HONOLULU — The federal government is trying to foreclose on the assets of Sandwich Isles Communications Inc. to recover $128 million in principal and interest the company owes.
The lawsuit filed by the U.S. Department of Justice is over delinquent U.S. Department of Agriculture loans, the Star-Advertiser reported Thursday.
Sandwich Isles has an exclusive license to provide telecommunications services on Hawaiian Home Lands, and borrowed more than $166.7 million from the department to help finance its fiber optic telecommunications network across the Hawaii Islands.
Hawaii political leaders, including the late U.S. Sen. Daniel K. Inouye, supported Sandwich Isles’ efforts to obtain more loans, but according to the lawsuit filed last week company founder Albert Hee told federal officials in 2013 that the company could no longer make the payments of more than $1 million per month for its loans.
Hee was convicted of federal tax fraud in 2015 and sentenced to 46 months in federal prison for concealing from the IRS that his company deducted $2.75 million as business expenses to cover Hee’s personal expenses.
Among the supposed business expenses cited by prosecutors in the tax fraud case were $718,559 the company paid for college tuition and living expenses for Hee’s three children, $92,000 in payments for massages for Hee and $121,878 in credit card charges made by Hee for personal expenses, according to federal court filings.
The suit seeks a foreclosure judgment against Sandwich Isles and an order requiring the company’s assets be sold.
Sandwich Isles said that it is still reviewing the complaint to explore potential next steps.
“Despite these constraints, Sandwich Isles Communications continues to operate and serve our customers,” the company said.
Sandwich Isles provides telecommunications services to about 3,600 customers on Hawaiian Home Lands, but has been pummeled by legal and other challenges that threaten its survival.