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Sunday, February 3, 2013
DoTax Employees Secretly Arrested, Fired
By Andrew Walden @ 12:40 PM :: 11434 Views :: Ethics, Hawaii State Government, Law Enforcement, Tax Credits, Taxes

DoTax Employees Secretly Arrested, Fired

by Andrew Walden

In the former Soviet Union, underground journalists risked their lives to publish ‘Samizdat’ news--often plucking crumbs of information from the state-owned media, reading between the lines to tell tales not otherwise revealed in the official press.  In Hawaii, we find ourselves picking through the “Whatever Happened to…” column in the Star Advertiser.

On January 31, we were treated to this tender morsel:

QUESTION: Whatever happened with the state investigation of internal security breaches in the state Department of Taxation’s computer database discovered in 2011, and which resulted in disciplinary action against some employees?

ANSWER: A number of tax department employees who were investigated in connection with the security breaches have been “arrested and relieved of their duties,” said state Rep. John Mizuno, vice chairman of the House Legislative Management Committee, which is monitoring the case.

Mizuno said he spoke with members of the governor’s information technology staff, but said he didn’t have additional details of the investigation, such as the number of employees arrested.

The department announced on Dec. 15, 2011, that an audit uncovered breaches of its computer database going back at least to 2008. The department said it referred the matter to the state attorney general and had placed employees on unpaid administrative leave.

Mallory Fujitani, department spokeswoman, said this month that 21 department employees were investigated, up from the 14 originally reported.

Fujitani said she could not say if the employees are back at work, still on leave or no longer with the department.

Why were DoTax employees arrested and by whom?  When were they arrested? And what are they charged with?  The scandal has been brewing since at least 2008 with only the most cursory and sporadic interest from the ‘official’ media.  Five years later there are no answers to these questions.  Samizdat-style, writers are left with is a trail of crumbs starting with a December 15, 2011 news release from the Governor’s office:

The Department of Taxation has referred to the Department of the Attorney General possible internal security breaches for review and investigation. Governor Neil Abercrombie today released the following statement:

“To the extent that any wrongful activity has taken place, anyone who has participated in or has had knowledge of these activities that date back to at least 2008 will be brought to account.

“The Department of Taxation and the Department of the Attorney General will be taking the necessary actions as deemed appropriate.”

The akamai reader will note that this short and information-free announcement purports to identify the problem, identify the culprits, and pronounce sentence -- without actually identifying anybody or anything.

A short, cryptic Star-Advertiser article added:

The state Department of Taxation announced today that it has placed several workers on administrative leave without pay this week, following the discovery of an internal security breach of the department's tax database.

The breach was found during an audit of the department's security systems and internal controls this year, department officials said. The incidents occurred at least as far back as 2008 and were referred to the state Attorney General's office for investigation, they said….

Donalyn Dela Cruz, spokeswoman for Gov. Neil Abercrombie, said the breach was an "internal matter" and "preliminarily, there is no need for the public to feel that their information has been breached."

Where do the trails lead?  There are five possibilities:

1) The year 2008 also pops up in a report by then-State Auditor Marian Higa: “Audit fuels “clinically psychotic” HGEA effort to strangle tax collection.”

2) As Abercrombie pushed massive tax hikes through the 2010 legislative session, DoTax lost and then found $134M.  The timing allowed Abercrombie to scream ‘poverty’ while tax hikes were debated and then quietly clean up the accounting after legislators had done the deed.  Here are the details: 

3) October 3, 2011: Why Stop at $500K? DoTAX Quietly Multiplies Hawaii Solar Tax Credit

4) June 24, 2012: Audit: State Gave Away $1B Act 221 Tax Credits Without Verification of Eligibility

5) Some other alleged criminal activity within the Department coming under the rubric of “internal security breach of the department's tax database.”



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