Three men who conspired with a for seven years to secure and sell $10.9 million in land and affordable housing credits in exchange for $1.9 million in bribes and kickbacks were found guilty by a federal jury Wednesday.
Attorneys Paul Joseph Sulla, Jr., 78, Gary Charles Zamber, 55, and businessmen Rajesh P. Budhabhatti, 65, “paid bribes and kickbacks ” to Alan Scott Rudo, a Housing Specialist for the Hawaii County Office of Housing and Community Development, according to the U.S. Attorney’s office.
They were charged in an 11-count superseding indictment filed Aug. 4, 2022.
“This verdict marks an important step toward accountability and reinforces the importance of integrity in public service, ” said County of Hawaii Mayor Kimo Alameda, in a statement. “We understand the impact this case has had on our community and remain committed to restoring trust. Since the initial findings, the Office of Housing and Community Development has taken concrete actions to strengthen internal controls, improve oversight, and ensure that public resources are managed responsibly and transparently. These changes reflect our commitment to kuleana—our shared responsibility—to serve with integrity and protect community resources.”
They were convicted after a three week trial before U.S. District Judge Jill A. Otake of one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years imprisonment, and nine counts of honest services wire fraud, each of which also carries a maximum sentence of 20 years, according to federal prosecutors.
Sulla’s attorney, Birney B. Bervar, told the Honolulu Star-Advertiser his client plans to appeal. “We think there are significant issues which could result in a reversal of the convictions, most notably that this conduct was self dealing by the county employee Alan Rudo, which under Supreme Court case law is not honest serv ices bribery, ” said Bervar.
Sulla alone was charged with and convicted of money-laundering, which carries a maximum sentence of 10 years in federal prison.
Rudo, who testified at trial, pled guilty in July 2022 to conspiring to commit honest services wire fraud in connection with the bribery and kickback scheme.
He is scheduled to be sentenced on Aug. 13 ; Zamber will be sentenced Oct. 7 ; Oct. 8 for Budhabhatti ; and Sulla on Oct. 21. They remain free on bail until sentencing.
In exchange for the cash, Rudo was convicted of using his official position to make certain the county approved three affordable housing agreements for Sulla, Zamber and Budhabhatti’s development companies—Luna Loa Developments LLC ; West View Developments LLC ; and Plumeria at Waikoloa LLC.
Sulla, Zamber, Budha bhatti and Rudo collectively “created, owned, managed, controlled ” the companies, according to federal court records.
They used those companies and at least two other limited liability corporations and two trusts.
Rudo worked for the county between September 2006 and December 2018. He worked at OHCD as a Housing and Community Development Specialist and was responsible for ensuring residential developers complied with the county’s affordable housing requirements.
He also reviewed developments and made recommendations on whether the county should enter into AHA’s, according to federal court records.
“Although the defendants promised in the AHAs to build affordable housing for the citizens of Hawaii County, their development companies never built a single unit, ” read a statement form the U.S. Attorney’s office.
Through the agreements the group got at least $10.98 million worth of land and excess affordable housing credits. From that amount, the defendants paid or attempted to pay Rudo roughly $1, 931, 778 in bribes and kickbacks.
The group pulled off their scheme from December 2014 until October 2021.
The land and affordable housing credits were “sold, with the proceeds distributed among the conspirators, ” according to the superseding indictment.
The verdict “reiterates our unwavering message to those who bribe and attempt to buy the discretion of Hawaii’s public officials at the expense of the public’s trust and the integrity of our public institutions—you will be federally prosecuted and brought to justice, ” said Acting United States Attorney Ken Sorenson, in a statement.
“Our office will continue to root out and vigorously pursue those who engage in public corruption or who violate their positions of public trust, ” he said.
The indictment listed three properties and detailed the schemes the men used to pull money out of each promise to build affordable housing.
On Dec. 17, 2014, Budha bhatti formed Luna Loa, a company he owned along with Zamber and Rudo. Sulla was the company’s attorney. On Feb. 4, 2015 Rudo secured the OHCD’s approval of an affordable housing agreement between the county and the company the men controlled.
Luna Loa got 212 credits in exchange for a promise to develop 106 affordable housing units on approximately 4.6 acres of land in South Kohala.
Rudo did not disclose his “ownership interest in Luna Loa, or that he had an agreement to share in any proceeds to be received by the company.”
He helped Luna Loa negotiate deals to buy the South Kohala Property, resell it, and retain and sell the credits, “all without developing any affordable housing units, ” contrary to the agreement they signed with the county.
Rudo identified “various landowners ” who might be interested in buying AHCs and drafted letters from Luna Loa to those landowners soliciting offers for the credits.
Budhabhatti sent an email to Rudo, thanking him “for compiling such a valuable list ” of large landowners in the county because “[w ]ith judicious use, we can generate a market frenzy ” for the credits.
On April 7, 2015, the group sold four credits for $200, 000.
The money was deposited in a Luna Loa bank account. On Apr. 24, 2015, Luna Loa entered agreements to buy the South Kohala Property from one real estate development company and resell it to another real estate development company.
Sulla handled the re-sale of the property. After closing the two transactions on the same day, Luna Loa retained 17 credits about $45, 000 in fees. Budha bhatti paid Zamber $11, 885, Rudo got $100, 000, and Sulla got $2, 475 out of Luna Loa’s accounts.
The indictment details 10 wire transfer payments and email correspondence between the men.
In a May 21, 2019, email Budhabhatti proposes to Rudo how to get county approval for the transfer of credits that their West View company got in its affordable housing agreement. “Blasting [OHCD Housing Administrator ] sounds tempting but probably not enough. Putting pressure on mayor seems to make sense but seems bit dangerous, ” Budha bhatti wrote.
The Federal Bureau of Investigation investigated the case. Assistant U.S. Attorneys Mohammad Khatib and Margaret Nammar and Trial Attorney William Gullota, of the U.S. Department of Justice’s Criminal Division, Public Integrity Section, prosecuted the case.
“The defendants in this investigation defrauded their own community for personal financial gain, ” said FBI Honolulu Special Agent in Charge David Porter, in a statement. “The corruption of government officials corrodes public trust and weakens our communities. The FBI will continue to aggressively pursue these cases to protect and maintain public trust and hold criminals accountable.”