Company owners vying for city concession rights to a lucrative Waikiki Beach surfboard stand say they were surprised yesterday at a city meeting when Tony Rutledge, and his son Aaron Rutledge, through their company, Starr-Beachboys Inc., not only qualified to bid, but presented the highest bid over 8 competitors.

The Rutledges are under federal indictment for a long and complicated list of allegations, including defrauding the city and federal taxpayers by concealing hundreds of thousands of dollars in profit from the city surfboard rental stand they operated until 1999 under Starr-Beachboys Inc.

Despite charges pending against them for tax evasion, mail fraud and wire fraud, which will be hashed out in federal court beginning Oct. 4, 2005, the city will allow the Rutledges to re-open their beach boy stand. That is if they meet city requirements within the next few weeks, including securing a $100,000 bond.

However, some of the owners of 8 companies bidding for the contract are angered over the city

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