Housing Scandal Update: Sentencing for all four defendants in the federal fraud case involving abuse of Hawaiʻi County’s system of awarding credits for affordable housing has been postponed yet again.
Ex-county employee Alan Rudo, who pleaded guilty in 2022 to charges of fraud, is now scheduled to be sentenced on February 17.
Sentencing for the three remaining defendants, convicted in June for their role in the scheme, is set as follows: Paul J. Sulla Jr., January 28; Gary C. Zamber, January 30, and Rajesh Budhabhatti, February 6.
According to court records, the delayed sentencing is owing to “other matters pending before the court and the length and breadth of the pending substantive motions in this matter.”
All four defendants remain free pending sentencing. However, in November, the U.S. attorney filed a request with the court to revoke Sulla’s bond and order him to be detained. The court heard that request, and Sulla’s lengthy response to it, on December 4.
In requesting Sulla’s detention, the government presented evidence that Sulla had engaged in the practice of law even after he was suspended from practice by the state Supreme Court on July 29. On August 18, Sulla provided legal advice to a woman seeking help with the settlement of her brother’s estate, receiving $1,200 for arranging power of attorney and $1,500 “as a deposit toward … [writing a] living trust … not includ[ing] deeds or travel.” When the client found out that Sulla was suspended from the practice of law and confronted him, Sulla told her, according to a statement from an FBI agent, that “he still wanted to work for her through Lockey White. Meaning [the client] would pay Lockey White in name but Sulla would do all the work and take the payment.”
(Lockey White has a law practice, Lockey Legal, in Hilo, in an office that doubles as a gallery for her art, Lockey Originals.)
Following Sulla’s arraignment in 2022, he was released, subject to certain conditions, including that he not violate federal, state, or local law and that he not “use or possess illicit drugs.” In 2024, the government asked that his bail be revoked after Sulla tested positive for THC twice in June 2024 and failed to report for drug testing in July. He was allowed to remain free on bail.
Given Sulla’s history, the government argued last month that he posed a flight risk and “is unlikely to abide by any condition or combination of conditions of release.”
“Sulla has exhibited a pattern of deceptive and dishonest conduct throughout this case by secretly using controlled substances and failing to submit to drug testing, … making false statements to the [Office of Disciplinary Counsel] regarding the facts of this case, committing perjury at trial, and secretly practicing law while under suspension,” the government argued.
The court ultimately chose to revoke Sulla’s release and ordered him to be detained.
More Kapalua Water Issues: The state Public Utilities Commission has issued an order in a case involving the question of whether Maui Land & Pineapple, which provides irrigation water to Kapalua golf courses owned by TY Management among other clients, should be regulated as a utility.
Short answer: No.
“Based on consideration of the plain text of HRS §269-1, … the commission’s precedent, the undisputed facts of MLP’s water delivery service … and MLP and TY’s arguments, the commission finds that MLP is not a public utility because MLP does not hold itself out, expressly or impliedly, as engaged in the business of serving water to the general public,” the commission stated in its order.
TY had asked the commission to find that MLP was a utility after MLP announced significant increases in its irrigation water delivery rates last fall. The PUC order, issued December 1, resolves that issue.
Another customer affected by MLP’s announced increase in water charges is Hawaiʻi Water Service – Kapalua, which receives both potable and non-potable water from MLP. HWS filed last month for a general rate increase and is asking the PUC to, among other things, approve a pass-through charge so it can respond to MLP raising its water delivery charges immediately without seeking prior PUC approval.
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