Hilo man sentenced in scheme to cheat cousin

A 48-year-old Hilo man is going to federal prison for 17 months for duping his cousin out of $19,250 in an elaborate swindle involving a fictitious Internal Revenue Service employee in Honolulu and fake correspondence from the IRS in California and Utah.

Kenneth Hua admitted that he presented himself as an independent auditor for the IRS when his cousin, an elementary school teacher, went to him in 2007 for help with her taxes.

Hua told his cousin she was being audited by the IRS and that she could pay a lower auditing fee if she hired him to do the audit rather than have the IRS do it when he knew the IRS does not charge taxpayers to audit them, according to federal court records.

At the time, Hua offered professional accounting and tax services under the business name Tri-Y Enterprises.

To persuade his cousin to continue paying him for auditing services never performed, Hua sent his cousin threatening mail and email purportedly from the IRS in Fresno, Calif., and Ogden, Utah, and from a fictitious IRS employee in Honolulu, said Tracy Hino, assistant U.S. attorney.

Hua also had his wife and daughter sign documents stating that they too were auditors working on the cousin’s tax case, Hino said.

He said the cousin gave Hua power of attorney and borrowed money to continue paying him.

So convincing was Hua’s scam that when an agent for the U.S. Treasury Department’s Office of Inspector General called the cousin to tell her the IRS was not auditing her, the cousin didn’t believe the agent, Hino said.

It was the cousin’s daughter-in-law who called the inspector general.

Hino said the cousin traveled to Honolulu to meet the agent and to tour the IRS office to see for herself that there was no "Jon Nishimura" working there and sending her correspondence about her taxes.

Hua pleaded guilty in April to mail fraud and to impersonating an employee of the IRS. District Chief Judge Susan Oki Mollway handed down the prison sentence Monday and ordered Hua to repay his cousin $19,250.