3 More Charged in Affordable Housing Conspiracy on the Big Island

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Alan Scott Rudo

The three other co-conspirators in a multi-million-dollar affordable housing scheme inside the County of Hawai‘i government have been charged in federal court for their parts in the conspiracy, the U.S. Attorney’s Office announced Monday, July 25.

A federal grand jury on Thursday, July 21, returned an eight-count indictment against Paul Joseph Sulla Jr., 76, and Gary Charles Zamber, 53, both attorneys residing on the island of Hawai‘i. Both defendants are charged with six counts of honest services wire fraud and one count of conspiracy. Sulla is also charged with one count of money laundering.

Rajesh P. Budhabhatti, 62, a private businessman on the Big Island, was also charged in a separate information with conspiracy to commit honest services wire fraud.

The charges stem from the conspiracy that came to light two weeks ago where Alan Scott Rudo, 55, a former housing specialist for the Hawai‘i County Office of Housing and Community Development, was indicted on fraud charges for his role in the conspiracy. He is the only former county employee of the four conspirators.

As a county employee in charge of regulating and approving affordable housing deals for the county, Rudo greenlighted affordable housing credit deals between the county and businesses operated by his co-conspirators whereby affordable housing credits were approved, but such housing was never developed.


“In short, the County of Hawai‘i had a very elaborate set of rules to address the housing crisis,” U.S. Attorney for the state of Hawai‘i Clare Connors said about the setup Rudo exploited in his position of trust to reach deals with developers on projects that guaranteed affordable housing were a part of those deals.

Instead, Rudo approved the deals with the businesses he was a part of; although, his identity was concealed. Rudo and his co-conspirators pocketed the proceeds of affordable housing credits they sold with the promise to develop, but they never did.

Rudo, who took roughly $2 million in kickbacks as part of the ploy throughout six years, pleaded guilty July 18 to the charge. He faces up to 20 years in prison.

“Public corruption at all levels is investigated and prosecuted,” Connors said during a press conference Monday announcing the charges. “You will be held accountable if you violate that trust.”

The FBI began investigating Rudo in 2018 after a county employee tipped off the federal investigation agency that something was amiss. The conspiracy involved 316 affordable housing credits.


Connors said some of those credits were sold to outside businesses not named in the investigation. Connors added that the proceeds the conspirators netted totaled $10 million in housing and land conveyances. The government has seized much of the proceeds and is continuing to work on collecting more. 

The FBI said the investigation was titled “Operation Reverse Robin Hood.”

According to court documents and information presented in court, Rudo solicited and accepted multiple bribes and kickbacks from Sulla, Zamber and Budhabhatti in exchange for performing, and agreeing to perform, official acts while working for the Hawai‘i County Office of Housing and Community Development.

According to the indictment and informations, the defendants deceived the public into believing 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.

Rudo abused his official position with the Office of Housing and Community Development to ensure the county approved three affordable housing agreements involving Luna Loa Developments LLC, West View Developments LLC and Plumeria at Waikoloa LLC. These companies were variously owned, controlled and used by the defendants to obtain public benefits related to development projects in South Kohala, Kailua-Kona and Waikōloa.


“Through the (affordable housing agreements) the defendants fraudulently obtained at least $10,980,000 worth of land and excess affordable housing credits,” a press release outlining the charges states.

Sulla is also charged in the indictment with money laundering, the release stated.

According to the allegations, he laundered the proceeds of the conspiracy and scheme to commit honest services wire fraud in an attempt to conceal, among other things, the source, location and ownership of those proceeds.

Budhabhatti is scheduled to enter a guilty plea to the information Aug. 1 before U.S. District Judge Jill A. Otake. Rudo is set for sentencing Oct. 31 before Otake.

The crimes of conspiracy and scheme to commit honest services wire fraud each carry a maximum penalty of 20 years imprisonment and a fine of $250,000. 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 in this case is more than $1 million.

As part of the investigation, the United States 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 also agreed to a money judgment against him in the amount of $2,114,170.

This case is the result of an ongoing investigation conducted by the FBI. Assistant U.S. attorneys Mohammad Khatib and Sydney Spector are prosecuting the case.

Rudo left his county position in 2018. The four men knew each other socially before they contrived the conspiracy.

Tom Hasslinger
Tom Hasslinger is a journalist who lives in Kailua-Kona. Prior to joining Big Island Now, he worked as the managing editor for West Hawaii Today and deputy editor for The Garden Island newspaper on Kauai. He's worked for over 15 years as a reporter for the Oahu-based Civil Beat news outlet, as well as in Coeur d'Alene, Idaho and Douglas Wyoming.
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