GUAM SENATOR INDICTED FOR FRAUD

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By Katie Worth

HAGÅTÑA, Guam (Pacific Daily News, Mar. 31) - Secretly taping and later testifying against his former colleague and friend Gil Shinohara didn't spare former Senator Willie Flores from a federal indictment.

Flores was indicted by a federal grand jury yesterday on charges of bank fraud and money laundering involving his investment in Pedro's Plaza.

According to the indictment, business partners Flores, Shinohara, businessmen Takahisa Goto and Keun Yil Kim, who bought Pedro's Plaza in May 1998, took out more than $3 million in loans from the Bank of Guam to buy and renovate the building.

However, according to the indictment, not all of those funds were used to improve the building. Instead, the money went into personal accounts and was not spent on improvements on the building, the indictment alleges.

Flores was a key witness in the trial against Shinohara this January. Shinohara was former Governor Carl Gutierrez's chief of staff and was indicted last year on 17 charges ranging from money laundering to attempting to defraud FEMA.

Last year, a federal judge split the charges against Shinohara in half, and agreed to try both cases in San Francisco because of concerns that a Guam jury would be biased against Shinohara.

The first trial, in January, resulted in an acquittal. The second trial, on charges surrounding the same Pedro's Plaza scheme, will begin later this month.

In the January trial, prosecutors played several tapes that Flores secretly recorded of his interactions with Shinohara. Flores said he'd agreed to cooperate with the FBI's investigation of Shinohara in order to save himself from the prospect of going to trial in the Pedro's Plaza scheme.

As part of the evidence in that trial, prosecutors produced an incomplete plea agreement made with Flores in 2002. At the time, Flores agreed to plead guilty to one charge of money laundering conspiracy and cooperate in the federal investigation of Shinohara, hoping that the U.S. Attorney's office would not prosecute him on any other counts.

However, though the plea agreement was signed by Flores and his then-attorney Frederick Kerley on April 17, 2002, it was never signed by the U.S. attorney. The agreement stated that the government would sign the plea agreement depending on how cooperative Flores was, or "if the United States, in its sole discretion, believes (Flores) has provided 'substantial assistance.'"

Yesterday, first assistant U.S. Attorney Russell Stoddard said that the U.S. had assessed the situation.

"The agreement we had with Flores was that at the end of the cooperation we would determine if it would be appropriate for him to plead to a criminal charge and that's in essence the nature of the agreement we have (with) Flores," he said.

He would not comment on whether Flores is expected to testify in Shinohara's upcoming case.

Flores, reached by phone at his home last night, deferred comments to his attorney, Patrick Civille.

Civille said he had not seen the indictment, so he could not make specific comments on the case. However, when asked whether Flores will continue to cooperate in the case against Shinohara, Civille said yes.

Tumon project

Flores was elected to the Guam Legislature in 1996 and served from January 1997 to January 1999. He owned W.B. Flores and Company, which, the indictment reads, "derived significant business from the delivery of services to contractors engaged in capital improvement projects with the government of Guam, including the Tumon Beautification Project."

The indictment notes that Flores, Shinohara, Goto and Kim took out a $3 million term loan from the Bank of Guam, of which $2 million was spent to buy Pedro's Plaza. The remaining $1 million was supposed to be spent on renovations and repairs.

Shortly after that, the indictment reads, the Bank of Guam agreed to lend the business partners an additional $300,000 for more renovations and repairs at Pedro's Plaza.

According to the indictment, Flores and the other partners sent a letter to Bank of Guam stating that the money would be used by Kim's and Goto's companies to repair the property's air-conditioning units, doors and windows. Flores allegedly submitted quotations and estimates to the Bank of Guam for the purchase of the air-conditioning units, doors and windows.

"After the $300,000 disbursement by the Bank of Guam, the partners used the money for personal purposes unrelated to the renovations and repairs of the Bank of Guam's collateral, Pedro's Plaza," the indictment alleges.

According to the indictment, the money was disbursed among the business partners.

Stoddard said he couldn't comment on whether there will be any other indictments in the case, or whether he believes this indictment will affect Shinohara's trial later this month.

In Shinohara's January trial, Shinohara defense attorney Michael Green asked Flores if he had cooperated with the federal investigation with the hope of being able to "walk away" from his own legal problems with them. Flores said he didn't understand the question.

"Did you ever think if you didn't cooperate against a man who was like your brother, there might be a day your children might have to visit you in a federal penitentiary?" Green asked in January.

"The thought crossed my mind, yes," Flores responded.

April 1, 2005

Pacific Daily News: www.guampdn.com

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