3 others charged in Hawaii affordable housing scheme

HONOLULU — Two Hawaii attorneys and a businessman helped an ex-county official pull off a years-long, nearly $11-million affordable housing scheme, U.S. authorities said Monday.

Alan Rudo, who was a Housing and Community Development Specialist on the Big Island, pleaded guilty last week to conspiracy to commit honest services wire fraud.

In providing more details about the scheme, which lasted about six years and resulted in no affordable housing units being built, authorities said Big Island attorneys Paul Joseph Sulla Jr. and Gary Charles Zamber, along with businessman Rajesh Budhabhatti, used Rudo’s position to defraud county residents of badly needed affordable homes and fraudulently obtain more than $10,980,000 in land and affordable housing credits.

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. Sulla’s defense attorney, Birney Bervar, declined to comment. It was unclear who represents Zamber.

Budhabhatti is charged with conspiracy to commit honest services wire fraud.

Salina Kanai, federal defender for Hawaii, said her office represents Budhabhatti. She declined to comment.

The lawyers and businessman used Rudo’s position to shepherd affordable housing deals between the county and companies they had ownership interests in, Clare Connors, U.S. attorney for Hawaii, said.

“He was a public official. He was employed by the county,” Connors said of Rudo. “And his role was to assist the county in solving its affordable housing crisis.”

They allegedly abused a program that required developers to include affordable housing in their projects. Developers who agree to construct new affordable housing units in addition to any required under county code can earn excess credits, which can be sold or transferred to other developers to satisfy affordable housing requirements for other projects, according to court documents.

The four men then sold the credits and land they received, authorities said. The United States government recovered and seized more than $2.3 million and 45 affordable housing credits connected to the charges, prosecutors said.