Lawsuit filed in condo association theft case

  • Scott and Penny Sherley (Facebook photo)
  • HOLLYN JOHNSON/Tribune-Herald The Kawili Regency condomimiums in Hilo.

A Hilo condominium owners’ association is suing a former vice chairman of the state Real Estate Commission and his wife for allegedly embezzling about $120,000 in funds.

The civil lawsuit was filed Monday in Hilo Circuit Court by Hilo attorney Steven Strauss on behalf of Kawili Regency Association of Unit Owners. The defendants are Scott A. Sherley, Penny T. Sherley, SRH Inc., a Maui real estate company doing business as ERA Pacific Properties, and Stephen W. Hogin, SRH’s president.


The suit claims conversion, theft, fraud, breach of fiduciary duty and negligence and seeks general and special damages, including costs of investigation, accounting and legal services.

Both Sherleys were indicted in December on two counts each of first-degree theft for the alleged embezzlement at the Kawili Regency, which is at 34 E. Kawili St. in Hilo and the revocable living trust of Edward G. Pereira and Frances G. Pereira, which are not plaintiffs on the civil suit. According to police, the amount allegedly misappropriated from the Pereira trust, owner of Pereira Apartments, was $135,633.

Both Sherleys have pleaded not guilty to both theft charges, which are Class B felonies punishable by up to 10 years imprisonment. Scott Sherley’s trial is scheduled for Sept. 10 before Hilo Circuit Judge Greg Nakamura, while Penny Sherley is slated for trial Nov. 19 before Hilo Circuit Judge Henry Nakamoto.

“They’re looking for restitution; they want to get paid back,” Strauss said Wednesday of the Kawili owners’ association. “… There’s potentially a restitution claim in there, but it’s unlikely. (The Sherleys) have one piece of property that we’re aware of. I don’t know if they have significant funds, likely not. Who knows?”

According to court records, the property, at 15-611 S. Puni Mauka Lp. in the Hawaiian Shores subdivision in Pahoa, is in foreclosure. According to county tax records, the market value of that home is $218,700.

“Then, there’s the broker, who has responsibility under the statutes,” said Strauss, referring to Hogin and his company. “The broker’s responsibility includes, for example, ensuring that annual audits and financial accounting is performed.”

Strauss said the audits weren’t performed for at least five years prior to to the Kawili owners’ association terminating Scott Sherley’s management contract in August 2016.

Scott Sherley was a licensed real estate broker, and Penny Sherley, aka Penny Honda, a licensed real estate salesperson. According to the state Department of Commerce and Consumer Affairs website, both were stripped of their licenses for five years on Jan. 26, 2018.

Scott Sherley was also vice chairman of the state Real Estate Commission until he apparently stepped down following a monthly meeting on Aug. 26, 2016. He had been a member of the regulatory panel since 2010.

He’s described as a real estate educator in several locations online, and his Facebook page describes him as “Instructor/Provider/Owner at REAL Class INC.”

The company’s Facebook page says REAL Class is “Providing Education &Training throughout the State of Hawaii, specializing in topics on Fair Housing, Property Management, Condominium Ownership, Americans with Disabilities Act and Service Animals.”

In a 27-minute YouTube video, Scott Sherley addresses “Medical Marijuana, The Law and Your Condo.”

He also started a page on the legal crowdfunding website Funded Justice titled “Please Help The Sherleys Raise Legal Funds.”

The crowdfunding page states a goal of $10,000 and, as of Wednesday, indicated $11,680 has been raised from 88 contributors in a 83-week period.


“After 31 years of helping the real estate industry and agents and the Hawaii community, and asking for nothing in return for myself, and never having a complaint filed or action made against me in all those years. Now I need help defending myself,” Sherley wrote on the fundraising page.

Email John Burnett at jburnett@hawaiitribune-herald.com.