A financial adviser who was supposed to manage the deferred compensation accounts of active and retired city employees said in state court Tuesday that he was arrogant to treat other people’s money as his own.
A state judge sentenced Bruce M. Harada to 20 years in prison for pocketing more than $2.5 million that 21 of his clients gave him to invest for their future.
"My pride told me to keep up a lifestyle at any cost," Harada said.
That lifestyle included spending lavishly on cars, clothes and vacations, school tuition for his children and more than $300,000 on home repairs, said Deputy Prosecutor Chris Van Marter.
Harada’s lifestyle did not include paying off a $180,000 mortgage on his Kapolei home, according to a May 2012 Bank of America National Association foreclosure filing against Harada, 57, and his wife, who filed for divorce in November.
Van Marter said that from April 2007 to May 2012, Harada persuaded his victims to cash in their deferred compensation accounts in order to put the money into investments managed by ING North America Corp. Harada was a contract financial adviser for ING at the time.
Instead of investing the money, Harada spent it on himself and sent out phony monthly and quarterly statements to his victims. He even paid promised "dividends" to some victims using money he had taken from other victims, Van Marter said.
Harada offered an apology in court Tuesday to the people he admits he defrauded and whose trust he betrayed.
Van Marter said, "I’m not sure how sincere he really is. He got caught. He acknowledged his guilt when the evidence against him was overwhelming."
Harada pleaded guilty in July to securities fraud and money laundering.
His lawyer, Ed Harada (no relation), said his client cooperated with authorities as soon as they confronted him.
Van Marter said the U.S. Secret Service investigated the case. He said its agents were not able to recover any of the money Harada stole.
ING reimbursed Harada’s victims more than $1.8 million.
Circuit Judge Rom Trader ordered Harada to repay the money ING paid to his victims. Trader also sentenced Harada to 10 years in prison for money laundering, but that prison sentence will run at the same time as the 20 years for securities fraud.
The Hawaii Paroling Authority will decide how much of his prison sentences Harada must serve behind bars before he is eligible for parole. Harada has already been in custody since June 2012 and will have that time applied toward his prison sentences.
