2 Big Island attorneys, businessman found guilty in affordable housing credits scam

After a three-week trial before United States District Judge Jill A. Otake, a federal jury found two Big Island lawyers and a businessman guilty in an affordable housing corruption scheme.

The verdict was read out on Wednesday.

Paul Joseph Sulla, Jr., 78, Gary Charles Zamber, 55, and Rajesh P. Budhabhatti, 65, were all found guilty of conspiracy to commit honest services wire fraud and nine counts of honest services wire fraud, according to a press release from U.S. Attorney’s Office District of Hawai‘i.

Sulla was additionally convicted of money laundering. Sentencing is set for Oct. 7 for Zamber, Oct. 8 for Budhabhatti, and Oct. 21 for Sulla.

The defendants were permitted to remain released on bail pending sentencing.

At trial, the evidence showed that Sulla and Zamber, both attorneys, and Budhabhatti, a private businessman on the Big Island, paid bribes and kickbacks to Alan Rudo, a Housing Specialist for the Hawai‘i County Office of Housing and Community Development, in exchange for Rudo using his official position to ensure the county approved three affordable housing agreements benefitting the defendants’ development companies Luna Loa Developments, LLC, West View Developments, LLC and Plumeria at Waikōloa, 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 Waikoloa.

Although the defendants promised in the affordable housing agreements to build affordable housing for the residents of Hawaii County, their development companies never built a single unit, the release stated. Through the agreements, the defendants fraudulently obtained at least $10.98 million worth of land and excess affordable housing credits.

From that amount, the defendants paid or attempted to pay Rudo approximately $1.93 million in bribes and kickbacks.

“This verdict marks an important step toward accountability and reinforces the importance of integrity in public service,” said Hawai‘i County Mayor Kimo Alameda. “We understand the impact this case has had on our community and remain committed to restoring trust. Since the initial findings, the Office of Housing and Community Development has taken concrete actions to strengthen internal controls, improve oversight, and ensure that public resources are managed responsibly and transparently. These changes reflect our commitment to kuleana — our shared responsibility — to serve with integrity and protect community resources.”

The defendants were convicted of one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years imprisonment, and nine counts of honest services wire fraud, each of which also carries a maximum sentence of 20 years. Sulla alone was charged with and convicted of money laundering, which carries a maximum sentence of 10 years.

“Today’s verdict reiterates our unwavering message to those who bribe and attempt to buy the discretion of Hawaii’s public officials at the expense of the public’s trust and the integrity of our public institutions—you will be federally prosecuted and brought to justice,” said Acting United States Attorney Ken Sorenson. “Our office will continue to root out and vigorously pursue those who engage in public corruption or who violate their positions of public trust.”

Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Rudo, who testified at trial, previously pled guilty in July 2022 to conspiring to commit honest services wire fraud in connection with the bribery and kickback scheme. Rudo is scheduled to be sentenced on Aug. 13.

“The defendants in this investigation defrauded their own community for personal financial gain,” said FBI Honolulu Special Agent in Charge David Porter. “The corruption of government officials corrodes public trust and weakens our communities. The FBI will continue to aggressively pursue these cases to protect and maintain public trust and hold criminals accountable.”