{"id":16540,"date":"2025-06-03T16:50:25","date_gmt":"2025-06-04T02:50:25","guid":{"rendered":"https:\/\/www.environment-hawaii.org\/?p=16540"},"modified":"2025-07-25T12:53:41","modified_gmt":"2025-07-25T22:53:41","slug":"defendants-in-affordable-housing-case-argue-it-was-self-dealing-not-fraud","status":"publish","type":"post","link":"https:\/\/environment-hawaii.org\/?p=16540","title":{"rendered":"Defendants in Affordable Housing Case Argue It Was \u2018Self-Dealing,\u2019 Not Fraud"},"content":{"rendered":"\n<p>You can\u2019t bribe yourself.<\/p>\n\n\n\n<p>That\u2019s what counsel for Hawai\u02bbi island attorney Paul Sulla Jr. said during closing arguments last month before a jury and U.S. District Judge Jill A. Otake. It\u2019s also what counsel for another Hawai\u02bbi attorney, Gary Zamber, and businessman Rajesh Budhabhatti said.<\/p>\n\n\n\n<p>In its <a href=\"https:\/\/environment-hawaii.org\/?p=14586\">case against them<\/a>, the trial for which began May 13, the Department of Justice has argued that between late-2014 and late-2021, the three men were involved in a conspiracy to provide bribes or kickbacks to former Hawai\u02bbi County Office of Housing and Community Development employee Alan Rudo in exchange for his help in securing affordable housing agreements, valuable excess affordable housing credits (made even more valuable by building restriction waivers he facilitated), and land in Waikoloa meant for the development of affordable housing.<\/p>\n\n\n\n<p>The DOJ estimated that their schemes netted them nearly $11 million and eventually charged the men with honest-services wire fraud. It also charged Sulla, who created the various \u201cshell\u201d companies involved, with money laundering.<\/p>\n\n\n\n<p>Rudo pleaded guilty to honest services wire fraud in the summer of 2022 for his part \u2014 being the \u201cinside man\u201d \u2014 in the scheme. Budhabhatti \u2014 the \u201cface\u201d of the companies that received the affordable housing credits \u2014 almost pleaded guilty later that year, as well, but backed out at the last minute, choosing instead to go to trial along with Sulla and Zamber, who the DOJ alleged were the attorneys who worked to make the schemes look legitimate.<\/p>\n\n\n\n<p>Rudo had a hidden financial interest \u2014 an ownership interest, the defendants argued \u2014 in the companies that received the agreements, credits, and land. While a public official exploiting his position to benefit companies he secretly owns is unethical, it\u2019s not illegal under U.S. Code Section 1346 regarding honest services fraud.<\/p>\n\n\n\n<p>According to a May 2020 Congressional Research Service report, under the U.S. Supreme Court\u2019s 2010 ruling in the case <em>Skilling v. United States<\/em>, which involved Enron executives enriching themselves while lying about the company\u2019s poor health, \u201cmail and wire fraud prosecutions under an honest services theory may extend only to those who, in violation of a fiduciary duty, participate in bribery or kickback schemes. Notably, the <em>Skilling <\/em>decision withdrew from the reach of Section 1346 a significant category of cases that had been prosecuted as honest services fraud up to that point: cases involving more general financial self-dealing or conflicts of interest, where no bribes or kickbacks are given. Congress has considered legislation on more than one occasion that would reinstate the self-dealing category of honest services fraud rejected in <em>Skilling<\/em>, though the law remains unchanged as of this writing.\u201d<\/p>\n\n\n\n<p>And so throughout the trial held over 10 days last month, the attorneys for the three men harped on Rudo\u2019s financial ties to Plumeria at Waikoloa, Luna Loa Developments, LLC, and West View Developments, LLC. Those three companies were the beneficiaries of the affordable housing agreements and related documents that Rudo recommended county officials sign.<\/p>\n\n\n\n<p>Plumeria at Waikoloa, which acquired 11.8 acres from a developer at a steal with Rudo\u2019s help and later sold it for $1.5 million, was co-owned by Rudo, Sulla, and Zamber. Plumeria was later renamed Peaceful Ventures. Rudo was the majority owner through his company Dezign Artz (then later via two trusts benefitting him), and Sulla and Zamber owned the remainder through their company SZ Ventures, in which Sulla was the majority owner.