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Monday, February 24, 2020
Hawaii ILWU Official Sentenced for Tax Evasion, Identity Theft
By Selected News Articles @ 5:11 PM :: 3832 Views :: Ethics, Labor, Law Enforcement

Hawaii ILWU Official Sentenced for Tax Evasion, Identity Theft

by Carl Horowitz, NLPC, February 24, 2020

If government benefits were available, Nathan Lum made sure that he was going to receive some of them, legally or not. But the only thing that he’s received now is a sentence. On January 29, Lum, former Longshore Division director of International Longshore and Warehouse Union Local 142, was sentenced in U.S. District Court for the District of Hawaii to 30 months in prison for tax fraud and identity theft totaling more than $300,000 over several years. The identity theft involved his cashing of Social Security checks owed to his deceased father. Lum had pleaded guilty last March after an initial indictment in July 2018 and another one that September. He also will have to pay full restitution, plus a $125 special assessment. The actions follow a probe by the FBI, the IRS and the Labor Department’s Office of Labor-Management Standards.

Nathan Y.G. Lum, now 62, a resident of Honolulu, for a couple decades had controlled the docks through his position at ILWU Local 142, which has about 18,000 members of whom over a thousand are longshoremen. That gave him a lot of leverage over the Hawaiian economy. “Basically, he was in charge of the stevedores in the state, and they have negotiated labor union contracts that control the flow of virtually goods in and out of the state,” says veteran Hawaii investigative reporter Jim Dooley, author of the book, Sunny Skies, Shady Characters: Cops, Killers, and Corruption in the Aloha State. “So, he’s enormously influential.”

Sometimes having that kind of power translated into a license to steal. In 2011, international union filings with the Department of Labor revealed that Lum had made more than $24,000 in unauthorized purchases with a union credit card, though he later repaid the money. And back in the Nineties – Lum by then had taken control of the longshoremen division – the FBI and the Honolulu Police Department conducted a joint investigation of Hawaiian waterfront corruption, Operation Harbor Rats. There was ample evidence that ILWU Local 142 was ripping off hundreds of thousands, if not millions of dollars from the Matson Navigation shipping terminal. Nobody was convicted. One union member, Bruce Perry, was tried twice by a state jury for viciously beating a whistleblower, Quentin Tahara, but each case resulted in a mistrial.  

Old habits apparently wouldn’t die. According to prosecutors, Lum during 2011-17 knowingly failed to file any federal or state personal income tax returns despite having a gross annual union pay in excess of $200,000 for most of that time. That evasion added up to $280,743.27. In particular, he failed to report about $90,000 in payments he received from Beverly Hills-based indie film studio Relativity Media during 2012 and 2013 in connection with his efforts to secure state tax credits from the Hawaii legislature. But that wasn’t all. After his father’s death in June 2013, he cashed his Social Security checks for about two and half years, forging the father’s signature on over 50 checks, depositing the checks into his own bank account, and then using the money for personal expenses. The tab for this pilferage was $33,435. That raised the grand total of his thefts to $314,178.27. Nathan Lum pleaded guilty last March to charges of tax evasion and aggravated identity theft; prosecutors, as part of the deal, dropped a theft charge. At sentencing this January before U.S. District Judge Derrick Watson, Lum was contrite: “First of all, I offered no excuses,” he stated. “From day one, I admitted yes, I did commit those crimes.”  

Federal officials have no doubt that Lum received his just deserts. “The sentence imposed today holds Lum accountable for his flagrant violation of federal law,” said U.S. Attorney Kenji Price. “It sends a message to all in Hawaii that no one in Hawaii, regardless of position or privilege, is above the law. Those who hold positions of trust, such as leaders of Hawaii’s public- and private-sector unions, are fully accountable for their conduct, and when they intentionally violate federal law, my office will work with law enforcement to ensure that there are consequences.” IRS Criminal Investigation Special Agent-in-Charge Justin Campbell likewise commented: “Nathan Lum earned a significant income based partly on his criminal conduct and position of influence. He knew he had an obligation to file his income tax return, but chose not to.”

This raises the issue of what other things federal and local investigators might uncover. Given Lum’s role as a power broker between the worlds of Hawaii business, labor and politics, it is little surprise that a probe of other members of Local 142 reportedly has been ongoing. Lum’s attorney, Myles Breiner, is convinced that his client took a fall for other corrupt union leaders. “Most likely, this is going to lead to subsequent indictments,” Breiner remarked last year. If nothing else, time will show the wiser.

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