Maui News

Fraud, public corruption charges filed in case involving affordable housing on Hawaiʻi Island

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PC: US Attorney’s Office – District of Hawaiʻi

A series of public corruption charges were filed after the culmination of a federal investigation on the Big Island of Hawaiʻi into an alleged conspiracy involving affordable housing. An indictment was returned by a federal grand jury on Thursday, which identified four individuals–with various, entities and LLCs created and used by these individuals–as part of a conspiracy to deprive the County of Hawaiʻi of affordable housing.

“At the same time, they allegedly enriched themselves to a tune of more than $10 million,” said US Attorney, District of Hawaiʻi, Clare E. Connors during a press conference on Monday morning.

“Through the affordable housing agreements, the defendants fraudulently obtained at least
$10,980,000 worth of land and excess affordable housing credits,” according to a department news release that followed.

Alan Scott Rudo, 55, who was employed as a Housing Specialist by the County of Hawaiʻi in the Office of Housing and Community Development, plead guilty last Monday pursuant to a plea agreement, to conspiracy to deprive the citizens of Hawaiʻi County of his honest services.


Rajesh P. Budhabhatti, 62, a private businessman on the Big Island, was also charged last week Thursday in a separate felony information with the same conspiracy. He will appear next week, Aug. 1, to enter his plea.

“It’s pursuant to an information. So generally when there’s an information filed, it suggests that the individual will enter a plea of guilt, but we’ll see what happens next week,” said US Attorney, District of Hawaiʻi, Clare E. Connors.

The federal indictment named the final two individuals, both practicing attorneys on Hawaiʻi Island–Gary Charles Zamber, 53, and Paul Joseph Sulla, Jr., 76.

All three documents–the two felony informations and the indictment–set out the details of the conspiracy, which authorities say spanned about six years.


“In short, the County of Hawaiʻi had come up with a very elaborate set of rules to address their affordable housing crisis. These rules were set forth in a County Code, and they were administered largely through this Office of Housing and Community Development,” said US Attorney Connors.

Connors said Rudo’s role as a Housing Specialist was to assist the County in solving its affordable housing crisis, and working with developers to ensure that affordable housing was provided to the citizens of Hawaiʻi County.

“Mr. Rudo abused his position,” said US Attorney Connors. “[He] abused his public official position by soliciting and accepting kickbacks and bribes. The acts that he engaged in–the acts for which he was paid, for which he received money–included creating and shepherding through the County approval process, agreements that would allow developers to avoid the obligation to build affordable housing. So through these agreements, entered into by companies that Mr. Rudo had an ownership interest in–but he didn’t disclose at the County–certain developers would be allowed to not build affordable housing in the County.”

According to Justice officials, Mr. Rudo concealed his role in developing these entities that entered into the agreements with the County. He was allegedly assisted in this by Budhabhatti, and by attorneys Zamber and Sulla.


US Attorney Connors said they created three entities, specifically–Luna Loa Developments LLC, West View Developments, LLC and Plumeria at Waikoloa LLC.

The Plumeria at Waikoloa LLC deal had been covered in the Environment Hawaiʻi newsletter, and that’s when a county employee became aware of the involvement of the county, and reached out to the FBI.

“According to the indictment and informations, the defendants deceived the public into believing that Rudo was dutifully working on their behalf to provide affordable housing, when in reality he was using his official position to obtain money from Sulla, Zamber and Budhabhatti in the form of bribes and kickbacks,” Department officials said in a press release.

As part of the investigation, the US has recovered more than $2.3 million in criminal proceeds and 45 affordable housing credits connected to the charges. As part of his guilty plea, Rudo agreed to forfeit his interest in those funds and the 45 affordable housing credits, as well as other real estate connected to the charges. Rudo has also agreed to a money judgment against him in the amount of $2,114,170.

Justice officials say indictments and informations are merely allegations, and defendants Sulla, Zamber, and Budhabhatti are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Rudo is set for sentencing before Judge Otake on Oct. 31, 2022.

The case is the result of an ongoing investigation conducted by the Federal Bureau of Investigation. Assistant US Attorneys Mohammad Khatib and Sydney Spector are prosecuting the case. FBI Special Agent in Charge, Steven Merrill was also present at Monday’s press briefing.

Wendy Osher
Wendy Osher leads the Maui Now news team. She is also the news voice of parent company, Pacific Media Group, having served more than 20 years as News Director for the company’s six Maui radio stations.
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