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Tuesday, December 25, 2018
Al Hee Sues Water Board Because Rail Project Not Rerouted to Protect His Tax Scam
By Andrew Walden @ 1:10 AM :: 6817 Views :: Honolulu County, Ethics, Rail

by Andrew Walden

Criminal tax cheat Al Hee surrendered himself to begin serving his 46 month sentence in a Minnesota Federal Penitentiary, June 15, 2016. 

Two months later, Hee filed suit in Oahu Circuit Court against the Honolulu Board of Water Supply.  At the top of his list of complaints: Things just aren't like they were back in the Inouye days. 

Hee whines:

“In 2001, the BWS was led by a 38-year career employee who implemented innovative and cooperative ways to generate revenues….

“Unfortunately, since 2005, innovation has been replaced by dogmatic engineers…with no regard for generating alternative revenue.”

At Hee’s behest, the “innovative” BWS advertised a December, 3, 2001 Request for Proposals for rights to BWS abandoned water and sewer lines.  Hee’s ClearCom was the only company responding and won the bid promising BWS an annual $1 per foot usage fees and $100K license fee backed up by a guaranteed minimum of $48.75M in fees paid over the next 30 years starting with $5M due December 31, 2013. 

Hee never paid the $5M—but he told the IRS he did. 

BWS’ countersued September 30, 2016, complaining Hee’s company also had “not paid the Annual Licensing Fee since 2011 or the Usage Fees since 2005.”   BWS points out: “ClearCom…leveraged political connections to avoid payment under the License Agreement ….”

How “innovative” was the old system?  The BWS countersuit explains:

“…in addition to the charges asserting that Mr. Hee improperly caused Waimana to pay for his personal expenses, from 2002-2012, Waimana, SIC and ClearCom claimed a total of $28.8M of business deductions for depreciation, amortization and lease interest expenses based upon the assumption that the $5M Guaranteed Fee was paid to BWS in May, 2007.  The United States of America alleged that the false deductions caused Waimana, SIC and ClearCom to underpay their federal taxes by approximately $3.6M.”

Under the lease agreement, Hee grabbed control of nearly 10 miles of abandoned lines in Waianae, Mililani, Kunia, Waikele, Kalihi, Downtown, Punchbowl, Kakaako, Ala Moana, Waikiki, Kaimuki, East Oahu, Hawaii Kai, and Waimanalo.

Hee’s lawsuit complains that the Honolulu Rail project has not been rerouted to serve his interests:

“…BWS has allowed third parties, including but not limited to The Honolulu Authority for Rapid Transit (HART) and contractors employed by HART and others, to destroy water mains that BWS promised to protect.…”

The State Department of Transportation wasn’t too happy with the ‘innovative’ Hee-BWS deal.  The BWS counter suit reveals:

“On July 9, 2002, the Hawaii Department of Transportation (DOT) sent a letter to BWS stating that DOT would ‘no longer allow the abandonment of any pipelines or utility facilities on DOT properties including the highway rights of way.’  Additionally, DOT indicated that any assignment or sub-letting of BWS’ abandoned water mains to other entities for any different use….”

In spite of this, ClearCom took control of six segments of abandoned water mains under Farrington Highway and other State routes.

Hee's suit and the BWS countersuit have lingered for two years as the Court awaits conclusion of Federal Bankruptcy proceedings.


First Circuit Court, Civ. No. 16-1-1564

Attached Court Documents:



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