officials "and without any collateral as required of previous recipients of Unity House monies."

The loan is among several transactions using Unity House funds, including a $1 million film investment, cited in the indictment. It charges the Rutledges with mail and wire fraud and tax fraud conspiracy in connection with the use of the funds.

New charges

A 13-count federal indictment unsealed yesterday alleges Unity House funds were improperly used by Anthony "Tony" Rutledge Sr. and his son, Aaron.

The transactions include:

• $1 million for a film project in which Tony Rutledge had a financial interest.

• $40,000 for a loan to former state Rep. Romeo Mindo.

• $50,000 for a separate film project in which Tony Rutledge held an undisclosed interest

• $15,000 to Aaron Rutledge "despite not having provided any services to Unity House."

Source: Unsealed federal indictment

Attempts to reach Rutledge last night for comment were unsuccessful.

Rutledge attorney Jeff Rawitz, reached last night on the Mainland, declined comment on the new, 70-page indictment. "I just got a copy of it late this evening and I haven't had a chance to review it," Rawitz said.

The existence of the loan to Mindo was only disclosed to the board of Unity House this summer "after the grand jury requested information regarding this loan and the absence of any repayment," the indictment said.

Mindo, a Democrat who represented the 43rd District ('Ewa Beach, West Loch) in the House, lost his job at Unity House this week after the federal government seized control of the organization and froze its $42 million in assets.

The new indictment is the fourth in a series of criminal charges leveled against Tony and Aaron Rutledge since they were charged with federal tax fraud last year. They have pleaded not guilty and are scheduled to go to trial next month. The Rutledges will be arraigned on the new charges Monday morning.

The new charges concern a series of financial transactions that laid the groundwork for the federal government's move Tuesday to place the 53-year-old Unity House in a court-supervised receivership.

Federal agents took control of Unity House headquarters at 7 a.m., dismissing employees and turning temporary control of the nonprofit over to a private firm, EG&G Technical Services, Inc.

Among the new charges: that Rutledge invested $1,050,000 in Unity House funds in two film projects in which Rutledge had personal financial interests. One million dollars went to a Los Angeles firm called Beacon Edge Pictures, which had an agreement to use "movie production services" in Hawai'i controlled by Rutledge, the indictment said.

All but $250,000 was returned to Unity House after the Rutledges were charged with criminal offenses in August 2003 and the rest is the subject of a lawsuit filed by Unity House in federal court here, according to the indictment.

Rutledge also sent $50,000 in Unity House funds to a second organization he controlled, the Hawai'i Pacific Cinema Development Foundation, for development of a film project called "Hawai'i Port of Call," the government charged.

Rutledge did not tell Unity House directors "that he was one of the original investors in that film project and stood to gain financially if that project turned a profit," the indictment charged.

The government also charged that Rutledge, as recently as two months ago, was exploring the possibility of moving Unity House financial assets "offshore" to protect them from the "continuing threat posed by the grand jury's investigation of his activities," the indictment said.

Unity House also paid Aaron Rutledge some $15,000 in commissions after he was listed as the sales agent for two Unity House properties, "despite not having provided any services to Unity House" in connection with the property sales, the government charged.

The indictment also charged that Rutledge made two unlawful Unity House loans worth a total of $35,000 this year to the head of a new labor union called the Hawai'i Hospital and Health Care Workers Union.

The new indictment alleges that Tony Rutledge made a series of moves designed to give him more direct control over Unity House and its assets, including introduction of the Mindo bill last year. That measure, which passed, allowed Unity House to convert from a "membership-based" organization to a "non-membership-based nonprofit controlled by the board of directors," the indictment said.