The state Office of Disciplinary Counsel is investigating two Hilo attorneys being prosecuted in federal court for allegedly receiving Hawaii County affordable housing credits and land conveyances worth at least $10.98 million, with no intention of developing affordable housing.
Paul Sulla Jr., 77, and Gary Zamber, 54 — along with 63-year-old Big Island businessman Rajesh Budhabhatti — are charged with nine counts of conspiracy to commit honest services wire fraud and a single count of conspiracy. In addition, Sulla is charged with one count of money laundering. Three of the wire fraud charges for each defendant were added to the original charges in August 2022.
Trial for all defendants is set for Dec. 11 before U.S. District Judge Jill Otake in Honolulu.
ODC revealed the investigation in separate motions filed in mid-September seeking instruction by the Supreme Court about how to respond to a federal subpoena seeking testimony or documentary evidence in the cases against Sulla and Zamber. The motions noted that disclosure of a portion of what is being requested requires high court authorization because the records “are in whole or in part confidential pursuant to the Rules of the Supreme Court of Hawaii.”
In lieu of witness-stand testimony, the federal subpoena, according to ODC, seeks “all documents regarding complaints that resulted in the imposition of discipline” to Zamber or Sulla. It also seeks “any and all statements made by” Zamber and Sulla to ODC investigators.
Bradley Tamm, ODC’s chief disciplinary counsel, told the high court he “can see an argument” that the U.S. Attorney “should be given access to those records” due to “the felonious federal criminal charges pending” against Sulla and Zamber.
“The ODC, however, is without the authority to grant access absent an order of the Hawaii Supreme Court,” Tamm added.
There are multiple exhibits filed under seal in the ODC’s motion regarding Sulla pursuant to Supreme Court rules, the motion states.
“One such matter is a public record that arises from a reciprocal disciplinary proceeding from the U.S. Tax Court,” according to the document. “… All of these exhibits, if this court so authorizes, would be produced” in response to the federal subpoena.
Zamber has no prior record of discipline, according the ODC.
Zamber had no comment when asked by the Tribune-Herald about the ODC investigation, and a call to Sulla’s office wasn’t returned in time for this story.
Alan Scott Rudo, a former housing specialist in the county Office of Housing and Community Development from 2006 to 2018, pleaded guilty in August 2022 to conspiracy to commit honest services wire fraud by awarding affordable housing credits to false limited liability companies established by alleged co-conspirators, and then selling those credits to other developers for a profit.
Rudo’s share of that profit was at least $1.8 million. As part of his guilty plea, Rudo agreed to forfeit his interest in the recovered funds and housing credits, in addition to real estate connected to the charges. He’s also agreed to a monetary judgment of more than $2.1 million against him.
According to court documents and information presented in court, Rudo solicited and accepted multiple bribes and kickbacks from Sulla, Zamber and Budhabhatti for performing, and agreeing to perform, official acts while working for the OHCD.
If the case against Sulla, Zamber and Budhabhatti goes to trial, Rudo — whose sentencing has been delayed numerous times — is expected to testify for the prosecution.
According to court documents, Rudo abused his official position with the OHCD to ensure the county approved three affordable housing agreements, or AHAs, involving Luna Loa Developments LLC, West View Developments LLC and Plumeria at Waikoloa LLC. Authorities say those companies were variously owned, controlled and used by the defendants to obtain public benefits related to development projects in South Kohala, Kailua-Kona and Waikoloa.
Through the AHAs, the defendants fraudulently obtained at least $10.98 million worth of land and excess affordable housing credits, prosecutors allege.
The feds also contend that Sulla laundered the proceeds of the alleged conspiracy and scheme in an attempt to conceal, among other things, the source, location and ownership of those proceeds.
Conspiracy and committing honest services wire fraud carry a maximum penalty of 20 years imprisonment for each offense and a fine of $250,000, upon conviction. Money laundering carries a maximum penalty of 20 years imprisonment and a fine of twice the value of the property involved in the transaction, which prosecutors say is more than $1 million.
Email John Burnett at jburnett@hawaiitribune-herald.com.