Feds outline details of 5-year-long investigation of affordable housing scheme on Big Island

By Jefferson Tyler

Click here for updates on this story

    HAWAII (KITV) — After a more than 5-year investigation, the US Department of Justice brought down the hammer today on four men in what’s it’s calling a conspiracy to defraud the County of Hawaii. One of them is a county official who was supposed to help create low-income housing on the Big Island.

Businessman Rajesh Budhabhatti is expected to enter a plea next week. The Department of Justice says a federal grand jury has returned an 8-count indictment against attorneys Paul Sulla Jr and Gary Zamber. With Rudo waiting on his sentencing, charges for the other three include types of wire fraud, with Sulla Jr and Zamber also facing a conspiracy charge.

The podium being handed off between officials today as details are laid out about alleged fraud on Hawaii Island involving affordable housing credits and the land where the housing was supposed to be located.

“The idea behind the affordable housing credits is, they can be bought and sold by developers in lieu of building affordable housing,” said U.S. Attorney Clare Connors. An intricate web of details was laid out by officials detailing where the sale of these valuable credits became a crime.

According to court documents, the lynchpin in the alleged scheme revolves around housing and community development specialist Alan Rudo whose job involved facilitating the building of low income housing on the island.

“It was clear that Mr. Rudo was employed by the county. That was the position of trust that allowed him to move through these different levels of approval,” said Connors.

According to the U.S. Attorney, three other men joined with Rudo in an alleged scheme to defraud the county. “These individuals created fictitious companies and engaged with other individuals who are charged separately to make it seem they were going to build homes that hard working families could afford to purchase,” said FBL Special Agent In Charge Steven Merrill.

Waikoloa, Kailua-Kona and South Kohala all had developments involved. “Mr. Paul Sulla Jr and Mr. Gary Zamber helped Mr. Rudo to conceal his interests through a series of trusts and other entities that made it difficult for the county to understand that Mr. Rudo stood to benefit from the transactions,” said Connors.

Companies, Luna Loa Developments, West View Developments, and Plumeria at Waikoloa were to get affordable housing credits, sell them, buy the land the low-income homes were supposed to be on, and then also sell that for a profit.

An indictment says Rudo tried to get owners in Kailua-Kona to sell to his company, by pretending to represent the county and in the case of Waikoloa, one of the others allegedly pretended to own the company involved in the deal.

“The first instance with Luna Loa, I think it was the South Kohala property. They were supposed to build 106 affordable housing units on that property. They obtained the property, they sold the property. No affordable housing was built,” said Connors.

Incidents primarily took place between 2015 and 2018. The U.S. Attorney would not confirm whether Budhabhatti will plead guilty when it comes time for him to appear in court. But she did indicate a deal is either worked out or being worked out in preparation of that appearance.

Please note: This content carries a strict local market embargo. If you share the same market as the contributor of this article, you may not use it on any platform.