<\/p>\n\n\n\n<p>Rudo testified that he had a \u201cgentleman\u2019s agreement\u201d with Budhabhatti to receive 50 percent of whatever profits came from deals involving land that Budhabhatti did not already own, such as the land Budhabhatti\u2019s Luna Loa Development company acquired from DR Horton using affordable housing credits.&nbsp;<\/p>\n\n\n\n<p>Also, Rudo\u2019s then-wife, Margaret Reynolds, owned shares in Budhabhatti\u2019s company West View, which were eventually transferred to Budhabhatti after the FBI began investigating.<\/p>\n\n\n\n<p>\u201cShe shouldn\u2019t be on the company records. That was a mistake. I knew the jig was up. \u2026 I told them to remove Margaret,\u201d Rudo testified. While he stopped short of saying that he was the actual owner of her shares, he testified, \u201cI had a financial interest in West View\u201d and that his wife was listed as a member of the company \u201cto hide my interest.\u201d<\/p>\n\n\n\n<p><strong>\u2018Not Hiding\u2019<\/strong><\/p>\n\n\n\n<p>Sulla, who was facing an additional charge of money laundering, was the only one of the three defendants to testify at trial.<\/p>\n\n\n\n<p>In his testimony, Sulla explained that some of the companies and trusts he created for Rudo, a client, were merely products of estate planning, and not, as the DOJ suggested, efforts to hide Rudo\u2019s role in the affordable housing schemes.<\/p>\n\n\n\n<p>He also testified at first that he believed the original intent was for Plumeria to develop affordable housing, although he admitted it was really just a shell company. \u201cWe didn\u2019t even have a bank account,\u201d he said.<\/p>\n\n\n\n<p>He also said he had no prior knowledge of and had nothing to do with Rudo\u2019s misrepresentations to the county that Plumeria was a non-profit company, which had enabled the 11.8 acres in Waikoloa acres to be given to Plumeria for such a bargain.<\/p>\n\n\n\n<p>According to minutes of meetings of Plumeria\u2019s members, discussions had been held early on with an architect and a contractor about the possibility of building affordable housing on the site. But, Sulla said, Rudo suddenly came up with a buyer, a company called Pua Melia, that had wanted for years to build a True Value hardware store there and would commit to building the required affordable housing. (The land was later reverted by the state Land Use Commission back to the Agricultural District, thereby preventing Pua Melia from proceeding with its development plans.)<\/p>\n\n\n\n<p>During cross-examination, U.S. attorney Mohammad Khatib questioned Sulla about his statements that he believed what he and Rudo were doing was legal.<\/p>\n\n\n\n<p>Khatib asked Sulla whether he ever called anyone from the county to see if it was okay to work with Rudo on the Plumeria deal.<\/p>\n\n\n\n<p>\u201cWhy would I do that?\u201d Sulla replied, but later added that, in hindsight, it might have been nice to check on what Rudo told him. \u201cHe sugarcoated it to me. It was affordable housing. It was a mixed-use thing,\u201d he said.<\/p>\n\n\n\n<p>Khatib noted that after Plumeria sold the land for just under $1.5 million to Pua Melia, Sulla took a three percent increase in his share of the profit. Rudo\u2019s ownership interest in Plumeria \u2014 through his Sulla-created company, Dezign Artz \u2014 dropped from 70 percent to 67 percent.<\/p>\n\n\n\n<p>Sulla claimed that because Dezign Artz wound up \u201cnot doing what it was supposed to do,\u201d which was securing contractors to build the affordable housing in exchange for lots, Sulla needed to replace Rudo as the owner of Dezign Artz with two trusts that benefitted Rudo, Active REI and Ad Astra.<\/p>\n\n\n\n<p>That extra legal work is what warranted the three percent increase in his share in Plumeria, Sulla explained.&nbsp;<\/p>\n\n\n\n<p>Khatib suggested that further work was done to conceal Rudo\u2019s involvement.<\/p>\n\n\n\n<p>\u201cAbsolutely not. \u2026 You keep saying \u2018hiding.