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By Ken Ige, Star-Bulletin
Michael Kahapea bows his head as the verdict is read.
He was found guilty on nearly all charges.

Judge orders him held in
prison until sentencing Sept. 28

The man in the middle
Housing scandal timeline
Case figures in mayoral campaign

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By Gordon Y.K. Pang
and Debra Barayuga
Star-Bulletin

Fired city housing official Michael Kahapea was found guilty of 43 counts of theft, money-laundering, forgery and related charges by a Circuit Court jury this morning in connection with the Ewa Villages scandal.

Circuit Judge Rey Graulty ordered that Kahapea, 57, be confined at Oahu Community Correctional Center without bail until sentencing -- scheduled for Sept. 28 -- despite Kahapea's attorney's attempt to keep him free on supervised release.

Kahapea was found guilty of 19 counts of first-degree theft; five counts of unlawful ownership of a business; one count of Class B money laundering, and two counts of failure to report income. Each of those counts is punishable by a maximum 10 years in prison.

He was also found guilty of five counts of second-degree theft; 11 counts of second-degree forgery; one count of Class C money laundering, and two counts of bribery. Each counts carries a five-year maximum prison term.

Stephen Swift, whom prosecutors charged with one count of second-degree theft, was acquitted.

Donald Wilkerson, Kahapea's attorney, is attempting to reduce the number of theft charges by 12, stating that prosecutors "overcharged" when he was first indicted.

"It's important that those theft counts are dismissed," Wilkerson said. "I don't think that the verdict necessarily indicates Mr. Kahapea is necessarily responsible for (the theft of) the $5.6 million."

Kahapea gave no statement as he left the courtroom. Wilkerson said he would appeal.

"We really didn't expect this verdict," he said. From the beginning, he and Kahapea conceded that he likely would be found guilty of some of the charges, he said, "but not this many."

Wilkerson said he intends to ask the Hawaii Paroling Authority to set Kahapea's minimum term consistent with other cases involving theft.

Deputy Prosecutor Randal Lee said he was pleased with the verdict. He expects to ask for an extended and enhanced sentence based on the amount of taxpayer money taken.

Lee said the length of the trial was largely because of the immense amount of paperwork involved.

The eight-man, four-woman jury had been deliberating since last Wednesday in a case that involved the largest theft of city funds ever.

Prosecutors say Kahapea was the mastermind of a scheme that took some $5.8 million from a commercial relocation fund by rigging the procurement system.

"Moving" companies set up by friends and family wound up with the bids and received payment for work either not done or done at inflated costs, prosecutors say.

The relocation fund climbed from $1.2 million in 1993 to $6.4 million in 1997, and Kahapea received about half that money in kickbacks from both movers and the companies that were moved, prosecutors say.

Kahapea, in defense, said much of the funding was used to pay for the cleanup of dump sites in the neighborhood and to rehabilitate old homes.

Topic in mayoral campaign

Out of the courtroom, the Ewa Villages scandal has become part of this year's mayoral campaign. Challenger Mufi Hannemann has questioned how the scandal grew so elaborate under Mayor Jeremy Harris' watch.

Harris has countered that Hannemann and the City Council approved the additional relocation funding with no questions asked. The project began when former Mayor Frank Fasi was at the helm and Harris was his managing director.

Harris this morning called the verdict "fantastic."

"I am extremely pleased," Harris said, adding that, as a result of the corruption case, the city has instituted more internal controls to prevent problems.

Fasi said he, too, was pleased, but he blamed Harris and Hannemann for the corruption.

"Obviously (the guilty outcome) was going to happen, so there's nothing to report. But it was inexcusable for the mayor of the City and County of Honolulu and the people who were responsible to allowing this kind of corruption to happen," Fasi said.

Harris said the corruption began during Fasi's term and that he began an undercover investigation as soon as he detected something was wrong.

Councilman Duke Bainum, among the first to demand an investigation, said this morning: "As a custodian of taxpayers' interest, I am relieved justice has been done. This case was a good but costly lesson to the city. I am happy this chapter in the city history is closed. It should have never happened."

The tone for the trial was set early on when Ewa Villages hauler David "Brian" Kaahaaina testified that he did some cleanup work at Kahapea's behest and received between $700,000 and $800,000 in "bumped up" payments from the city. He returned about half back to Kahapea, he said.

key testimony from family

Key testimony also came from Michael J. Barnett, Kahapea's nephew. Barnett said he cashed cashier's checks made out to him on behalf of his father, the late Russell Williams, and Kahapea totaling more than $200,000. Prosecutors said those checks came from the owners of companies awarded the contracts for the bogus Ewa Villages work.

