By Cherrie Anne E. Villahermosa
Variety News Staff

THE former senior executive officer of the United Micronesia Development Association has pleaded guilty to giving false statements in connection to receiving millions of dollars of fees generated from certain UMDA tax shelter transactions.
Michael Grandinetti was charged in the U.S. District Court for the Southern District of New York.
At the hearing, according to the Associated Press, Grandinetti, 54, said he lied to a prosecutor and an Internal Revenue Service agent when he told them in a March 2006 telephone call that he had disclosed to the UMDA’s board of directors that he received secret side payments from a group of tax shelter promoters.
“The statement was not true and I knew it was not true,” Grandinetti said prior to entering his plea.
He faces up to five years in prison on the charge. Bail was set at $10,000.
UMDA, a Saipan-based regional investment firm, yesterday declined to comment.
Grandinetti was served with a subpoena at UMDA’s headquarters on Saipan on March 21, 2006.
According to the prosecution, Grandinetti admitted receiving and sharing with one of the promoters fees generated from UMDA tax shelter transactions but falsely claimed he had disclosed it to the UMDA board of directors.
Grandinetti was arraigned on Jan. 11 and appeared with his counsel, Larry Krantz.
Grandinetti pleaded guilty to the charge.
Judge Thomas P. Griesa set the sentencing for Jan. 8, 2008 at 4:30 pm.
Grandinetti is a certified public accountant and a former partner at one of the world’s largest accounting firms.
Between 1994 and the present, Grandinetti was a senior executive officer of the UMDA, which is engaged in the purchase of operation and sale of various assets, including cable television systems that serve subscribers on Guam and the CNMI.
UMDA has also invested in, owned and managed a portfolio of companies operating in the tourism, telecommunications and airline industries.
Because of its investments activities and ownership of various entities, UMDA received or stood to receive millions of dollars of income during, among other periods, the 1996 and 1997 tax years.
According to the prosecution, upon learning of UMDA’s receipt or impending receipt, of that income, certain tax shelter promoters in the United States spoke with Grandinetti and suggested that UMDA engaged in tax shelter transactions in order to have UMDA avoid having to pay millions of dollars of Saipan corporate income taxes.
As part of his discussions with certain tax shelter promoters including, among others, one based in Denver, Colorado, who was then a partner at a major international accounting firm, and another based in or around Los Angeles, California, Grandinetti agreed to share with the promoters certain portion of the fees that would be generated by the promoters and others as a result of UMDA’s decision to engage in the tax shelter transactions.
As a result of UMDA’s participation in tax shelter transactions, millions of dollars of were generated by the promoters which fees were divided among the promoters and shared with Grandinetti.