&#8217; This is estate planning. This is how it\u2019s done,&#8221; Sulla replied. (This \u201cnot hiding\u201d claim came after his direct examination, in which he admitted he initially represented to the government that he was not a member of Plumeria. \u201cI was being glib,\u201d he said, adding that his statement was not under oath and \u201ctechnically, I wasn\u2019t a member,\u201d SZ Ventures was. \u201cI was being a little glib. \u2026 Sorry about that.\u201d)<\/p>\n\n\n\n<p>Addressing Sulla\u2019s and the other defendants\u2019 arguments that Rudo was merely self-dealing or just had a conflict of interest, Khatib reminded Sulla, \u201cYou were the sole signatory on Plumeria. Rudo had no access to these funds,\u201d referring to the profits from the sale of the Waikoloa land.<\/p>\n\n\n\n<p>From that sale, Rudo received $1.1 million, Sulla received nearly $400,000, and Zamber received about $80,000 in land and\/or money.<\/p>\n\n\n\n<p>When Khatib asked Sulla what purpose Plumeria served, Sulla did not repeat his earlier claim that it was to build affordable housing. He said instead, \u201cYou should really ask Mr. Rudo about that.\u201d<\/p>\n\n\n\n<p>\u201cSo you were naive of this matter approximately to the tune of $400,000? \u2026 Did you receive land or anything of value [worth] approximately $400,000 from Plumeria?\u201d Khatib later asked.<\/p>\n\n\n\n<p>At the risk of sounding glib again, Sulla responded only that Rainha Iemanja Capital Holdings, LLC did. The company, which the DOJ dubbed \u201cRICH,\u201d was managed by Sulla and his wife, Jamie Ann Wallace-Sulla.<\/p>\n\n\n\n<p>Despite Sulla\u2019s testimony that the work he did for Rudo was <em>not<\/em> to hide his interest in Plumeria, Birney Bervar, Sulla\u2019s attorney, began his closing arguments by stating that Sulla never bribed Rudo. Rather, \u201cAlan Rudo used Sulla to set up companies to hide self-dealing,\u201d Bervar said.<\/p>\n\n\n\n<p>Bervar also argued that Dezign Artz was not created to hide illegal activity, but to protect Rudo\u2019s assets from the wife he was divorcing at the time and for consulting jobs he did outside of his work for the county.<\/p>\n\n\n\n<p>With regard to the schemes involving affordable housing credits, Bervar argued that Sulla was not involved in either the 2014 \u201ctest run\u201d deal by a company owned by Budhabhatti called ERH1, LLC, that was not charged in the indictments, or the Luna Loa or West View deals, \u201cexcept as an attorney\u201d for the latter two.&nbsp;<\/p>\n\n\n\n<p>Bervar pointed out that Sulla received only a few thousand dollars for his legal services for those deals, for which he provided at least one invoice.<\/p>\n\n\n\n<p>Regarding Sulla\u2019s actions surrounding the Plumeria deal (including the receipt of property in Ninole, which RICH then sold after Sulla learned of the FBI investigation), Bervar said that for someone to be found guilty of money laundering, the money has to come from an illegal transaction <em>and<\/em> the person has to <em>know<\/em> it was illegal.<\/p>\n\n\n\n<p>There\u2019s no evidence here of that, Bervar said, adding, \u201cThis is estate planning, not money laundering.\u201d<\/p>\n\n\n\n<p><strong>Bogus Checks<\/strong><\/p>\n\n\n\n<p>When it came to the deals involving the award and sales of affordable housing credits, there was no question about whether or not there was a concerted effort to hide Rudo\u2019s involvement.<\/p>\n\n\n\n<p>Rudo testified that he approached Budhabhatti with a plan to provide him with affordable housing credits and they discussed various options of how to take advantage of them. Rudo said he trusted Budhabhatti because they had a longstanding relationship.&nbsp;<\/p>\n\n\n\n<p>\u201cI would do affordable housing agreements. He was going to develop affordable housing,\u201d Rudo said. That was the plan, and it started with ERH1, which involved two parcels in Kea\u02bbau that Budhabhatti already owned. In emails, Rudo had raised the possibility of building container homes that could be rented out. Developing some kind of affordable housing would provide \u201ccover\u201d so \u201cwe smell like roses,\u201d which would allow them to keep doing deals, Rudo testified.<\/p>\n\n\n\n<p>But as soon as ERH1 was awarded the credits, Budhabhatti sold them, Rudo said. The proceeds, $68,000, were split among Budhabhatti, Zamber, and Rudo.<\/p>\n\n\n\n<p>\u201cThat\u2019s when I realized we\u2019re in it for the credits. \u2026 I told him [Budhabhatti] I want 25 percent of what he got for selling the credits after Zamber [took his cut of 5 percent]. If it wasn\u2019t your property, I wanted 50 percent.