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Tuesday, February 21, 2017
February 21, 2017 News Read
By Andrew Walden @ 3:04 AM :: 5477 Views

Forbes: Taxes Make Hawaii One of 10 Worst States for High Earners

OHA and HART Auditor Admits Fraud, Embezzlement

SA: The former managing partner of one of the state’s largest accounting firms admitted in state court that he created fictitious companies and employees, and phony correspondence and contracts, and doctored invoices and other documents in order to collect hundreds of thousands of dollars in false reimbursements from his own company.

Patrick Oki testified last week that he did so because “I felt like I had been underpaid for at least a couple of years. And based on the partnership agreement, I’m entitled to that share of profit based on my ownership percentage.” ….

Oki, 47, a certified public accountant and certified fraud examiner LOL!, is on trial in state court on 13 counts of theft, money laundering, forgery and using a computer to commit the theft and money laundering. According to the indictment against him, Oki stole $503,897 from PKF Pacific Hawaii LLC between January 2011 and January 2014….

The indictment lists the other partners — Lawrence Chew, Deneen Nakashima, Dwayne Takeno and Trisha Nomura — as complainants. They later left the firm. In October 2015 new partners executed a buyout agreement with Oki and changed the name of the firm to Spire Hawaii LLP….

One of the schemes involved the supposed buyout of Hawaiian Cement and Ameron Hawaii by Sumitomo Osaka Cement Co. Ltd. of Japan. Oki admitted that no such deal was in the works. He said he created a company he called AMC Associates that was supposed to provide legal and translation services to Sumitomo. He also said he lifted a signature from the internet and pasted it onto an AMC document.

Oki said he later told his partners the Sumitomo deal fell through because a PKF employee had leaked information about the proposed buyout. He also had PKF’s law firm, Goodsill Anderson Quinn & Stifel, draft a settlement document to indemnify Sumitomo (unknowingly!) from any responsibility and expenses related to the (nonexistent) failed deal. The lawyer who drafted the document says he doesn’t know (what the hell he was doing!) whether the law firm’s representation of PKF is part of Oki’s criminal case.  (OOOOPS!)

The address Oki listed for AMC Associates is a mail-forwarding company in Connecticut. When Deputy Prosecutor Chris Van Marter referred to AMC as a fake company, Oki bristled, saying companies can exist only on paper. On a document for another company Oki created, he said he signed the name Ernie Harrison. When Van Marter called it a phony signature, Oki said it was his, real signature of Ernie Harrison….  (LOL!)

(This is the guy who was auditing OHA and HART.  Feel confident now?)

read … Defendant admits conjuring up deals

HB1549: Don’t Tax Affordable Housing to pay for Affordable Housing

CB: Honolulu Mayor Kirk Caldwell has spent years and thousands of dollars of taxpayer money coming up with an affordable housing requirement for all large developments on Oahu.

The Democrat highlighted his plans during his State of the City speech Thursday, and is planning to introduce bills to the City Council outlining his proposals next month.

But it may be too late.

A bill in the Legislature would partially nullify Caldwell’s efforts by preventing counties from imposing affordable housing requirements on developments built for low- and middle-income buyers.

Rep. Beth Fukumoto, a Republican who sponsored House Bill 1549, says she wants to incentivize development of housing for the middle class and sees affordable housing requirements as a tax on developers.

Some affordable housing advocates fear Fukumoto’s measure would undermine years of efforts to form an effective inclusionary zone policy, a common strategy in other cities not only to ensure that low-income housing is built but that it’s not concentrated in only a few areas.  (Translation: If you’re not part of our social engineering scheme, you may go live in a tent on the beach.)

read … Housing Bill Strikes A Blow For The Middle Class

Airbnb tries again on Hawaii tax broker bills

PBN: Airbnb is once again backing two bills that would enable the online vacation rental platform to act as a tax broker and collect and remit taxes on behalf of its hosts in Hawaii, claiming the measure could generate $100 million in tax revenue.

