Federal court documents outlining charges against two Hilo attorneys and a Pahoa businessman claim the trio, and a county official who has already pleaded to wrongdoing, fraudulently obtained almost $11 million in land and affordable housing credits over a six-year-plus period — without building any affordable housing.
A federal grand jury on July 21 indicted 76-year-old Paul Sulla Jr. and 53-year-old Gary Zamber, both lawyers in Hilo.
Sulla and Zamber are charged with six counts of honest services wire fraud and one count of conspiracy to commit honest services wire fraud. Sulla also is charged with a single count of money laundering.
It’s alleged Sulla laundered the proceeds from the conspiracy and scheme to commit honest services wire fraud in an attempt to conceal, among other things, the source, location and ownership of those proceeds.
Also on July 21, 62-year-old Rajesh P. Budhabhatti — who’s described on LinkedIn as the CEO of a Pahoa-based remote sensing company, Space Technology for Farmers — was charged with conspiracy to commit honest services wire fraud.
The three, along with Alan Scott Rudo, a 55-year-old former housing specialist for the Hawaii County of Office and Community Development, are accused of abusing a program requiring developers to include affordable housing in their projects.
Developers who agree to build more new affordable housing units than required by the county code can earn credits, which can be sold or transferred to other developers to satisfy affordable housing requirements for other projects, documents state.
Clare Connors, U.S. Attorney for Hawaii, said Rudo, while working for OHCD, solicited and accepted bribes and kickbacks from Sulla, Zamber and Budhabhatti to ensure the county approved three affordable housing agreements involving Luna Loa Developments LLC, West View Developments LLC and Plumeria at Waikoloa LLC.
Those companies, owned and controlled by the defendants, were used to fraudulently obtain at least $10.98 million in land and affordable housing credits related to development projects in South Kohala, Kailua-Kona and Waikoloa, according to documents.
The properties included three lots totaling 13 acres in Kealakehe Homesteads in Kailua-Kona, 11.8 acres in Waikoloa and 4.6 acres in South Kohala.
The four men then sold the credits and land they received, authorities said. The federal government recovered and seized more than $2.3 million and 45 affordable housing credits connected to the charges, according to prosecutors.
Rudo, who took at least $1.8 million in bribes and kickbacks, pleaded guilty July 18 before U.S. Magistrate Judge Rom Trader. He’s scheduled to be sentenced Oct. 31 by U.S. District Judge Jill Otake.
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’s also agreed to a monetary judgment of more than $2.1 million against him.
Budhabhatti is scheduled to plead guilty on Aug. 1.
His attorney, Salina Kanai, a federal public defender, declined to comment.
This isn’t the first time Sulla has been accused of or indicted for alleged wrongdoing in a real estate transaction.
In December 2019, a Hilo grand jury indicted him on state charges of first-degree theft and second-degree forgery in connection with a narrow piece of property with an easement road in lower Puna. County prosecutors alleged that in 2016, Sulla forged a deed to deprive Leonard G. Horowitz and/or the Royal Bloodline of David of the property.
Those charges were later dismissed by Hilo Circuit Judge Peter Kubota.
Both Sulla and Zamber proclaimed their innocence of the charges on Monday.
“All I can say is I had no criminal intent, and I was deceived by my clients and the county, and I can account for my actions,” Sulla said. “The charges brought against me are over broad. I was never involved in the sale of affordable housing credits and, if anything, I helped facilitate the construction of affordable housing units in the one project I was involved in. As I reach my 50th year as an attorney, approaching retirement, breaking the law in any way is the last thing I would do.
“All this will come out in due time.”
In an email, Zamber wrote, “The Constitution presumes that someone accused of a crime is innocent until proven guilty.”
“While these allegations are serious, they are just that: allegations. They have been around for some time,” he continued. “I have been cooperative with the FBI and the government since the first time they contacted me. I have nothing to hide. I am confident that, as the case plays out in court, the truth will come out and my innocence will be proven in court … not the media.”
All of the alleged charges in this case carry a maximum penalty of 20 years imprisonment. Honest services wire fraud and conspiracy to commit honest services wire fraud also carry a potential fine of $250,000, while money laundering carries a potential fine of twice the value of the property involved in the transaction, which, according to prosecutors, is more than $1 million.
The Associated Press contributed to this story.
Email John Burnett at jburnett@hawaiitribune-herald.com.