\u201d<\/p>\n\n\n\n<p>\u201cWe reaffirmed my agreement when we turned to Luna Loa,\u201d he continued.<\/p>\n\n\n\n<p>After Rudo facilitated the award of 212 credits to Luna Loa, the company sold them to other developers for cash, or, in the case of DR Horton, land.&nbsp;<\/p>\n\n\n\n<p>Luna Loa, after owning that land for a \u201csplit second,\u201d as Khatib put it, sold it.<\/p>\n\n\n\n<p>Budhabhatti paid nearly $350,000 in profits from Luna Loa deals to Rudo via checks to Dezign Artz and Kaha Kii Hale LLC, another Rudo company. On those checks were written \u201cfake memos\u201d to make it look like the companies were getting paid for consulting services.<\/p>\n\n\n\n<p>\u201cThis is bogus. Mr. Rudo said he never provided those services,\u201d Khatib told the jury. He also informed it that Rudo testified that \u201cmost, if not all, of the checks were handed to him by Zamber.\u201d<\/p>\n\n\n\n<p>Similar to the Plumeria deal, Khatib also pointed out that in the deals involving Luna Loa and West View, Rudo did not control their bank accounts. Therefore, he argued, the payments were not self-dealing.<\/p>\n\n\n\n<p><strong>\u2018Red Herring\u2019<\/strong><\/p>\n\n\n\n<p>Is there a difference between being an owner of a company and having a financial interest in it? Does it matter with regard to the cases against Sulla, Zamber and Budhabhatti?<\/p>\n\n\n\n<p>The way that so much of the arguments and questioning of witnesses revolved around these two questions, it would seem to make all the difference between whether the case was one of self-dealing or bribes and kickbacks. If it was the former, the defendants were not guilty. If the latter, guilty, it seemed at first.<\/p>\n\n\n\n<p>When did Rudo and the federal government start calling what transpired bribes and kickbacks? And Why didn\u2019t Rudo ever use those terms in so many of his interviews with the FBI? the defense attorneys wanted to know. When did the government stop referring to Rudo\u2019s ownership of the companies and start calling it an \u201cinterest\u201d in them?<\/p>\n\n\n\n<p>In response to questioning by Zamber\u2019s defense attorney, Gary Springstead, Rudo said he didn\u2019t know that what he was doing was accepting bribes and kickbacks until his attorney at the time informed him that\u2019s what it was.<\/p>\n\n\n\n<p>Yet despite all the time and energy spent during the trial debating the ownership\/interest issue, both Kanai and Khatib stated in their closing arguments that, ultimately, it didn\u2019t matter.<\/p>\n\n\n\n<p>Khatib called the ownership issue a \u201cred herring.\u201d Why did Rudo get ownership interest in the companies? Because it was his reward for his official acts, Khatib stated.<\/p>\n\n\n\n<p>\u201cIf even one percent of the money Rudo got was because of his position at the county, they\u2019re guilty of kickbacks,\u201d he said.<\/p>\n\n\n\n<p>He also said that it didn\u2019t matter whether there was any benefit to the community from these deals. One of them did eventually lead to the construction of affordable housing by another developer; a second one may yet.&nbsp;<\/p>\n\n\n\n<p>Further, since the affordable housing agreements associated with the credits lifted building restrictions on future construction, some of the benefits to the community were \u201csucked out,\u201d Khatib said.<\/p>\n\n\n\n<p>In any event, he said, the detriment to the public was the bribe.<\/p>\n\n\n\n<p>In her closing arguments, Kanai first addressed \u201cthe elephant in the room\u201d \u2013 that what Budhabhatti did was \u201cnot okay.\u201d It just wasn\u2019t as wrong as the DOJ was making it out to be, she argued.<\/p>\n\n\n\n<p>She then leaned into the blurriness surrounding the alleged illegal activities.<\/p>\n\n\n\n<p>\u201cEveryone is getting these issues confused,\u201d she said with regard to whether what Budhabhatti did involved a conflict of interest or bribes and kickbacks.<\/p>\n\n\n\n<p>\u201cWe can all agree it\u2019s offensive to exploit the affordable housing code,\u201d she said.<\/p>\n\n\n\n<p>However, she continued, \u201cWhy are we fighting about ownership? \u2026 What is really the difference between ownership, ownership interest and financial interest? \u2026 These semantics and quibbling with words do not matter.