House Bill 1471 and Senate Bill 1087 propose to enable a transient accommodations broker to register as a tax collection agent for vacation rental operators. Both measures have passed second reading and have been referred to the House and Senate money committees….

Another bill, HB1470, would enable hosting platforms to collect taxes on behalf of hosts but would impose a 4 percent TAT surcharge on short-term rental lodging in the state, would require the hosting platform to pay an annual fee of $10,000, and would limit the registration of properties to one short-term rental lodging unit per operator. That bill passed second reading and was referred to the House Judiciary Committee on Feb. 10, but no hearing has been scheduled.

HB1470 received more than 50 pages of testimony in support and opposition from many industry leaders, including Hawaii Lodging and Tourism Association President and CEO Mufi Hannemann, who called it a “major priority” for the hospitality organization.

“It is the goal of the hospitality industry, which we represent, to ensure a level playing field for all visitor accommodations, from the traditional hospitality businesses to the alternative accommodations offered online,” Hannemann said in written testimony. “There are an estimated 25,000 alternative accommodations in the Hawaiian Islands competing with hotels, resorts, timeshares, and bed-and-breakfasts, except that the majority of them are most likely avoiding our 9.25 percent transient accommodations and general excise taxes.”

But Airbnb Public Policy Manager Matt Middlebrook said in written testimony that Airbnb opposed the bill, and claimed "was crafted by Hilton Hotels" to “kill what it sees as competition.

read … Airbnb tries again on Hawaii tax broker bills

Counties Won’t Stand up to NIMBYS and Legalize TVRs – But They Want TAT!

HTH: …Without any action, the counties’ share would drop back to $93 million for the 2017-18 fiscal year that starts in July.

Bills lawmakers are considering offer different paths, with the counties getting more or nothing at all.

The bill counties want lawmakers to pass was introduced by Sen. Kai Kahele.

His legislation follows the recommendations of a TAT working group the state formed a few years ago. That would provide the state with 55 percent of remaining TAT revenue after about $110 million in contributions to special funds, with the rest dispersed between the counties. Hawaii County would receive 18.6 percent of the counties’ share.

Industry forecasters think the TAT, a 9.25 percent tax on hotel stays, will bring in $475 million this year. If the bill passes, the county could receive more than $30 million.

Kahele, D-Hilo, said he doesn’t think the counties are getting their fair share. But he noted it’s not an easy argument to win.

“Every year we deal with this,” Kahele said.

“It’s a big fight at the Legislature because of the amount of money it generates for the general fund.”

His legislation, Senate Bill 1290, passed a joint committee and will next be considered by the Ways and Means Committee, which Kahele sits on. The bill would not increase the tax.

The bill the counties fear is House Bill 1586. That would phase out their share of the TAT revenue over three years, while also simplifying the state’s income tax brackets and doubling a personal exemption….

But there might be a third way. Call it the fall back.

House Bill 830 keeps the funding formula the same but with the amounts left blank. That could allow lawmakers to reinsert the current $103 million cap or come up with another figure….

read … TVR Blackmail

Marijuana Just Another Excuse for a Tax Hike

HNN: …Lawmakers are looking to add a new tax on medical marijuana to help cover some the of costs associated with setting up Hawaii's program (insert excuse here), but many are concerned that it will just make pot more expensive for patients.

State Rep. Della Au Belatti, chair of the House Health Committee, supports a new "Use Tax" on medical marijuana on top of the existing general excise tax. The amount of the proposed tax is still unknown….

State lawmakers say the additional money is needed because departments have been requesting funds to help prepare for this new industry (and nobody thought it appropriate to tell the departments to take care of their new responsibilities by cancelling solitaire on the computer or by filling vacant positions.). For example, the State Tax Department requested about $600,000 for security improvements and more staff at its offices to handle the influx of cash that will be delivered from the eight dispensaries (with more staff, they will need X-Boxes to keep them busy).

