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Tuesday, June 30, 2015
$4M Lawsuit Claims Bumpy Kanahele Defrauds Am. Samoa of Tsunami Recovery Funds
By Andrew Walden @ 12:59 AM :: 4488 Views :: Ethics, OHA

by Andrew Walden

As a multi-million dollar tsunami-relief scam unravels in American Samoa, pardoned convicted felon and sovereignty activist Dennis 'Bumpy' Kanahele so far has evaded both punishment and media attention.  But its been a bad couple of years for Bumpy Kanahele's business associates. 

While Kanahele got a role playing himself in the movie 'Aloha,' his business partner in two enterprises--Quin Ngoc Rudin--is in a federal penitentiary in California.  One of Kanahele's interlocutors, Evelyn Langford, formerly director of the American Samoa Department of Human Resources, faces 22 months in prison after pleading guilty to bribery and wire fraud.

A June 26, 2015 news release from the US DoJ announcing Langford's sentence mentions "Native Hawaiian Holding Company, Inc" but does not mention Kanahele.  This type of kid-glove treatment is sometimes provided to criminals who snitch on their co-conspirators, something that prospective future Kanahele business partners might want to meditate on.

According to the Hawaii DCCA BREG, Kanahele is CEO of the so-called "Native Hawaiian Holding Company, Inc" which is no longer in good standing with DCCA.  Federal convict Quin Ngoc Rudin is the only other executive officer listed with BREG.  BREG shows that NHHC partners include CGC Digital LLC, Community Investment Corporation, and Malama First LLC.  Of these, Malama First LLC is the only company which lists Bumpy Kanahele alone as its partner--and it alone remains in good standing. 

In October, 2009, CNN revealed massive waste and fraud in an expose titled: "Tsunami warning funds squandered in American Samoa."  It didn't take long for copycats to sense opportunity.  The timeline presented in a $4M American Samoa Government (ASG) lawsuit against Kanahele and his co-conspirators begins in 2010.  Kanahele and Rudin's NHHC was registered with DCCA December 2, 2010.

An AP article appeared on the Star-Advertiser website Sunday, it is the first Hawaii media coverage of this scam, reading only:

Evelyn Langford was sentenced Friday in Oakland to nearly two years behind bars. She was ordered to repay $260,000 to the government of America Samoa, a self-governing U.S. territory.

Langford accepted $260,000 in 2012 to help the Native Hawaiian Holding Company pitch business ideas to the American Samoa government.

While the story has escaped attention in Hawaii for several years, it has been big news in American Samoa and the Samoans knew what the score was.  In January, 2015, when Langford was first charged, commenters pointed out:

It's a "Bumpy" ride.

How do you people know Bumpy? Your smart.

Every people know Bumpy Roads! He likes to look like Hawaiian Super Man, but is the opposite of Robin Hood!!! Take what should go to the poor, then give it to himself to make him even 'Moa' Rich!!!

Very good-- your paying attention.

In fact, the charges facing Langford were just the tip of Bumpy Kanahele's iceberg.  The Samoa News April 7, 2014 reports:

The American Samoa Government has filed a lawsuit against the Native Hawaiian Holding Company for close to $4 million, on allegations of fraud, failure to pay taxes, compensatory damages, exemplary punitive damages, and unjust enrichment.   The 41-page lawsuit was filed last Friday with the High Court, by Assistant Attorney General Masaya Uchino, naming NHHC’s President Quin Rudin, NHHC’s CEO Dennis Kanahele, CGC Digital, Community Investment Corporation (CIC), Malama First and John and Jane Doe as defendants in this multimillion civil litigation.   According to the lawsuit, in 2009 the territory was awarded a National Emergency Grant (NEG) from the USDOL, and one of its purposes was to fund training and employment for individuals who were unemployed as a result of the 2009 tsunami....

In 2011 the bid was awarded to American Pacific Resources (owned by Michael McDonald and his wife Paula Stevenson McDonald) based on a cost analysis; however five months later APR withdrew its bid as they were unable to meet certain financial requirements set forth in the federal NEG....  

In the period of Dec 2011 to Jan 2012, DHR was approached by APR leadership--the McDonalds--and NHHC President Quin Rudin (according to BREG, Rudin is Exec VP and Kanahele is CEO) claiming they had experience with call centers and working with Samoan communities. After numerous meetings and phone calls, Rudin represented that NHHC had the capabilities and funds to successfully complete ASNEG’s goal in coordination with its off island partners and APR....  NHHC was awarded a sole source contract....

In July, 2012, the FBI foolishly closed its Pago Pago office after 6 years spent prosecuting numerous corrupt ASG officials.

The Samoa News story continues:

HISTORY OF FRAUD BY NHHC NETWORK  

Pointing to a history of fraud, the American Samoa Government (ASG) said that Rudin had been indicted by a Federal Jury on two counts of wire fraud and one count of aggravated identify theft. The indictment and complaint indicated how Rudin had used CGC Digital, a company he controlled, to defraud Cisco Systems Inc, for millions.  

According to the lawsuit, ASG uncovered — after a review of expenditures — that Rudin, Kanahele and NHHC had used ASNEG funds to pay

yet the payments were not justified nor had there been any job placement with these companies.  

“On information and belief, Quin Rudin and Dennis Kanahele and other individuals unknown at this time orchestrated the scheme of NHHC, using ASNEG payments to fraudulently remit funds to CGC Digital, CIC and Malama and other companies that they controlled.”  

FAILURE TO PAY TAXES 

NHHC has also an outstanding amount of $285,365.59 owed to ASG for income taxes on wages paid to employees when it conducted business in the territory, says the lawsuit....

