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4 charged in $11M Hawaiʻi Island affordable housing scheme

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An affordable housing scheme on Hawaiʻi Island deprived the county of development and $11 million. Four men have been indicted and charged in what the FBI has named Operation Reverse Robin Hood.

FBI Special Agent in Charge Steven Merrill says the three-year investigation came to a head last week.

"On Thursday, July 21, 2022, a federal indictment was returned for two individuals who executed a devious housing scheme to defraud into profit and deprive the county's Office of Housing and Community Development and its citizens of affordable housing," Merrill said.

Alan Scott Rudo allegedly used his position with the Hawaiʻi County Office of Housing and Community Development to mislead officials. Rudo pleaded guilty last week, and will be sentenced in October.

Rudo accepted bribes and kickbacks from businessman Rajesh Budhabhatti, and attorneys Paul Joseph Sulla and Gary Charles Zamber.

Sulla and Zamber are charged with six counts of honest services wire fraud and one count of conspiracy. Sulla is also charged with one count of money laundering.

Budhabhatti is charged with conspiracy to commit honest services wire fraud. Budhabhatti is expected to enter a guilty plea in August.

"We believe everyone charged conspired to deceive and defraud the County of Hawaiʻi and personally profited from the scheme," Merrill said.

Together, the conspirators created three limited liability companies to conceal their fraud, which took place from 2014 to 2021.

Rudo used his county position to obtain affordable housing agreements for those LLCs. Instead of developing these lands, the conspirators sold them off. The land and affordable housing credits come out to nearly $11 million.

"They then proceeded to sell set land and affordable housing credits to other developers, and distributed the proceeds amongst themselves. Under these false pretenses, and during a major housing shortage throughout Hawaiʻi, these individuals and those charged elsewhere only thought of themselves and pocketed $3.2 million," Merrill said.

The FBI was able to recover about $2.3 million. Legal proceedings will determine what money can be returned to the county.

Sabrina Bodon is a general assignment reporter at Hawaiʻi Public Radio. Contact her at sbodon@hawaiipublicradio.org or 808-792-8252.
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