There have been estimates that the dispensaries will be paying about $400,000 in taxes every month.

read … Just Another Excuse

SB173: Marijuana Candies are ‘medicine’

SA: …a bill pending in the state Legislature would, if approved, authorize licensed medical marijuana dispensaries to manufacture and distribute edible and drinkable cannabis products beginning July 1, 2018.

The measure, Senate Bill 173, Senate Draft 1, has strong support from the Hawaii Dispensary Alliance, the Drug Policy Forum of Hawaii and other advocates, including patients who said pot-infused food and drink may be easier to ingest. The state departments of Public Safety and Transportation submitted testimony against the bill; the DOT said long-acting edibles could increase impaired driving in Hawaii, citing statistics from other states.

The bill would require that edible marijuana products be manufactured in a certified kitchen within a production center using marijuana grown in a production center; require each product to be tested and labeled for dosage and strength; prohibit gummies, brightly colored candies and other products that resemble other commercial products or might attract children (KNOW THEM BY WHAT THEY DENY!); and allow liquid products that contain no more than 10 milligrams of activated tetrahydrocannabinol per serving.  (How many servings in an ounce?  Answer: As many as we want there to be.)  Tetrahydrocannabinol, or THC, is the psychoactive ingredient in marijuana.

As originally written, the measure also would have lifted the prohibition on convicted felons (you know—like drug dealers)  working in the medical-marijuana industry, allowing such employment if the person hadn’t been imprisoned on a felony conviction in the five years immediately prior to employment. However, that language was excised in committee.

You can read the bill, testimony for and against it, and a related committee report at….

LAT: Here's what's driving lawmakers working to legalize recreational pot in 17 more states

read … Feeling Medicated yet?  How about your kids?

Audit Finds a House Worth of Unrecorded Lumber at Hawaii County baseyard

HTH: Inadequate inventory control at county Public Works baseyards allowed chainsaws, string trimmers, a generator, a lawnmower, a digital camera and other items to walk off the job.  (Fringe benefits!)

In other cases, items, materials and supplies — including a pile of treated lumber worth $140,765 (ooops! didn’t get it out the back door fast enough!) — were found at baseyards with no record of them in the inventory system, according to a report recently released by the legislative auditor.

“County employees (who are asking for a raise) are stewards of county resources and must ensure all public property and equipment are treated as a public trust and not be used in a proprietary manner or for personal purposes,” Auditor Bonnie Nims said in the report….

PDF: Audit Report

read … Not nailed Down

HB1277 Add 1,200 More Unionized Public Employees

HTH: …Senate Bill 406, introduced by Sen. Kai Kahele, D-Hilo, and companion House Bill 1277, introduced by Rep. Justin Woodson, D-Maui, would allow graduate student assistants employed by UH to collectively bargain.

House Resolution 18, introduced by Rep. Joy San Buenaventura, D-Puna, and House Concurrent Resolution 39 would call for a confidential vote among UH graduate assistants to see whether the majority of them want to become unionized employees….

1,209 grad assistants systemwide….

As of Monday, HB 1277 had cleared a second reading by the House committees on Higher Education and Labor and Public Employment. It was awaiting a hearing by the Committee on Finance. SB 406 was awaiting a second reading by the Senate Committee on Ways and Means.

Both House resolutions were offered and referred to committees Monday, but no hearings were scheduled.

read … Just What We Need

SB1298: Will Police Commission be Allowed to Hire Outsider as Chief?

SA: …The commission, which is responsible for hiring and firing the chief, is expected to soon place advertising in the newspaper and online informing prospective candidates of the impending vacancy, Lawrence said.

Levinson said he’s concerned with state laws that require all state and county department heads to be Hawaii residents for at least a year. Levinson said he’s worried the provision could thwart the commission’s efforts to seek a pool of candidates that would include prospects from outside Hawaii.

In January 2015 the provision forced Gov. David Ige to pull back his nomination of Elizabeth Kim as labor director because Kim, who lived in Hawaii as a youth, had spent her adult years on the mainland.

Bills before the state Legislature would eliminate the requirement. House Bill 1534 eliminates the requirement for all state and county department heads and their deputies. Senate Bill 1298 would exempt county police chiefs from the requirement. A separate exemption already is in place that applies to the University of Hawaii president.