\u201d<\/p>\n\n\n\n<p>She then highlighted the commonality in the evidence used in Budhabhatti\u2019s defense and in his prosecution. She stated that if the same evidence can suggest someone is either guilty or not guilty, the reasonable doubt standard requires the jury to return a verdict of not guilty.<\/p>\n\n\n\n<p>\u201cYou should expect and demand quality evidence, not evidence that makes you hesitate,\u201d she added.<\/p>\n\n\n\n<p>The jury received 37 instructions on how to deliberate. Those instructions stated, \u201cBribes and kickbacks involve the exchange of a thing or things of value for official acts by a fiduciary, in other words, a quid pro quo (a Latin phrase meaning \u2018this for that\u2019 or \u2018these for those\u2019). A quid pro quo is satisfied if the evidence shows that the defendant promised or provided to Mr. Rudo something of value in exchange for his promise to take one or more future official acts in his capacity as an employee of the County\u2019s Office of Housing and Community Development.\u201d<\/p>\n\n\n\n<p>The instructions also included this one: \u201cUndisclosed self-dealing or undisclosed conflicts of interest are insufficient to constitute honest services wire fraud. Undisclosed conflicts of interest and undisclosed self-dealing do not involve quid pro quos.\u201d<\/p>\n\n\n\n<p>In his rebuttal, Khatib argued that the evidence shows there was a quid pro quo.&nbsp;<\/p>\n\n\n\n<p>He also said the defendants want the jury to believe that by creating shell companies and making public officials partners in them, you can shield yourself from bribery charges.<\/p>\n\n\n\n<p>In this case, if everything was legal and above board, why hide Rudo or send fake invoices or blind copy him to emails to the county? Khatib continued.&nbsp;<\/p>\n\n\n\n<p>While every one of the schemes was a conflict of interest, \u201cThis is not one man acting alone. This is concerted action,\u201d he said.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM.jpeg\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"371\" src=\"https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM-1024x371.jpeg\" alt=\"\" class=\"wp-image-16553\" srcset=\"https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM-1024x371.jpeg 1024w, https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM-300x109.jpeg 300w, https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM-768x278.jpeg 768w, https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM-1536x556.jpeg 1536w, https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/06\/Image-6-2-25-at-1.12\u202fPM-2048x741.jpeg 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><figcaption class=\"wp-element-caption\">Combined Actual and Projected Distribution of Funds Credit: FBI<\/figcaption><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p>He pointed out that during Springstead\u2019s closing arguments, he tried to deny that a meeting of the parties had ever occurred regarding ERH1 in Zamber\u2019s office. But Sulla had testified that that meeting did, in fact, occur, Khatib argued. \u201cThey discussed the fact that Rudo was a public employee,\u201d he said.<\/p>\n\n\n\n<p>Khatib said that \u201cthe defense is blaming everyone for what they did,\u201d be it Rudo, or the county, or even Sulla\u2019s wife, who Sulla said pushed for one of the land exchanges involved in the Plumeria deal.<\/p>\n\n\n\n<p>\u201cAmerica is supposed to be a democracy. \u2026 The defendants want a government for [the] politically connected. \u2026 A government that works for the rich and steals from the poor,\u201d he said.<\/p>\n\n\n\n<p><strong>Rudo\u2019s Testimony<\/strong><\/p>\n\n\n\n<p>The jury was also instructed as to how to deal with Rudo\u2019s testimony: \u201cYou have heard testimony from Alan Scott Rudo, a witness who pleaded guilty pursuant to a plea agreement to a crime arising out of the same events for which the defendants are on trial. This guilty plea and plea agreement are not evidence, and you may consider them only in determining this witness\u2019s believability.