Posted on: Tuesday, May 10, 2005
Firm pleads guilty in illegal-donation case
By Ken Kobayashi
Advertiser Courts Writer
A Honolulu engineering company pleaded guilty yesterday to federal tax charges of disguising illegal political campaign donations by claiming on its tax returns that the money was legitimate employee pay.
Thermal Engineering Corp. pleaded guilty to four counts of filing false tax returns for the years 1997 to 2000 when it knew that during those years, $59,000 were for the political campaign donations and not employee pay.
As part of the plea agreement, the government will drop four counts charging Ken I. Mashima, the company president, with helping prepare the tax returns for those four years.
The company now faces a fine of $60,000 to $120,000 under the federal advisory sentencing guidelines. Sentencing is scheduled for Jan. 17 before U.S. District Judge David Ezra.
"We feel this serves the ends of justice and sends the message that we take very seriously our obligation to uphold the campaign financing laws," Assistant U.S. Attorney Mike Purpura said.
"In this situation, the government and the defense feel this is the appropriate result," Thermal lawyer Stephen Pingree said.
In 2002, the state Campaign Spending Commission fined the company $31,000 for reimbursing employees for political contributions to former Gov. Ben Cayetano and former Mayor Jeremy Harris as well as smaller donations to former Maui Mayor Kimo Apana and then-gubernatorial candidate Linda Lingle.
In yesterday's plea agreement, Thermal Engineering admitted that a "corporate-wide decision" was made to violate the law.
The officers met regularly to determine which candidates would receive the company support and which "owner/employee" would be used as the vehicle for the illegal donations, the company said.
Those people would make the political contribution and then be reimbursed for that amount, the company admitted.
The company would claim the payments to those people as deductible expenses for more than 40 political contributions. Political donations are not deductible.
