The Federal Communications Commission on Wednesday fined Sandwich Isles Communications, its parent company and the owner of both entities nearly $50 million for violations that resulted in millions of dollars in improper payments.
Sandwich Isles, its parent company Waimana Enterprises and owner Albert S.N. Hee were found jointly and severally liable and ordered pay $49,598,488 for violating the Universal Service Fund program rules, the agency announced. The company received over $27 million in unearned payments due to falsified cost reporting over a period of 15 years, said FCC Chairman Ajit Pai.
“This was taxpayer money intended to support deployment and maintenance of communications networks for the benefit of the people living in the Hawaiian Homelands,” said Pai.
Sandwich Isles was the exclusive carrier receiving support to deploy and maintain communications networks serving residents living on Hawaiian Homelands throughout the state via the fund’s High-Cost program.
According to the FCC, Hee used his control of Sandwich Isles, Waimana, and other affiliated companies to tap corporate funds to pay for more than $4 million in personal expenses benefiting himself and his family. That included more than $90,000 to his personal masseuse, family vacations to Europe and the South Pacific, his children’s college tuition, vehicles, and inflated salaries for his wife and children. Sandwich Isles also used funds to pay Waimana inflated rent and management fees as well as unjustified bonuses to Hee.
In 2015, Hee was convicted of criminal tax fraud and sentenced in 2016 to nearly five years in federal prison. On Dec. 5, 2016, the commission eliminated Sandwich Isles’ ability to receive additional support from the fund, took action to recover $27 million in improper payments Sandwich Isles had received, and proposed the $49.6 million fine against Sandwich Isles, Waimana Enterprises, and Hee for its apparent violations of program rules.
“The American people, and particularly, those living in the Hawaiian Homelands, deserve better. And thankfully, there is good news ahead,” Ajit said.
Next month, bidding will kick off in the $16 billion Rural Digital Opportunity Fund Phase I auction, and unserved parts of Sandwich Isles’ former service area will be eligible for bidding by service providers who will use taxpayer dollars to bring broadband to those areas.
