Former County Employee Charged in Multi-Million Dollar Affordable Housing Scheme
July 15, 2022, 3:21 PM HST
A former employee of the county Office of Housing and Community Development is facing federal charges for allegedly taking nearly $2 million in bribes and kickbacks to influence affordable housing projects in West Hawai‘i.
The U.S. Attorney District of Hawai‘i Office filed the criminal complaint July 11 against Alan Scott Rudo, stating that Rudo used companies in which he concealed his involvement and that he jointly owned with three other people to secure affordable housing credits through the Office of Housing and Community Development, OHCD.
Rudo and his co-conspirators between December 2014 and October 2021 made it appear that their companies would then develop affordable housing when in fact they had no intention to do so, the complaint states.
Instead, those companies and at least two other limited liability corporations and two trusts were used deceptively to obtain and distribute the affordable housing credits they had earned after Rudo helped approve them in his official capacity in the Office of Housing.
“The agreement between Rudo and others to use jointly owned companies (was done) to deceive the County, accept bribes and kickbacks and thereby to breach Rudo’s fiduciary duty of honestly and loyalty,” the complaint outlines.
The county maintained an affordable housing policy that required developers to include affordable housing in their projects or contribute to affordable housing off-site. Developers could satisfy this requirement by building a specified number of affordable units in their projects or within a 15-mile radius of a project site, or by conveying land with infrastructure to the county of non-profit entities approved by the county.
Developers would earn affordable housing credits based upon the number of affordable housing unites constructed and made available. If residential developers constructed new affordable housing units that exceeded county requirements, they could earn “excess” affordable housing credits, or AHCs. Those AHCs could be sold or transferred to other developers. Any transfer was subject to county approval.
As the OHCD Housing and Community Specialist, Rudo was responsible for ensuring residential developers complied with the county’s affordable housing requirements.
The charges claim that Rudo helped the individuals draft their proposed affordable housing applications to the county, falsely promising that the companies would develop the housing.
“In fact, the companies were intended to be used solely as conduits to receive both land and AHCs that could then be sold, with the proceeds being distributed between Rudo and his co-conspirators,” the complaint reads.
The co-conspirators were not identified in the charging documents. It describes them as two attorneys and a businessman in the state of Hawai‘i.
The complaint states that Rudo worked as a housing and community development specialist at the Office of Housing and Community Development from September 2006 and December 2018.
He used that position to ensure that the office approved the affordable housing applications submitted by his co-conspirators on lands in Waikōloa, Kailua-Kona and South Kohala. In the Waikoloa instance, the companies received AHCs and land conveyance having value of $10.9 million.
“Despite receiving these awards, the conspirators did not develop any affordable housing projects,” the court file reads. “Rudo and individuals 1,2 and 3 thereafter sold or transferred the AHCs and land, and distributed the proceeds amongst themselves.”
Rudo did this in a number of other instances, never disclosing his ownership in any of the companies that did dealings with the county offices, the complaint reads.
Rudo received $1.8 million in total bribes and kickbacks for his schemes, the complaint alleges.
The complaint states it is seeking a personal money judgment in the amount of at least $2.114 million, the sum of monies Rudo obtained directly or indirectly as a result of the alleged ploys.