Arthur Lee Ong’s career as one of the state’s biggest gun dealers is over, his lawyer said Monday after a jury in federal court found Ong guilty of conspiracy to defraud the government and failing to file income tax returns on time from 2000 to 2006.
Ong, 53, faces up to five years in prison for the conspiracy and each of six counts for the tax returns when he is sentenced in March. At that time he will become a convicted felon and be prohibited from possessing or owning a firearm.
Ong owns Magnum Firearms in Kakaako, which has long provided firearms and related products and services to the military, state and local law enforcement agencies and consumers.
The government says Ong conspired with convicted tax protester Royal LaMarr Hardy and Hawaii island lawyer Paul Sulla to evade paying taxes and stop filing individual income tax returns since 1994.
The prosecution said Ong set up sham trusts into which he diverted his earnings to evade paying income taxes. The government says Ong controlled the trusts and used money from the accounts to pay for personal expenses, including buying luxury cars and real estate.
Ong said he relied on the advice of Sulla, to whom he was referred by Hardy, and that because of his limited education, he did not know he was breaking the law. He said he just wanted to set up the trusts to benefit the Hawaii Baptist Foundation, his alma mater, Hawaii Baptist Academy, and Olivet Baptist Church.
His lawyer, Robert Fricke, said Ong has since paid all the income taxes he owes, including interest and penalties.
Prosecutor Timothy Stockwell said the amount Ong paid was computed by his own expert, not the government’s, and that he has yet to pay any back state income taxes.
Hardy and Sulla were not charged with any crimes and were identified in the indictment against Ong by their initials.
In 2005 Hardy was sentenced in federal court for wilfully failing to file income tax returns and conspiracy to defraud the U.S.