Evelyn Pang, a former Kahapea secretary, testified that she was instructed to type in bidding information on the instructions of both Kahapea and Norman Tam, another housing official who was believed to be a key accomplice. Tam died of natural causes on Dec. 31, 1999.

Several Nevada hotel executives testified that Kahapea gambled thousands in their casinos.

Kahapea never took the stand during the trial. Since being granted supervisory release, he has been working as a limousine driver.

More than a dozen were arrested in connection with the case, but Swift was the sole remaining co-defendant as trial began.

Charged with one count of second-degree theft for cashing a $19,000 check from the city, he countered during trial that the city promised to pay for electrical and other infrastructure work tied to his relocation from Ewa Villages to the Waipahu Sugar Mill site.

Public Defender Todd Eddins, Swift's attorney, said after the verdict that it was "truly obscene that an honest businessman was hung out to dry with the city's dirty laundry."

Seven other codefendants reached plea agreements with the state and helped in the case against Kahapea. Besides Tam, Russell Williams died before trial began.

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Star-Bulletin reporter Suzanne Tswei also contributed to this story.

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Star-Bulletin
Michael Kahapea in Circuit Court near
the beginning of the trial.

The man in the middle
of Ewa Villages trial

Accused: Michael Kahapea, 57, former city property management branch chief from 1993 to 1997, oversaw relocations at Ewa Villages, Middle Street and West Loch.

Charged with: 21 counts of first-degree theft (maximum sentence of 10 years in prison on each count); four counts of second-degree theft (five years each count); 11 counts of second-degree forgery (five years each count); five counts of unlawful ownership of a business (10 years each count); one count of Class B money laundering (10 years); one count of Class C money laundering (five years); two counts of bribery (five years each count); and two counts of failure to report income (10 years each count).

Prosecutors say: He was the mastermind of the most expensive theft and fraud scheme ever committed against the City and County of Honolulu. He used his position as the city's relocation expert to manipulate the bidding process, diverting some $5.8 million from the Ewa Villages commercial relocation fund into the accounts of companies set up by friends and relatives. The scheme perpetuated for a time because of the trust placed in his position, but safeguards ultimately exposed it.

Kahapea's attorney says: Kahapea was no angel, but was instructed by his supervisors to shift funds from the relocation account to pay for the cleanup of waste sites scattered throughout Ewa Villages. City supervision was faulty and disorganized all-around. There was selective prosecution in the case, and police did not do a thorough job covering all the bases. Witnesses, especially those who were city employees, were forced to lie on the witness stand.

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A housing scandal timeline

Feb. 11, 1993: The city enters an agreement with Campbell Estate to purchase 590.7 acres that include the Ewa Sugar Plantation and its residential communities known collectively as Ewa Villages. The property was then under the management of Oahu Sugar Co. The city's intent is to revitalize the area and allow employees to continue living in their homes.

May 15, 1997: City Council members are told that the city is in the hole for $63.5 million in loans connected to the Ewa Villages Revitalization Project. Original plans called for new homes to be sold at market rates to finance the renovation of homes for plantation workers, but those plans blow up when the economy and housing market go south.

June 6, 1997: The City Council introduces a resolution seeking subpoena powers after accusing the administration of Mayor Jeremy Harris of withholding information relating to the fledgling Ewa Villages project.

Oct. 31, 1997: City housing officials Michael Kahapea and Norman Tam are arrested on charges that they improperly awarded commercial relocation contracts to family, friends and associates. In ensuing days, reporters find tenants who supposedly had moved still operating out of their Ewa Villages addresses.

Dec. 5, 1997: City officials confirm that day-to-day functions of the Department of Housing and Community Development's property management branch has been transferred to the Finance Department.

April 22, 1998: Police begin making arrests in connection with questionable payments to a company doing relocations of businesses out of what now is the Middle Street bus depot. Arrests are also made in connection with questionable relocation work at the city's West Loch relocation project.

June 8, 1998: Michael Kahapea turns himself in to police after holding a press conference in Ewa Villages claiming that he was instructed by supervisors to submit false billing statements, in part, to help clean up waste sites in the area.

June 25, 1998: Donald Hall, owner of A1 Trucking Hawaii, pleads guilty to charges of theft, forgery and money laundering in connection with the Ewa Villages scandal. He also agrees to cooperate with prosecutors in their case against others.

Dec. 31, 1999: Former city housing employee Norman Tam, charged with 34 counts in connection with the Ewa Villages case, dies of a heart attack. Subsequently during trial, Kahapea will try to divert some of the blame on Tam.

May 1, 2000: Jury selection begins in the Ewa Villages trial with seven of nine defendants already having pleaded out, leaving only Michael Kahapea, charged with 47 counts, and Stephen Swift, accused of one count of theft. Opening statements are heard May 30.

Aug. 2, 2000: Kahapea indicted on 43 counts.