Father & Son Union Bosses Indicted for Tax Fraud in Hawaii Federal Court

Anthony “Tony” Rutledge and his son, Aaron, were indicted on Aug. 20 on charges of tax fraud.  Tony is also accused of using his office at Local 5 of the Hotel Employees & Restaurant Employees Intl. Union to run the business from which he is alleged to have skimmed cash without reporting it to the IRS.

Tony and Aaron, along with the     now-deceased patriarch, Arthur, headed Star-Beachboys, Inc., a rental company for surfboards and other beach equipment.  According to the indictment, the 3 Rutledges began depositing daily cash receipts into at least 4 safe deposit boxes in various Hawaii banks in 1992, so that they could use the funds without reporting them as income.  By ’97, they had collected more than $350,000.  The cash-concealment scheme allegedly continued up until the indictment.

Arthur Rutledge died in Sept., 1997.  Soon after, federal agents began investigating the Rutledges’ financial dealings.  Tony and Aaron blamed the patriarch, Arthur, for squirreling away cash at his home, when they deposited $589,214, which they claimed they found in Arthur’s house, in a bank account in Oct. 1997.  The Rutledges allegedly filed false tax returns for Star-Beachboys from 1993-97, failing to report $415,205 in gross rents.

Arthur Rutledge founded Local 5 in 1938 and was its president for 40 years.  Tony Rutledge was financial secy. and treasurer of Local 5 from 1986 until 2000.  He is accused of using his office to conduct his business activities, and using employees of Local 5 to perform personal services for himself, Arthur and Aaron.

Aaron is already under indictment for witness tampering and records destruction in the investigation. [U.S.A.O. HI, 8/20/03: Honolulu Advertiser, 8/21/03]