2 Plead Innocent in Honda Case : Courts: The former executives, one a Laguna Hills man, are accused of defrauding the car firm of millions of dollars in kickback scheme.

CONCORD, N.H. — Two former American Honda Motor Co. executives, accused in a kickback scheme that allegedly defrauded the company of millions of dollars, pleaded innocent Thursday in U.S. District Court here.

Lawyers for former Senior Vice President S. James Cardiges, 48, of Laguna Hills, called Cardiges a scapegoat but declined to elaborate.

“We’re confident the evidence will ultimately show that Jim Cardiges didn’t defraud anyone, including American Honda,” said his lawyer, Philip Israels of Sherman Oaks. Cardiges is charged with racketeering.

Damien Budnick, 45, of Orlando, Fla., pleaded innocent to conspiracy to commit mail fraud.

Indictments against the two men and three others charge them with accepting cash and gifts, including Rolex watches, luxury cars, furniture, real estate and, in Cardiges’ case, 10 $1,000 business suits. Investigators allege that the kickbacks were part of a scheme involving 30 to 40 of Honda’s hundreds of U.S. dealers.

The allegations, spanning the years from 1979 to 1992 and involving roughly $10 million, include people paying as much as $750,000 for the right to open dealerships for Hondas and the company’s luxury Acura cars. In other cases, dealers paid to get larger allocations of popular models and executives got kickbacks from inflated payments for advertising and training, prosecutors said.

The others charged are John Billmyer of Raleigh, N.C., David Pedersen of Roswell, Ga., and Dennis Josleyn of Penn Valley, Calif. They are to be arraigned within the next two weeks.

All five were arrested last month.

Eight other former Honda sales executives have pleaded guilty to fraud- and bribery-related charges, including conspiracy.

U.S. District Magistrate William Barry set a trial date of June 7 for Cardiges and Budnick, who remain free on bail.

Cardiges was the top U.S. sales executive in the Honda division of American Honda. His lawyers say he is now in private business but would not say where or what he does.

During Cardiges’ arrest, FBI agents seized corporate, banking and financial records from his home, as well as some gifts he allegedly accepted from Honda dealers.

On Thursday, Assistant U.S. Atty. Michael Connolly said Cardiges’ lawyers looked through the boxes of material and removed documents they say are protected under the attorney-client privilege.

Connolly said he wants to check what was taken to ensure that it is privileged and asked Barry to bar defense lawyers from alleging that the evidence is tainted if the government examines it.

Cardiges’ lawyers refused to go along, however, and Barry sided with them. Connolly thus must trust the defense or check the evidence and risk not being able to use it.

“You’re on the horns of a dilemma, sir,” Barry told Connolly. “That’s one of the perils of the job of a U.S. attorney.”

The yearlong investigation was prompted by a civil lawsuit filed in 1991 by a New Hampshire Acura dealer, Richard Nault. Nault alleged that American Honda forced him out of business by failing to deliver all the cars he had been promised.

The suit was settled for a reported $5 million last year, but U.S. District Judge Steven McAuliffe ordered an investigation of the bribery allegations.