<\/p>\n\n\n\n<p>\u201cIn evaluating the testimony of Mr. Rudo, you should consider the extent to which or whether his testimony may have been influenced by his plea agreement. In addition, you should examine the testimony of Mr. Rudo with greater caution than that of other witnesses.\u201d<\/p>\n\n\n\n<p>During their closing arguments, all three defense attorneys attacked Rudo\u2019s testimony.<\/p>\n\n\n\n<p>Bervar said that in Rudo\u2019s guilty plea, he acknowledged being advised that he could face seven-and-a-half to nine years in prison. Bervar suggested that influenced Rudo\u2019s trial testimony, which sounded \u201clike he was getting $100 every time he said bribe or kickback.\u201d<\/p>\n\n\n\n<p>Springstead likened Rudo\u2019s testimony to that of a professional witness and criticized him for sitting on the witness stand for hours on end, answering questions from the defendants\u2019 attorneys with evasion or \u201cNo, I don\u2019t recall.\u201d&nbsp;<\/p>\n\n\n\n<p>\u201cHe\u2019s the government\u2019s star witness. He\u2019s also someone that\u2019s not very credible,\u201d Springstead said.<\/p>\n\n\n\n<p>Finally, Kanai said that it was \u201cpatently obvious Rudo wanted to testify in a way that pleased the government.\u201d She said when questioned by the defense attorneys, she counted some 50 instances of Rudo saying he didn\u2019t remember or recall something.<\/p>\n\n\n\n<p>Recounting how Rudo had been deceitful about so many things, she asked the jury, \u201cWhat would a man like that do to avoid years in prison time?\u201d<\/p>\n\n\n\n<p>In his rebuttal, Khatib said little about Rudo\u2019s testimony, leaving it up to the jury to decide how to weigh it.<\/p>\n\n\n\n<p><strong>Fiduciary Duty<\/strong><\/p>\n\n\n\n<p>For the jury to find the defendants guilty of honest services wire fraud, it had to find, among other things, that Rudo owed a fiduciary duty to the county, its Office of Housing and Community Development, and the county\u2019s citizens, according to jury instruction No. 22.<\/p>\n\n\n\n<p>For a fiduciary duty to exist, the instructions said, the jury must find that the county, the OHCD, and the citizens placed \u201cspecial trust and confidence\u201d in Rudo, \u201cexpecting that he would then exercise his discretion and expertise with the utmost honesty and forthrightness in the interest\u201d of the county, the OHCD, and the citizens, \u201csuch that they relaxed the care and vigilance that they would ordinarily exercise.\u201d<\/p>\n\n\n\n<p>The jury must also find that Rudo \u201cknowingly accepted that special trust and confidence and thereafter undertook to act on behalf\u201d of the county, OHCD, and the citizens.<\/p>\n\n\n\n<p>\u201cIf the [OHCD] employed Mr. Rudo and thereafter directed, supervised, or approved his actions, Mr. Rudo was not necessarily a fiduciary. Rather, as previously stated, it is only when one party places, and the other accepts, a special trust and confidence\u2014usually involving the exercise of professional expertise and discretion\u2014that a fiduciary relationship exists,\u201d the instruction stated.<\/p>\n\n\n\n<p>During the trial, documents showed Rudo\u2019s initials indicating that the was recommending approval of affordable housing agreements or housing credit awards that his higher-ups within the OHCD ultimately approved.<\/p>\n\n\n\n<p>For the ERH1 deal, Budhabhatti and then-housing administrator Stephen Arnett signed the affordable housing agreement and assignment of affordable housing credits.<\/p>\n\n\n\n<p>Khatib reminded the jury that Arnett had testified at trial that he relied on Rudo\u2019s advice \u201c100 percent\u201d and absolutely trusted him.<\/p>\n\n\n\n<p>Arnett also said that if he had known that Rudo was receiving kickbacks from the deals, he would never have signed them.&nbsp;<\/p>\n\n\n\n<p>Another former housing administrator, Susan Akiyama Kunz, also testified that she relied on Rudo\u2019s advice when she signed the assignment of affordable housing credits and, like Arnett, would not have signed it if she had known what was really going on.<\/p>\n\n\n\n<p>Khatib said the politically appointed housing administrators don\u2019t have the expertise in the county affordable housing code and it was \u201cnatural they rely on their employees to do their job. \u2026 That\u2019s what she thought Rudo was doing.