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The Honolulu Advertiser

Posted on: Thursday, July 1, 2004

Two indicted in airport probe

By Jim Dooley
Advertiser Staff Writer

Two Honolulu building contractors were indicted yesterday by a federal grand jury, charged with being major participants in what state and federal law enforcement authorities described as a long-running conspiracy to rig bids and inflate values of more than 400 Honolulu International Airport repair contracts worth "millions of dollars," officials announced.

The accused

• Charged: Michael Furukawa; Wesley Uemura.

• Charges: 1 count of conspiracy to defraud; 32 counts of mail fraud.

• Maximum penalties: Up to 20 years in prison, $250,000 in fines if convicted.

• Alleged conspiracy: The two worked with unidentified state airport officials from 1998 to 2001 to land more than 400 airport repair contracts worth "millions of dollars." Each contract was worth no more than $25,000. Some of the contract prices were inflated to "two or three times" the value of the work performed, officials allege.

The two men, Michael Furukawa and Wesley Uemura, were arrested by state investigators in 2002 but were not charged with a crime until yesterday.

Howard Luke, attorney for Furukawa, and Clifford Hunt, lawyer for Uemura, declined comment yesterday, saying they had not yet seen the 48-page indictment.

Furukawa, head of MF Masonry and other contracting firms implicated in the case, and Uemura, head of Wes' Contracting and other firms, are to be arraigned Tuesday on one count each of conspiracy to defraud and 32 counts of mail fraud.

Former state airport officials Dennis Hirokawa and Richard Okada, identified in state criminal and civil cases as alleged participants in the scheme, have not been charged criminally, but state Attorney General Mark Bennett said yesterday that the investigation won't be concluded "until all of those responsible for airport bid rigging are brought to justice."

Bennett invited Furukawa and Uemura to "cooperate with federal authorities" in the ongoing investigation.

Hirokawa, the former head of maintenance at the airport, and Okada, former head of the statewide airport visitor information program, retired from state employment after they were arrested by state investigators in 2002. Neither man has been charged, and both deny wrongdoing.

The two men indicted yesterday face up to 20 years in prison and fines of up to $250,000 if convicted, according to U.S. Attorney Ed Kubo.

Kubo said the alleged conspiracy involved so-called "small" airport repair and maintenance contracts worth no more than $25,000 each. In awarding contracts under that threshold, state officials follow a less formal bidding procedure than is required for larger jobs. They can solicit price quotations over the telephone from at least three competing contractors.

The indictment alleged that Furukawa and Uemura conspired with unnamed state personnel to ensure that their companies got the contracts at inflated prices.

Phony competing bids were submitted to make it appear that the Furukawa-Uemura companies offered to do the work at the lowest prices, according to the indictment.

Kubo and Bennett said the investigation may be expanded to cover possible improprieties in the award of much larger public works projects at the airport.

State Deputy Attorney General Larry Goya said the state two years ago froze investment accounts controlled by Furukawa that contained more than $1 million allegedly generated by the bid-rigging scheme. Because of the favorable stock market, those accounts have grown to more than $2 million, Goya said.

The state has filed a civil lawsuit against Furukawa, Uemura, Hirokawa, Okada and others to recover money gained from the alleged conspiracy.

That suit, filed in state Circuit Court, alleges that 171 contracts worth more than $1.25 million were fraudulently awarded.

The civil suit has been put on hold because of the federal criminal investigation, and Bennett said yesterday that it may continue to be delayed.

Several state contractors have admitted involvement in the bid-rigging scheme in state criminal cases and agreed to cooperate in the larger federal probe.

Some of those contractors have said in plea agreements that they worked in concert with Furukawa and Uemura and made cash kickbacks to Hirokawa and Okada.

One contractor, Arthur Inada, said in state court last year that he paid $129,000 in kickbacks, including $40,000 in "political contributions" to Okada and Hirokawa.

Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.