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The Honolulu Advertiser
Posted on: Wednesday, September 27, 2006

Airport fraud case under way

By Jim Dooley
Advertiser Staff Writer

As one airport bid-rigging case went to trial yesterday, federal prosecutors were unveiling another, related case that has been under seal for almost two years.

In the trial, before U.S. District Judge David Ezra, former state officials Dennis Hirokawa and Richard Okada are alleged to have conspired with private contractors Michael Furukawa and Wesley Uemura to rig the awards and inflate the values of 45 contracts worth $1 million for small repair jobs at Honolulu International Airport from 1998 through mid-2002.

According to the prosecution, jobs flowed to the contractors and cash kickbacks and political donations flowed to the officials.

Defense attorneys told jurors their clients are not guilty and that the government's case is marred by self-serving witnesses, no financial evidence of kickbacks or political donations, and an unqualified analysis of the repairs conducted as long as five years after the jobs were completed.

The new indictment, issued in 2004 but unsealed Monday, accuses prominent Honolulu general contractor Walter Arakaki of scheming with an unidentified airport official to bypass state procurement law in the award of four contracts worth just under $25,000 each to Walter Y. Arakaki, General Contractor Inc., in 1999.

The contracts were for repair work at the fire rescue boathouse originally built by the state near the end of Lagoon Drive in 1994. Arakaki, 66, is accused of inflating the value of the contracts, and the indictment alleges that the work was illegally "parceled" split into increments of less than $25,000 each in order to avoid the more complex and time-consuming sealed-bid process required for larger contracts.

Arakaki pleaded not guilty to the charges Monday. His attorney, Keith Kaneshiro, declined comment on the case yesterday. There is no allegation that he paid kickbacks or made political donations in return for receiving the work.

The case against Hirokawa, Okada, Furukawa and Uemura alleges that the two state officials required the payment of kickbacks and campaign donations to unidentified politicians. They are alleged to have conspired among themselves and with at least six other contractors. Deputy Attorney General Lawrence Goya told jurors yesterday that Okada, former head of the Visitor Information Program for airports and harbors statewide, was known as the "go-to man to get anything done at the airport."

"Mr. Okada had strong political connections with legislators at the Capitol," Goya said.

Okada's attorney, Dana Ishibashi, reserved delivery of his opening statement to jurors until later in the trial.

Keith Shigetomi, lawyer for Hirokawa, said his client was given "no cash kickbacks. He didn't receive a single cent for himself."

Shigetomi said six other contractors and a state employee implicated in the case have entered plea agreements in state court and are now blaming their misdeeds on Hirokawa.

"Did he cut corners? Maybe. But he needed to get the work done," Shigetomi said.

"Dennis Hirokawa is not a crook. He helped keep the airport safe and beautiful," said Shigetomi.

Both the case now on trial and the Arakaki indictment allege that the conspirators arranged for the delivery of three purportedly independent bids for airport contracts. But two of the bids were "complementary" and only one was earmarked ahead of time for acceptance by state officials, prosecutors said.

Goya said a private consultant estimated that the work performed was worth only 10 percent of what the state paid.

Both indictments allege that the defendants committed mail fraud in the contracting schemes.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.