All of the $487,044 in cash that former arcade owner Lo Van Ho admitted that he and his wife deposited in their bank accounts in quantities of $10,000 or less over a three-month period last year came from the Products Direct Sweepstakes machines in the arcades, lawyers for the Hos said in federal court Monday.
Assistant U.S. Attorney Chris Thomas said federal investigators estimated how much activity would have to occur in Ho’s downtown Honolulu arcade and Kalihi arcade to generate $487,000 but that undercover officers saw "not even a fraction of that activity was happening in these businesses." While authorities have a theory, they were not able to trace the true source of the money, Thomas said.
In the end the government charged Ho, 49, with conspiring to and structuring cash transactions to evade legal reporting requirements. Ho’s wife, Thanh Bao Ho, 37, was charged with failing to report the crime to authorities.
Both pleaded guilty in November.
U.S. District Judge J. Michael Seabright sentenced Lo Van Ho to a year in jail Monday and sentenced Thanh Bao Ho to three years of probation, six months of which will be on electronically monitored home detention. Seabright also fined Thanh Bao Ho $2,000 and ordered her to perform 150 hours of community service.
He told the Hos that they should sell or return to the dealer their 2014 Mercedes-Benz sport utility vehicle and 2014 Lexus automobile, for which they pay $3,000 per month, because they are in no position to own the luxury vehicles.
"Get a (Toyota) Corolla or something you can afford," Seabright said.
The Hos have agreed to forfeit to the government $598,044.
Federal authorities have already seized $100,028 from the Hos’ Bank of Hawaii and First Hawaiian Bank business and personal accounts; $41,026 cash from the Hos’ downtown Honolulu condominium; and $19,657 from the safes at the Winning Zone arcade at 1 N. King St. and Fun Zone arcade at 1717 N. King St.
Rustam Barbee, Thanh Bao Ho’s lawyer, said the Hos started making cash deposits in quantities of $10,000 or less because American Savings Bank "shut them down" because of earlier large cash deposits.
William Harrison, Lo Van Ho’s lawyer, said the Hos skirted the over-$10,000 threshold because that was the only way they knew how to put their money into the bank.
"The structuring was not for nefarious reasons," Harrison said.
Thomas said the Hos made 176 cash deposits in quantities of $10,000 or less into two separate accounts between April 29 and July 31, 2013, to evade the reporting requirement.
Another federal judge ruled in a civil case in April 2014 that Products Direct Sweepstakes machines are gambling devices prohibited under Hawaii law. The case was brought by nine people seeking the return of some of the machines Honolulu police had seized from arcades across Oahu in 2012.
One day after the ruling, an Oahu grand jury returned an indictment against the nine people charging them with 414 counts of racketeering, gambling and money laundering.
A state judge dismissed the criminal case in October at the request of the city prosecutor because of admitted deficiencies with the indictment.
