Date: 02-09-2020

Case Style:

Case Number: 1:16-cr-00749-JMS-RT

Judge: J. Michael Seabright

Court: United States District Court for the District of Hawaii (Honolulu County)

Plaintiff's Attorney: Michael Nammar

Defendant's Attorney:

Description: Honolulu, HI - The United States of America charged Steve Edwards and Melanie Edwards with:

18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(1-8)
18:371.F CONSPIRACY TO DEFRAUD THE UNITED STATES
(1s)
18:1343.F FRAUD BY WIRE
(2s-16s)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(9-10)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(11)
18:1956-4700.F MONEY LAUNDERING - 18:1956(h) Conspiracy to Commit Money Laundering
(12)
18:1957-4700.F INTERSTATE WIRE, ETC. - 18:1957 Money Laundering
(13)
18:1957-4700.F INTERSTATE WIRE - 18:1957 Money Laundering
(14)
18:1956-4999.F CONSPIRACY TO COMMIT MONEY LAUNDERING. 18 USC § 1956(h)
(17s)
18:371.F CONSPIRACY TO DEFRAUD THE UNITED STATES
(18s)
26:7206A.F FILING FALSE TAX RETURNS - 26 USC § 7206(1).
(19s-21s)

Steve Edwards, 73, and Melanie Edwards, 61, of St. George, Utah, were sentenced in federal court for conspiracy to defraud the IRS and conspiracy to commit money laundering.

U.S. Attorney for the District of Hawaii Kenji M. Price announced that, according to court documents and information presented in court, the Edwards defrauded Koyo USA Corporation, a manufacturer of bottled water on Hawaii Island, for more than 10 years. They created sham pass-through companies and held those companies out to Koyo as if they were legitimate or actual manufactures, when in reality the companies were only resellers, with no employees, that only existed to take money from Koyo. During the fraud, the Edwards used fictitious names to communicate with employees of Koyo, lied about various departments that the sham companies purportedly had, and concealed from Koyo the fact that one of its upper level managers was an owner of the sham pass-through companies. During the fraud scheme, the Edwards laundered 3.7 million dollars in fraudulent proceeds. The Edwards also defrauded the IRS by filing false tax returns, submitting false books and records to their CPAs, and improperly classifying millions of dollars in distributions to the owners of the pass-through companies as consulting fees. Such conduct allowed the Edwards to evade paying $1,471,113 in taxes.

At sentencing, Chief Judge Seabright commented that the Edwards ran a sophisticated fraudulent scheme for more than ten years and that prison time was warranted for such conduct. Judge Seabright ordered the Edwards to pay $3,752,155.69 in restitution t0 Koyo USA Corporation and $1,471,113.00 in restitution to the IRS.

“Prosecutions like these send a message to those who line their pockets by defrauding companies and evading their federal tax obligations, and Defendants Melanie and Steve Edwards will appropriately have time to reflect upon their egregious conduct as they serve time in federal prison,” stated U.S. Attorney Price.

"Melanie and Steve Edwards engaged in a lengthy sophisticated theft and tax fraud scheme designed to satisfy their greed,” said IRS Criminal Investigation Special Agent in Charge Justin Campbell. "They were held accountable for their shameful conduct."

The case was investigated by IRS-CI and the FBI.

Outcome: Steve Edwards was sentenced to 36 months of imprisonment and three years of supervised release. Melanie Edwards was sentenced today to 30 months of imprisonment and three years of supervised release.

Plaintiff's Experts:

Defendant's Experts:

Comments: