In 2003, Tanaka pleaded guilty to misprision of a felony as part of a political corruption probe by the Guam U.S. Attorney's Office in which Tanaka was accused of endorsing previously-rival Democratic candidate Gutierrez in 1997 in exchange for his construction firm receiving a large government contract to build school bus shelters a few months later. Judge William Alsup sentenced Tanaka to two years of supervised release, including six months of house arrest. In the trial, Air America Radio financier Evan Montvel Cohen testified against Tanaka.
Tanaka agreed to a plea agreement with the United States Attorneys Office in Guam; there was no trial for him.
Tanaka was later implicated in allegations that he tried to influence the investigation that had been pursued against him by the U.S. Attorney's Office. In June, 2006, the USDOJ's Office of the Inspector General released their final report on their investigation into allegations made by previous interim U.S. Attorney for Guam Frederick Black that Tanaka's nephew Leonardo Rapadas replaced Black in his position as U.S. Attorney after Black called for an investigation into Washington-based lobbyist Jack Abramoff. Rapadas assumed the position after receiving President Bush's 2002 appointment. According to the investigation, "Black stated that he thought Tanaka had used his political influence to get Rapadas the nomination so that Tanaka's criminal matter would disappear." Rapadas was later recused from participation of any ongoing investigations of Tanaka. Black also claimed that Rapadas' nomination was intended to end his ongoing investigations into corruption by public officials in Guam. The OIG determined that Black's allegations were unsupported and that Rapadas' background investigation was sufficient and his appointment appropriate.