\u201d<\/p>\n\n\n\n<p>Kanai, however, argued that Rudo had no fiduciary duty. She said that the county seemed to just rubber-stamp Rudo\u2019s deals and it was no wonder that he was able to \u201cexploit the power vacuum.\u201d<\/p>\n\n\n\n<p>\u201cWhat I heard was plain old ordinary trust. \u2026 not a special trust,\u201d she said.<\/p>\n\n\n\n<p>The jury was still deliberating at press time.<\/p>\n\n\n\n<p>Also, on June 3, Judge Otake denied motions by the defendants for a mistrial or curative jury instruction addressing alleged false testimony by FBI special agent John Radzicki regarding Rudo\u2019s ownership interest in the companies involved. The DOJ argued that Radzicki did not falsely testify.<\/p>\n\n\n\n<p><strong>\u2014 Teresa Dawson<\/strong><\/p>\n\n\n\n<p>(This article has been updated to include Birney Bervar&#8217;s first name,  to reflect Judge Otake&#8217;s June 3 order denying the motions for a mistrial or curative jury instruction, and to correct the credit of the chart on the distributions of funds, from Salina Kanai to the FBI.)<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Environment Hawai\u02bbi\u2019s Role&nbsp;<\/strong><\/h2>\n\n\n\n<p>In August 2022, we reported on the Department of Justice\u2019s announcement of charges against four men who allegedly schemed to defraud the Hawai\u02bbi County affordable housing program. In that issue, we noted that then-U.S. attorney Clare Connors confirmed that articles in <em>Environment Hawai\u02bbi<\/em> about one of those schemes \u2014 the Plumeria at Waikoloa deal \u2014 led a Hawai\u02bbi county employee to contact the FBI. The investigation that ensued eventually led to the indictments.<\/p>\n\n\n\n<p>Several years ago, Plumeria at Waikoloa acquired 11.8 acres from the developer of Waikoloa Highlands in West Hawai\u02bbi for a mere $50,000. Plumeria was supposed to be \u2014 and initially presented itself to be \u2014 a non-profit that would develop affordable housing on the land. In actuality, Plumeria was a for-profit company secretly co-owned by Alan Rudo, the county employee who blessed the deal. The land was quickly sold for a profit of more than a million dollars.<\/p>\n\n\n\n<p>During testimony last month by one of the alleged schemers, attorney Paul Sulla Jr., <em>Environment Hawai\u02bbi<\/em> came up again during a discussion of how Plumeria\u2019s name changed to Peaceful Ventures, LLC.<\/p>\n\n\n\n<p>Sulla had created Plumeria and co-owned it with Rudo and attorney Gary Zamber.<\/p>\n\n\n\n<p>In August 2018, shortly after <em>Environment Hawai\u02bbi<\/em> reported on the questionable transfer and sale of the Waikoloa land, Plumeria changed its name to Peaceful Ventures.<\/p>\n\n\n\n<p>When asked at trial by his attorney, Birney Bervar, for the reason behind the name change, Sulla testified that Rudo was concerned about the publicity and thought that \u201cPlumeria should disappear.\u201d Although he mangled<em> Environment Hawai\u02bbi<\/em>\u2019s name and that of its editor, Patricia Tummons (calling her Pat Timmons), Sulla said Rudo was concerned about her exploration of the Plumeria deal.&nbsp;<\/p>\n\n\n\n<p>\u201cI don\u2019t know what he thought, [that it would be a] magic bullet to change the name,\u201d Sulla said.<\/p>\n\n\n\n<p><strong>\u2014 T.D.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>You can&rsquo;t bribe yourself. That&rsquo;s what counsel for Hawai&#699;i island attorney Paul Sulla Jr. said during closing arguments last month before a jury and U.S. District Judge Jill A. Otake. It&rsquo;s also what counsel for another Hawai&#699;i attorney, Gary Zamber, &hellip; <a href=\"https:\/\/environment-hawaii.org\/?p=16540\">Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":16553,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[538],"tags":[3],"class_list":["post-16540","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-june-2025","tag-teresa-dawson"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/16540","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16540"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/16540\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/16553"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16540"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16540"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}