Hearing set today on Unity House control
By Jim Dooley
Advertiser Staff Writer
A court hearing is scheduled for this morning on a request seeking to dissolve the restraining order allowing IRS agents to seize control of Unity House and install a court-appointed "receiver" to oversee the organization and its finances.
The request was filed by Anthony Rutledge Sr. and his son, Aaron, who are charged under a 13-count grand jury indictment with offenses including tax and wire fraud and criminal conspiracy. Trial is set for May.
An "extensive unlawful scheme of fraud" gave Rutledge Sr. "complete control" of Unity House Inc. and allowed him to put his relatives and personal associates on the payroll of the $42 million nonprofit labor organization, according to legal papers filed Friday by the court-appointed controller of Unity House.
The paperwork, filed by Anthony Pounders, asks Chief U.S. District Judge David Ezra not to dissolve the restraining order that allowed the government last month to take control of Unity House until the criminal trial of Rutledge and his son is completed.
Jeff Rawitz, lawyer for Rutledge Sr., said yesterday he had not seen the paperwork and could not comment on it.
"It will be up to the court to determine whether this has any bearing on the government's ability to seize Unity House," Rawitz said.
Brian De Lima, attorney for Aaron Rutledge, said yesterday: "Our intention is to deal with these allegations in court. They are more appropriate for civil disputes than for criminal cases."
The restraining order was issued last month by U.S. District Judge Samuel King.
In the motion filed Friday, Pounders said he has conducted a preliminary investigation that has turned up "many suspicious transactions that I believe may, directly or indirectly, benefit Anthony Rutledge Sr. or Aaron Rutledge personally."
Aaron Rutledge was both an officer of Unity House and a real-estate agent working for a firm trying to sell property owned by Unity House, Pounders said. The younger Rutledge was scheduled to receive a "finders fee" from the property sale, creating "a clear conflict of interest for Unity House" and a possible violation of federal tax law, he said.
"Any transaction Aaron was involved in at Unity House was a matter of public record," Rutledge lawyer De Lima said.
Aaron Rutledge was a salaried employee of Unity House, receiving $4,000 per month, according to Pounders. His brother Anthony Jr. and sister Abbey also were on the payroll, receiving $3,620 and $1,430 per month respectively, Pounders said.
Tony Rutledge Sr.'s brother-in-law, Arthur Abbey, was also a paid Unity House employee and Rutledge's cousin, Dick Ornellas, was a $4,840-per-month consultant until a budget cutback in June 2004, according to paperwork filed by Pounders.
Numerous paid consultants who "appear to have personal relationships" with the defendants were also on the Unity House payroll, he reported.
"I have not been able to determine what, if any, services these individuals provide to Unity House," Pounders said.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
