I dropped into the Mike Miske trial again Tuesday morning for a few hours.

It was the third day on the witness stand for Kaulana Freitas, whose mother is Miske’s cousin. Freitas’ father, Edward “Denny” Freitas, was the responsible managing employee of Kamaaina Plumbing for several years before severing his ties to Miske around 2015.

Kaulana Freitas pleaded guilty in March 2022 to conspiring to violate the racketeering laws of the U.S. as part of the Miske Enterprise, and using a chemical weapon to attack a Honolulu nightclub. As part of the plea agreement, prosecutors dropped a second chemical weapon charge and a drug trafficking charge. He also admitted taking part in several violent robberies and assaults, as well as participating in drug trafficking activities with other Miske associates.

When I entered the courtroom, lead defense attorney Michael Kennedy was cross examining Freitas.

At one point, he asked Freitas about several photographs taken in Miske’s M Nightclub that prosecutors had earlier questioned Freitas about.

The photos apparently showed Miske with a group of others partying at the club.

I wasn’t there for the earlier testimony, so I don’t know what was considered incriminating about the photos or the associations they suggested.

But Kennedy was attempting to pound home the point that as the owner of the M Nightclub, mixing with the customers and allowing himself to be photographed with them was just a normal part of business.

“That’s what you do when you’re in business, right, standing with other people for a photo?” Kennedy asked rhetorically. “Because he owned it, and that was his business.”

Nothing controversial, Kennedy implied, and no judgements should be drawn from such photos, since it’s just something a business owner does as a routine part of doing business.

Kennedy confidently described, through his questions, how Miske had owned the nightclub for several years but sold it in 2016 to the club’s manager, Jason Yokoyama, and retained no ownership interest after the transfer.

The club was renamed “Encore,” remodeled, and its appearance changed. It was, Kennedy asserted, now a different business. Nothing to do with Miske, so nothing to see there.

It sounded good when stated in Kennedy’s authoritatively manner. But it was an argument that could come back to bite Kennedy and Miske.

Why? Because Miske’s ownership of the nightclub had been fraudulently concealed from the Honolulu Liquor Commission due to a state law that prohibits granting a liquor license to any entity in which a convicted felon owns 25% or more of the business.

Miske had been convicted of four felonies before his 22nd birthday.

Miske’s ownership and control of the M Nightclub was disguised and covered up during the entire time it was in business through an elaborate and long-running scheme to provide incomplete, contradictory, and fraudulent information to the liquor commission, using underlings as “fronts” who falsely claimed ownership while concealing Miske’s illegal controlling interest.

The prohibition against convicted felons obtaining liquor licenses is a prominent part of the license application process, which requires applicants to submit a criminal history record clearance.

INSTRUCTIONS TO LIQUOR LICENSE APPLICANTS

REGARDING THE CRIMINAL HISTORY RECORD CLEARANCE

I. LEGAL REQUIREMENTS:

Section 281-45, Hawaii Revised Statutes, provides that “No license shall be issued under this chapter:

(1) To any person who has been convicted of a felony and not pardoned (except that the Commission may grant a license under this chapter to a corporation that has been convicted of a felony where the Commission finds that the organization’s officers and shareholders of twenty-five percent or more of outstanding stock are fit and proper persons to have a license), or to any other person not deemed by the Commission to be a fit and proper person to have a license;

(2) To a corporation, the officers and directors of which, or any of them, would be disqualified under paragraph (1) of this section from obtaining the license individually, or a stockholder of which, owning or controlling twenty-five percent or more of the outstanding capital stock would be disqualified under that paragraph from obtaining the license individually.”

“On April 08, 2011, Leverage Inc. President/Director Jason Yokoyama filed application No. 1631 for a new Cabaret General liquor license at the subject location,” liquor commission records show. The application listed Jason Yokoyama as president, and Richard Aqui as secretary. It also reported Yokoyama held 70% of the company stock, with Aqui holding 10%.

Just a few months earlier, on February 28, 2011, Yokoyama appeared in place of Miske for a court hearing in a civil lawsuit, where he identified himself as the “operations manager” for Kamaaina Termite and Pest Control. He did not list Kamaaina Termite among former employers on his application.

