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Corruption Lawsuit: Another Hawaiian ‘8a’ Defense Contractor in Court
By Andrew Walden @ 1:11 AM :: 404 Views :: Ethics, Military, OHA

Corruption Lawsuit: Another Hawaiian ‘8a’ Defense Contractor in Court

by Andrew Walden

Allegations of corruption are hitting yet another Hawaiian ‘8a’ racial set-aside defense contractor.

As usual, most of the action is occurring outside Hawaii.

Filed August 5, 2024, in Texas state courts and then ‘removed’ to the El Paso Division of the Federal District Court for the Western Division of Texas, Gonzalez v Shishido alleges that ‘8a’ insiders from several interrelated 8a contracting firms are systematically shortchanging the Kailua-based ‘Native Hawaiian Legal Defense and Education Fund, LLC’ aka Ho‘omaka Foundation.

NHLDEF is a registered native Hawaiian Organization.  According to the complaint, several of the 8a contractors “ceded 51% equity interest of each Corporate Affiliate (except Forte Human Capital) to the Fund in order to qualify each Corporate Affiliate for the SSA's 8a Business Development Program.”   

The five 8a contractors named in the suit allegedly obtained over $270M in DoD contracts between 2013 and 2024.

Louis Perez III, President of NHLDEF, did not respond to a request for comment.  NHLDEF is named as a defendant, but Perez is not.

In addition, plaintiff Luis M Gonzales, a disabled Air Force veteran and El Paso resident, alleges the defendants robbed him of ownership in several 8a companies set up to bid for 8a contracts set aside for disabled veterans.

Here are some key passages from the complaint:

8. Defendant Native Hawaiian Legal Defense and Education Fund, LLC (Fund) owns a 51% equity interest in:

a. KAKO'O SERVICES LLC (a Hawaiian limited liability company that is registered to do business in the State of Texas) ("Kako'o"),

b. CORNERSTONE SERVICES & SOLUTIONS LLC (a Hawaiian limited liability company that provides "small business support services" related to accounting and finance, and maintains staff in San Antonio, Texas) ("Cornerstone") ,

c. AKAHI ASSOCIATES, LLC (a Hawaiian limited liability company that provides staffing services and is registered to do business in the State of Texas), and

d. KUKULU LLC (a Hawaiian limited liability company that provides administrative support services and is registered to do business in the State of Texas)

Defendant Fund also owns a 19.3% equity interest in FORTE HUMAN CAPITAL, INC., a Texas corporation headquartered in El Paso County, Texas through which Defendants recruited and staffed personnel for the above-mentioned Hawaiian entities (collectively, "Corporate Affiliates")….

9 d. … The Fund is an alter ego of Defendant (Todd) Shishido. Even though the Fund owns 51% of all Corporate Affiliates (except Forte), the Fund participated in meetings and discussions concerning the various government contracts and business matters of the Corporate Affiliates only once between the date of Gonzalez's (2013) hiring and April 2024. The Fund does not receive distributions or remuneration from the government contracts consistent with its ownership interest in the Corporate Affiliates, and its business activities and decision making are controlled by Defendant Shishido even though he is neither an officer nor board member of the Fund. Plaintiffs further allege that the Fund has failed to maintain minutes of meetings, board resolutions, corporate authorizations and other corporate records, or obtain federal tax-exempt status as a nonprofit, consistent with its existence as a Hawaii nonprofit corporation.

e. The Corporate Affiliates are alter egos of Defendants Shishido, Komeiji, and Gusman. Personnel from one Corporate Affiliate perform work and are responsible for activities of other Corporate Affiliates, share resources and all personnel report to Shishido, Komeiji, and Gusman interchangeably. The amounts charged by one Corporate Affiliate to other Corporate Affiliates for work performed or services rendered are determined arbitrarily by Defendants Shishido, Komeiji, and Gusman to achieve their personal tax and compensation objectives without regard to the value of services performed by one Corporate Affiliate to another. …

13. … Defendants Shishido, Komeiji and Gusman structured their government contracting business in a manner that would give them an advantage against competing contractors for personnel staffing contracts awarded by the US Department of Defense (DOD) through the SBA: they ceded 51% equity interest of each Corporate Affiliate (except Forte Human Capital) to the Fund in order to qualify each Corporate Affiliate for the SSA's 8a Business Development Program ("8a Program"). Defendants represent to the public that the Fund is a nonprofit organization dedicated to "foster[ing] education and economic development to promote Native Hawaiian advancement" even though neither entity is registered as a tax-exempt entity with the Internal Revenue Service ("IRS").

---30---

PDF: Gonzalez v Shishido (3:24-cv-00366-LS)

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