Monday, March 04, 2024|
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A co-defendant in a federal criminal case involving alleged fraudulent use of Hawaii County affordable housing credits is seeking a postponement of the trial.
The motion to continue was filed Monday in U.S. District Court by Salina Kanai, the federal public defender representing Big Island businessman Rajesh Budhabhatti.
Budhabhatti is accused along with Hilo attorneys Paul Sulla Jr. and Gary Zamber of what a court document describes as “a scheme to defraud and deprive the (Office of Housing and Community Development), the county and its citizens of their intangible right to the honest services of their public officials through bribery and kickbacks.”
An updated indictment filed Aug. 4 charges Sulla, Zamber and Budhabhatti with nine counts each of honest services wire fraud and one count each of conspiracy. Sulla also is charged with money laundering.
All three have pleaded not guilty.
All of the charges are punishable by up to 20 years in prison.
The wire fraud and conspiracy charges also carry a potential fine of $250,000, and money laundering carries a potential fine of twice the value involved in the transaction. The indictment accuses Sulla of laundering more than $500,000.
A fourth alleged co-conspirator, Alan Scott Rudo, a former community development specialist in the the OHCD, pleaded guilty in August of conspiracy to commit honest services wire fraud and admitted to accepting more than $1.8 million in bribes.
According to the plea agreement, in return for Rudo’s cooperation, prosecutors have agreed not to file additional charges, including money laundering.
Rudo could face up to 20 years in prison, but likely will receive a lighter prison term. His sentencing, which was set for next month, has been moved back to May 23, 2023, before U.S. District Judge Jill Otake.
The indictment alleges Sulla, Zamber, Budhabhatti and Rudo “collectively created, owned, managed, controlled and used Luna Loa Developments LLC, West View Developments LLC and Plumeria at Waikoloa LLC to make it appear that the companies would develop affordable housing, when in fact they had no intention to do so.”
Those companies, as well as two limited liability corporations and two trusts, were used to deceive the OHCD, the county and its residents and to obtain and distribute affordable housing credits, land and money, authorities allege.
The government alleges the three received affordable housing credits — which can be transferred to other developers — and land conveyances with an aggregate value of at least $10.98 million.
“Despite receiving these awards, the conspirators did not develop any affordable housing units as promised,” the indictment states.
The four men then sold the credits and land they received, authorities said. The federal government later recovered and seized more than $2.3 million and 45 affordable housing credits connected to the charges.
The indictment also seeks cash forfeitures of at least $925,724 from Budhabhatti, at least $551,225 from Sulla, and at least $171, 792 from Zamber.
The county has petitioned the court after the feds filed notice of forfeiture and seizure of assets. The county wants the 45 housing credits, plus $938,426.16 from the sale of a Kiwi Street lot in Kailua-Kona known as Lot 16-A of Kealakehe Homesteads, and Lots 16-B and 16-C. Title of those two lots, valued by the county as $616,800 collectively, is held by West View Developments.
Lots 16-B and 16-C are under long-term lease from West View to Honua‘ula LLC, a Texas limited liability company which has also petitioned the court for determination of its interest.
Ronald Kim, a Hilo attorney representing Honua‘ula, told West Hawaii Today in October his client “is an innocent bona fide purchaser” of the lease and “seeks to provide the community with affordable housing.”
Trial for Sulla, Zamber and Budhabhatti is set for April 24, 2023, after prosecutors in the case were granted their own postponement from the original Oct. 11 trial date.
Otake’s order granting the postponement called the case “so unusual and complex … that is unreasonable to expect adequate preparation for pretrial proceedings or the trial itself within the time limits” — which, according to the U.S. Code, is 70 days to commence trial after the initial appearance of the defendant(s) in court.
“The ends of justice served by granting the continuance outweigh the best interest of the public and the defendants to a speedy trial,” Otake wrote.
In her motion to delay trial for Bhudabatti, Kanai said that as of Dec. 5, discovery documents in the case comprise “approximately 43,740 pages,” and the current trial date denies her “reasonable time for effective preparation for trial.”
Kanai added all parties are “agreeable to a date of Aug. 21, 2023.”
If the defense request for a postponement in the trial is granted, it is likely Rudo’s sentencing also will be pushed back until after the trial’s completion, because his plea deal requires him to testify at his co-defendants’ trials, if requested.
Email John Burnett at email@example.com.
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