Sword has testified at this year’s Legislature in favor of removing the one-year requirement.

Lawrence suggested that the commission put the ad out with no reference to the residency requirement “so we can start the process and get applicants,” and the panel agreed…..

Separately, in an effort to allow rank-and-file officers a confidential means of communicating with the commission on concerns they might have about the chief, Levinson and Sheehan are proposing that the commission purchase a monthly $25 subscription to Survey Monkey, an online survey company.

“We don’t want to speculate about how things are going inside the Police Department, and we want to be able to have an intelligent conversation with you about the rank and file and what’s going on with them,” Sheehan said, looking at acting Chief Cary Okimoto.

The opinions gathered also could help the commission in its annual evaluation of the police chief, she said.

Sheehan proposed five questions to ask officers, including whether they feel they’ve received sufficient training, whether managers listen to and respond appropriately to problems that arise, and whether they are able to “speak up without fear of retaliation or negative consequences.”

All three proposals are expected to be voted on by the commission at its next meeting in March….

read … Outsider

Star-Adv: Time for Greenmailers to get Serious About Extorting MegaBux from Zuckerberg

SA: State lawmakers are now weighing House Bill 120, which directs Hawaii’s Department of Land and Natural Resources (DLNR) to recognize the “entire Ala Loa trail on … Kauai as a state trail,” and “define the physical boundaries” of the trail. While the precise coordinates are still a mystery, according to DLNR, such a law could prod the state to more aggressively pursue its charting.

The trail is generally believed to follow the coast around the Garden Isle. It includes a section that crosses the property of Facebook CEO Mark Zuckerberg as well as other oceanfront property owners who apparently are reluctant to open their land to the public.

On (Billionaire) Zuckerberg’s 700-acre property, state documentation indicates the trail winds about 300 to 400 yards inland from the coastline; many Ala Loa paths traversed inland for reasons of commerce. A Kauai activist, meanwhile, is trying to prove that the path crosses closer to the water. And some Native Hawaiians are pushing for heritage-related public access in the area for fishing, gathering (medicine) and other cultural practices….  (Ca-Ching!)

If Native Hawaiian groups and others are not already working in tandem with Na Ala Hele on this matter, they should be.

HB 120, which currently includes no request for funding, could help build an argument for opening access to land now blocked by private property….

(Advice for Mark Zuckerberg: Run!)

read … Simoleons!

Heroic Coast Guard Protects Whales from Money-Hungry Anti-Superferry Activists

CB: A 16-member crew aboard the U.S. Coast Guard’s Galveston Island, a 110-foot cutter based in Honolulu, patrolled the south shore of Maui last week along with a 45-foot response boat and another vessel from the National Oceanic and Atmospheric Administration.

As part of Operation Kohola Guardian, a joint effort that also includes the Hawaii Department of Land and Natural Resources, they were monitoring the (vicious anti-Superferry) catamarans and other tour boats (with their primitive whale-killing propellers) providing (lucrative, paying) customers the chance to see 60,000-pound whales breach and their newborn calves spout….

This distinct population of roughly 12,000 humpbacks was removed in October from the list of animals protected by the Endangered Species Act in October. But boat strikes and entanglements with fishing nets and marine debris still occur.

“It’s kind of a minefield,” said Ed Lyman, NOAA’s resource protection specialist and large whale entanglement response coordinator. “We check up on the tour boats, keep them honest.”  (Because they’re not!)

There’s also been fewer non-incidental boat strikes in recent years — collisions that occur through no fault of boat operators. There’s been one so far this season. There were two during the 2015-16 season and five the season before that….

NOAA Fisheries’ Marine Mammal Hotline phone number is 888-256-9840.  (If you see something, say something.  Rat out an anti-Superferry protester today!)

2014: Tourist Boats Operated by Anti-Superferry Activists Hitting More Baby Whales Than Ever

read … Save the Whales from those who say ‘Save the Whales!’

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