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The Honolulu Advertiser
Posted on: Thursday, March 9, 2006

Federal contractor receives 12-day sentence in fraud case

By Ken Kobayashi
Advertiser Courts Writer

A multimillionaire whose company received nearly a half-billion dollars in federal work was fined $100,000 and sentenced to three weekends in prison yesterday for inflating a bid for a federal contract by about $380,000.

Federal prosecutors sought a longer sentence for Patrick Shin, but Shin's attorney Samuel King Jr. convinced U.S. District Judge Susan Mollway Oki that his client misrepresented the bid figures to cover legitimate profits and overhead expenses and not to defraud the government out of the money.

King asked the judge not to sentence Shin to jail, but Mollway said some time behind bars was necessary.

Shin will serve the 12 days the next four weekends from Friday to Sunday at the Federal Detention Center.

Shin, 41, owns Nan Inc., also known as Ocean House Builders, which received $463 million since 1995 to make the company the largest locally owned federal contractor in Hawai'i. During the hearing, it was disclosed that Shin has $40 million in assets, including $9 million in a savings account, a home worth $4 million and that his company is worth $24 million.

He pleaded guilty in April 2004 to misrepresenting figures for a $2.15 million contract for the overhaul and repair of a pump and motor at a Pearl Harbor drydock. To justify the contract figure, Shin inflated two subcontracts by $380,000, prosecutors said.

Shin was acting on behalf of JHL Construction Inc., a company owned by a nephew, according to court documents.

King argued that the federal government erred by assigning that type of nonbid contract that doesn't include overhead or profits to JHL. Because the contract had to be awarded quickly, Shin misrepresented the figures rather than negotiating for the additional amount that he would have gotten, King said.

The contract was never awarded.

Assistant U.S. Attorney Larry Tong argued that if Shin didn't go to jail, it would send a wrong message to the public and other contractors and "trivialize" Shin's offense.

He said Shin tried to defraud the government of $380,000, warranting a prison term of 18 to 24 months under federal sentencing guidelines.

Mollway said it was a "close call," but agreed with King.

Shin choked back tears in telling the judge he made a "mistake." He apologized to the federal negotiators.

"I was trying to make it work for everybody," he said.

Shin is also under administrative sanctions that prohibit him from federal government contracts for five years and from any association with his company for three years.

Mollway yesterday also fined JHL $3,000.

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com.