Mayor: Affordable Housing Fraud ‘Breach’ of Public Trust but County can Learn From Violation
July 22, 2022, 3:00 PM HST
* Updated July 22, 1:55 PM
Mayor Mitch Roth said his administration is using the recent development of a former employee being indicted on fraud charges for running an affordable housing scheme within in the county as a reason to review and possibly improve the checks-and-balances in place.
The mayor told Big Island Now the county wants to use the incident as a platform “to better our transparency and ensure honest services to all in our community.”
Alan Scott Rudo, the former employee of the county Office of Housing and Community Development, pleaded guilty in federal court on Monday to the felony offense of conspiracy to commit honest services wire fraud.
Rudo left his job in 2018 but accepted nearly $2 million in kickbacks and bribes to influence affordable housing projects in West Hawai‘i while working there.
Roth told Big Island Now it was a county employee who noticed Rudo’s actions and alerted law enforcement, which led to the indictment. The mayor added that Rudo was the only county employee arrested in the conspiracy and vowed that the county will take ownership of the issue and use it as a way to explore implementing better transparency safeguards.
“Since the initial tip-off, our county officials have worked diligently and transparently with federal investigators and will continue to do so,” Roth said. “Although these incidents happened under previous administrations, we are here to take ownership of the issue and will continue to find ways to better our transparency and ensure honest services to all in our community.”
On Thursday, several testifiers at the Leeward Planning Commission during a public hearing on a proposed subdivision cited Rudo’s transgressions as a reason the public couldn’t trust the county process in regards to anything concerning planning and development.
Some of the concerned testifiers called for a pause on all development projects until the fallout from the federal conspiracy subsides. Commission Chairman Mike Vitousek acknowledged the public’s mistrust, and said he understood from where it came.
“I’ve seen the skepticism that was expressed,” Vitousek said. “I understand those concerns, definitely.”
A video of the meeting is here.
According to the federal complaint, Rudo concealed his involvement in companies he jointly owned with three other people, two lawyers and a businessman all residing in the state of Hawai‘i, 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.
Roth described Rudo’s conduct as a breach of trust. They mayor also interated that the checks-and-balances in place eventually caught him.
“The County of Hawaiʻi is aware of Mr. Rudo’s actions to betray the public trust and forgo the community’s right to honest services,” Roth said. “Through the processes in place and the distribution of power related to affordable housing credits, a county employee spotted Mr. Rudo’s misconduct and alerted federal authorities of the matter, which ultimately led to his recent indictment.”