Posted on: Friday, September 10, 2004
Firm, president indicted on federal tax charges
By Ken Kobayashi
Advertiser Courts Writer
A Honolulu engineering company that was fined $3,000 in state court last year for making illegal campaign donations now faces federal charges of filing false tax returns.
A federal grand jury yesterday indicted Thermal Engineering Corp. and its president, Ken I. Mashima, on charges that the company made political contributions through its officers and then deducted the amount as compensation for the officers.
The result was that the taxable income for the company was lowered, the U.S. Attorney's Office said.
Mashima was indicted on four counts of helping prepare the company's corporate tax returns for 1997, 1998, 1999 and 2000. Each return falsely reported the compensation of the company's officers, federal prosecutors said.
Each count carries a maximum prison term of three years and a fine of $250,000.
The company was indicted on four counts of filing false tax returns for those years. The maximum fine is $250,000 for each count.
Thermal Engineering was fined by Honolulu District Judge Lono Lee in December for excessive donations to Mayor Jeremy Harris, former Gov. Ben Cayetano and former Maui Mayor James "Kimo" Apana. Those violations occurred between 1997 and 2001, according to a penal summons.
At that time, Howard Luke, a lawyer for the company, said the case involved "solid citizens" caught up a decades-long campaign practice.
Luke yesterday said he was "surprised" by the federal indictment. He said the company and Mashima cooperated fully with the government and he thought the case against the two had been closed.
Luke is not representing the company or Mashima in the federal case.
In 2002, the company was fined $31,000 by the Campaign Spending Commission for reimbursing employees for $37,000 in political contributions to Cayetano and Harris, as well as much smaller donations to Apana and then-gubernatorial candidate Linda Lingle.
The company was founded in 1978 and has worked on state projects.
Mashima and company officials could not be reached for comment yesterday.
Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com or 525-8030.
