A federal trial is set to start today for two Hilo attorneys accused of receiving Hawaii County affordable housing credits and land conveyances worth at least $10.98 million, with no intention of developing affordable housing.
A flurry of last-minute motions heard Monday delayed jury selection to today for the trial of attorneys Paul Sulla Jr., 78, and Gary Zamber, 55 — along with 64-year-old businessman Rajesh Budhabhatti — in the courtroom of U.S. District Judge Jill Otake in Honolulu.
All three are charged with nine counts of conspiracy to commit honest services wire fraud and a single count of conspiracy.
In addition, Sulla is charged with one count of money laundering. Three of the wire fraud charges for each defendant were added to the original charges in August 2022.
Alan Scott Rudo — a former housing specialist in the county Office of Housing and Community Development from 2006 to 2018 — pleaded guilty in August 2022 to conspiracy to commit honest services wire fraud by awarding affordable housing credits to false limited liability companies established by the alleged co-conspirators, and then selling those credits to other developers for a profit.
Rudo’s alleged share of that profit was at least $1.8 million. As part of his guilty plea, Rudo agreed to forfeit his interest in the recovered funds and housing credits, in addition to real estate connected to the charges. He also has agreed to a monetary judgment of more than $2.1 million against him.
According to court documents and information presented in court, Rudo solicited and accepted multiple bribes and kickbacks from Sulla, Zamber and Budhabhatti while working for the OHCD.
Sentencing for Rudo, who agreed to testify for the prosecution, has been delayed numerous times. He’s now scheduled to be sentenced Aug. 13 before Otake.
Prosecutors for the case are Assistant U.S. Attorneys Mohammad Khatib and Margaret Nammar, and trial attorney William Gullotta. Defense attorneys are Birney Bervar for Sulla, Gary Springstead and Richard Sing for Zamber, and Federal Public Defender Salina Kanai and Assistant Federal Public Defender Melinda Yamaga for Budhabhatti.
Otake on Monday denied a motion by Kanai to withdraw from defending Budhabhatti. Kanai claimed prosecutors had “at the eleventh hour, manufactured a conflict of interest and/or the appearance of one” regarding her, in a written motion requesting the court reconsider a ruling regarding the inadmissibility of “proffer statements” made by Budhabhatti. Proffer statements by defendants are made generally seeking a more favorable outcome in a case.
Kanai claimed “the government lodges the allegation that I am perpetuating a fraudulent defense and am otherwise advocating for Mr. Budhabhatti in a way that raises a substantial question as to my honesty, trustworthiness, or fitness, and suggesting that all the lawyers in the courtroom and this court should report my conduct to the Office of the Disciplinary Counsel.”
Otake also granted, in part, and denied, in part, the prosecution’s motion for reconsideration of Budhabhatti’s proffer statements.
Her ruling stated that if Budhabhatti’s lawyers argue that the alleged housing credits scheme was “self-dealing” by Rudo and didn’t involve bribes and kickbacks, prosecutors may use rebuttal testimony from Budhabhatti’s proffer statement, except for any statement he made using the terms “bribes” or “kickbacks.”
The court also granted a request by Zamber’s attorney, Springstead, to file a motion to dismiss the indictment “based on newly discovered evidence.” The document alleges “grand jury abuse, use of false or perjured testimony as the basis of the indictment” and alleged exculpatory evidence not presented to a grand jury, as well as pretrial statements or reports made by government witnesses.
Otake’s order said the motion shall not exceed 15 pages, including attachments.
According to court documents, Rudo abused his position with the OHCD to ensure the county approved three affordable housing agreements, or AHAs, involving Luna Loa Developments LLC, West View Developments LLC and Plumeria at Waikoloa LLC.
Authorities say those companies were variously owned, controlled and used by the defendants to obtain public benefits related to development projects in South Kohala, Kailua-Kona and Waikoloa.
Through the AHAs, the defendants fraudulently obtained at least $10.98 million worth of land and excess affordable housing credits, prosecutors allege.
The feds also contend that Sulla laundered the proceeds of the alleged conspiracy and scheme in an attempt to conceal, among other things, the source, location and ownership of those proceeds.
In addition to Rudo, the prosecution’s witness list includes: Pat Tummons, a journalist who broke the story leading to these court cases in her newsletter Environment Hawaii; former mayor Harry Kim; Roy Takemoto, Kim’s managing director; former OHCD administrators Susan Kunz, Stephen Arnett and Neil Gyotoku; former OHCD deputy administrator Harry Yada; Deputy Corporation Counsel Malia Hall; former deputy corporation counsels Ronald Kim and Amy Self; planning consultant Sidney Fuke; developers Doug Bigley, Danny Julkoski and Carlo Mireles; Office of Disciplinary Counsel Chief Raymond Kong; plus FBI agents and representatives of banks, Title Guaranty Hawaii, Google and Yahoo.
The defendants’ witness list includes: Rudo, Kunz, Gyotoku, Hall, Bigley, Yada and Arnett; plus former county managing director Bobby Command; County Auditor Tyler Benner; OHCD Community Development Manager Anne Bailey; Amy Bautista, former OHCD secretary; real estate brokers Margaret Reynolds and Noah Beatty; developer Rayson Noguchi; dome house builder Hajjar Gibran; architect David Sands; surveyor Chrystal Thomas Yamasaki; investigators Nathan Wesley Moores and Lionel Tejada; private attorneys Michael Green and Lockey White; Deputy Corporation Counsel Keyra Wong; and Marquette University Law Professor Nadelle Grossman as an expert witness.
Conspiracy and committing honest services wire fraud carry a maximum penalty of 20 years imprisonment for each offense and a fine of $250,000 upon conviction.
Money laundering carries a maximum penalty of 20 years imprisonment and a fine of twice the value of the property involved in the transaction, which prosecutors say is more than $1 million.
Email John Burnett at jburnett@hawaiitribune-herald.com.