UNJUST ENRICHMENT  

The lawsuit says that — based on detailed financial compliance records of NHHC’s expenditures — of the $4 million only $39,142.35 of the expenditures could be justified, and thus defendants were unjustly enriched by $3.09 million.

As one commenter on Talanei.net points out: "all of this could have been avoided with a back ground check on Dennis Kanahele. Anyone how lived in Hawaii during the 90's is familiar with his background."

When Kanahele received a 2002 pardon from out-going Hawaii Gov Ben Cayetano for a 1984 assault conviction and his 1987 conviction for pointing a loaded shotgun at police officers, the Honolulu Advertiser noted that "Kanahele's felony convictions limited some of his activities, including his involvement in the native Hawaiian bank."

Eleven years later, not satisfied with tsunami funds, Kanahele and Rudin also attempted to get into banking.  It didn't go very well in spite of support from the out-going American Samoa governor.  From Samoa News, January 13, 2013:

Out-going Gov. Togiola Tulafono says he signed last week the permit and necessary paperwork for the Community Investment Corporation, or CIC, to begin its work setting up a new credit union in American Samoa. To be called Community Development Credit Union (CDCU), the new financial institution will fill the void left behind when Bank of Hawai’i shuts down local operations on Mar. 15 this year.

Togiola said that he had spoken to a company familiar with matters of financial institutions early in November, to look at setting up a credit union in the territory, but didn’t identify the company at the time, as discussions were continuing.

He provided an update on this issue on his radio program over the weekend, saying that he had completed meetings with CIC, the firm that will be setting up the new credit union....

He said the new company has an office at Pago Plaza and has been issued a permit to commence its work setting up a local credit union.

Togiola claimed that the community development credit union is strongly supported by the federal government, who is satisfied with the plans for this new credit union to operate here and has policies in place to protect its assets and customers....

It is not known if the CDCU is a nonprofit entity, and what the qualifications to join its membership will be, nor if it is funded with ARRA money or privately or in partnership.

The CIC office has been open at the Pago Plaza for three months and its local representatives are Paula Alo and husband, Michael McDonald.

The couple also manage the One Stop Job Center at the old VA center, which is funded by an ARRA grant managed by the Hawaiian Holding Company.  Samoa News understands the One Stop center has been granted a 6-month program extension, as they were set to close their doors December 31, 2012.

Soon Kanahele's foray into banking went sideways.  From the Samoa News, June 28, 2013:

The DOC Deputy director confirmed to Samoa News that the McDonalds applied for a business license but did not go into detail as to what type of business they are looking at opening in the territory.  

Samoa News understands the name of the proposed business is called PPG Enterprises, and the application is seeking two licenses, one for “Business Management Development” and another for a clothing store.  

The PPG Enterprise is to be located where the Community Investment Corporation (CIC) office is currently located in the Pago Plaza Building, and where the Community Development Credit Union (CDCU) is located. Samoa News understands that Chief Executive Officer for CIC Gabriella Draney wrote a letter indicating the lease to CIC will be handed over to PPG Enterprise.  

This CIC office was mainly for the new credit union...said then Governor Togiola Tulafono....

Samoa News understands the business license application has been referred to the Attorney General’s Office....   Last month, the AG assigned the matter to Deputy Attorney General, Mitzie Jessop and Assistant Attorney General Michael Iosua.   Samoa News understands, Special Agents with OTICIDE, (Office Of Territorial And International Criminal Intelligence And Drug Enforcement) under Homeland Security are conducting an investigation in this matter and have held meetings with ASNEG employee on numerous occasions regarding this case. Samoa News has also been asked to supply copies of its stories from its archives.

Samoa News, Oct 15, 2014:

Federal court documents have revealed that Native Hawaiian Holding Company (NHHC) president Quin Ngoc Rudin is an alleged co-conspirator in a new criminal case filed last month at the federal court in San Francisco, Calif.  

Rudin pled guilty in February this year in the first case against him, a three count indictment handed down last year at the federal court in San Francisco. In this new case, Rudin is accused of defrauding Cisco Systems Inc. and its subsidiary Cisco Systems Capital Corporation and Altura Pharmaceuticals, Inc. — through his own company called CGC Digital.  

The plea agreement, along with other court filings in the case, is sealed by order of the court.  

There is no date in electronic court records as to when Rudin will be sentenced for the first case but federal prosecutors in a motion filed Oct. 3 say that a grand jury indictment handed down Sept. 23 this year naming Michael Q. Mai as a defendant and the case relates to a scheme to defraud Oracle America, Inc., a subsidiary of California based Oracle Corporation.  

The two count indictment alleges conspiracy to commit mail fraud and wire fraud, and engaging in a monetary transaction with criminally derived funds, said prosecutors, adding that Rudin is alleged to be a co-conspirator with Mai in this new case.

The comments are also informative.  On a January 26, 2015 Talanei.com news update titled, "No Response from NHHC to ASG suit", one commenter asks:

"Wasn't this the same company that funded the Manua health? They even sent a private plane to pick up staff to be trained in the mainland. It was too good to be true. special treatment. They should interview employees that were on top of those things. They are still here in Samoa, one of them is a top gun in DoH dept. She will for sure spill the beans."

A quick look at DCCA BREG shows Manua Health System Inc was registered March 21, 2012 by Kanahele's NHHC.  Manua is no longer in good standing.

And yes, NHHC has not responded to the ASG suit.

Apparently it is time for the FBI to re-open its office in Pago-Pago -- or maybe Waimanalo.

---30---

Flashback 2009: CNN Report: Tsunami warning funds squandered in American Samoa

Communist Party: 'Aloha' best Hollywood feature about Hawaiian sovereignty movement

Court House News January 28, 2015: Cisco Systems Seeks $10 Million From Doctors

The Teamsters Production Unit: Jim Dooley connects dots thru Honolulu underworld

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