U.S. Army employee pleads not guilty to taking recycling proceeds

An employee of a U.S. Army lodging facility in Seoul pleaded not guilty Wednesday in U.S. District Court in Honolulu to charges of conspiring with a co-worker to divert the proceeds from cardboard and cooking oil recycling to their personal bank accounts.

Bon Ku, who worked as rooms manager at the Dragon Hill Lodge, located on U.S. Army Garrison Yongsan, from 1997 to 2020, is charged with one count of conspiracy to commit theft of government property and two counts of theft of government property. He entered not-guilty pleas to each count of the indictment before U.S. Magistrate Judge Kenneth Mansfield.

His attorney, Patrick J. McLain of Dallas, said in a statement to the Honolulu Star-Advertiser that Ku is the “son of an Army veteran who has had 25 years honorable service with the U.S. Department of the Army, providing lodging services to U.S. Soldiers and their family. We look forward to defending his honor and good name in this legal process.”

Michael McCarthy, a trial attorney in the Criminal Division, Fraud Section, at the U.S. Department of Justice in Washington, D.C., is prosecuting the case for the government and did not immediately reply to Star- Advertiser requests for comment.

Ku’s trial is scheduled for March 14 before Senior U.S. District Judge Helen Gillmor.

According to the Nov. 17 indictment, Ku allegedly conspired in the scheme with Donald Gower, who was employed as director of security at Dragon Hill Lodge from 2011 to 2019 and oversaw the recycling program. The pair is accused of contracting a South Korean- based recycling company to remove and recycle cardboard from the lodge, one of four Armed Forces Recreation Center resorts that cater to service members and their families.

The Hale Koa Hotel in Waikiki is another of the four AFRC resorts operating around the world.

The recycling company that the two defendants are accused of working with paid Gower in cash, and Gower was responsible for depositing the payments into the Dragon Hill Lodge’s bank accounts, according to the indictment. However, from September 2014 until August 2020, Ku and Gower allegedly “split the payments between themselves.”

In 2017 the pair allegedly agreed to sell the lodge’s cooking oil to an off-site recycler and divide and stash the cash. That scheme started in early 2017 and ran until 2020, the indictment says.

From September 2014 to August 2020, Ku and Gower received about $17,818, according to a Sept. 15 plea agreement with Gower. Each allegedly got about $8,909 during that time period.

In 2015, Ku is alleged to have told Gower he had entered into an agreement with a company, which is not named in the indictment, that would pay Ku about 50% of the contract amount for any contract they got from the Dragon Hill Lodge and that they would split any money received from the arrangement, according to the plea agreement.

From January 2014 to October 2020, Ku allegedly received approximately $117,487 from the company and influenced the lodge to award the contract to the company, according to court records, and was compensated for his efforts.

Gower allegedly received about $19,391 from the recycler, through Ku, from September 2015 until May 2019, when Gower “exited the conspiracy” after leaving his job with the lodge, according to federal court records.

Gower is facing up to five years in federal prison and up to a $250,000 fine or twice the gross monetary gain from the alleged scheme, whichever is greater, plus three years of federal probation.