In a personal history filed along with the application, Aqui said he had 20 years nightclub experience. Yokoyama, on the other hand, said he had no prior experience in any liquor-related business.

A temporary liquor license was approved by the commission and became effective on May 16, 2011. On June 1, 2011, Yokoyama registered the trade name, “Ocean Club at Waterfront Plaza.”

The temporary license was renewed in September to provide time for the company to finalize terms of its lease.

The renewal application described Leverage Inc. as an “S corporation” with Yokoyama and Aqui as its sole officers. Yokoyama was identified as the sole stockholder owning 25% or more of the company.

The application asked for the full names of all members of the business who had been convicted of a felony. The section was left blank.

The form included a provision that “no person other than the applicant named herein shall have any interest in the business affected by this application without prior approval of such interest by the Commission.”

As part of the licensing process, a background investigative report was filed with the commission. The report, dated September 15, 2011, identified three shareholders–Yokoyama, Aqui, and Miske–were listed as the company’s owners, with shares of 70%, 20%, and 10%, respectively, reportedly based on the company’s filing with the state’s business registration division of the Department of Commerce and Consumer Affairs.

The report noted that criminal background checks had been done on Yokoyama and Aqui, which showed “the applicants have no criminal history background.” There was no mention of Miske’s multiple prior felony convictions.

The company’s articles of incorporation for Leverage Inc., signed by Jason Yokoyama on dated March 28, 2011 and filed with the state that same day, listed Yokoyama, Aqui, and Miske as the company’s three incorporators. However, Miske’s name is crossed out, with the change initialed “JY”, apparently referring to Yokoyama’s approval of the change. A copy of the articles of incorporation are included as an attachment to the commission’s investigative report.

The following day, March 29, 2011, Yokoyama sent a separate letter to the liquor commission again spelling out the three stockholders. This was 10 days before the completed liquor license application was filed with the commission.

Unlike the information submitted with its Articles of Incorporation, or contained in its official license applications, the letter identified Miske’s 20% interest as “Class B” shares, while Aqui and Yokoyama’s share were reported as “Class A” shares.

The two classes of shares are not described in the company’s articles of incorporation.

However, the March 29 letter added a key detail: “Michael Miske 20% (class B) (individual has no decision making powers with the company)

There is no indication in the files that the liquor commission ever questioned or sought additional information about Miske’s active role in managing the M Nightclub. The government alleges that after closing the M Nightclub and reopening as Encore, the club was still owned and controlled by Miske, despite paperwork claiming otherwise.

The false reports of the company’s stockholders should have come under scrutiny by the liquor commission after a March 2, 2015 letter in which Richard Aqui denied ever having been among the company’s owners.

“I have had no association with the establishment since May 2011 and was purely brought on as a consultant/Manager and never had any ownership of the business,” Aqui wrote. “Per State of Hawaii DCCA listing, I have never owned any shares nor do I have paperwork showing that I owned any shares of this business nor did I serve as an agent of the business.”

The company’s application to renew its liquor license was filed three months later, with Aqui’s name crossed out from the list of shareholders. A handwritten note on the application, apparently by liquor commission staff, “Looks okay to remove Aqui, reports shares went to Yokoyama.” The renewal application was amended to show Yokoyama now holding 80% of the company’s shares.

Wait! Aqui’s letter didn’t say that his shares “went to Yokoyama.” He said that he had never owned any shares, and that means the earlier reports filed with the commission were false.

Again, there is no indication that the discrepency revealed by Aqui’s letter triggered any investigation of the false statements filed by Leverage Inc between 2011 and the receipt of Aqui’s 2015 letter.

Jason Yokoyama was not among Miske’s original ten co-defendants indicted in June 2020. He was added to the list of defendants in a 2nd superseding indictment filed in July 2021. He pleaded guilty in December 2023 to a single count of wire fraud conspiracy for concealing income from the M Nightclub and thereby avoiding taxes due to the federal government. He acted according to Miske’s directions, his plea agreement states.