Friday, June 18, 1999

Feds probe union
chief’s finances

Including dealings with
failed health insurer

Gary Rodrigues, director of United
Public Workers, is under investigation

By Ian Y. Lind


Federal authorities are probing the financial activities of United Public Workers state Director Gary Rodrigues, including the union's dealings with the failed health insurer Pacific Group Medical Association .

Several current or former union members, and former employees of UPW and PGMA, told the Star-Bulletin they have been interviewed by U.S. Department of Labor and FBI investigators.

Assistant U.S. Attorney Florence Nakakuni said she could not confirm nor deny reports that a federal grand jury has issued subpoenas and is reviewing evidence in the case.

However, court records show Nakakuni sought a formal agreement several months ago giving federal investigators access to PGMA-related records already in possession of the state attorney general and the insurance commissioner.

"The United States is conducting an investigation of certain matters which relate, at least in part, to PGMA, and has obtained and expects to obtain various records relating to PGMA," according to a memo filed in Circuit Court proceedings.

A court order approving the document sharing agreement was signed by Judge Gail Nakatani on May 7.

PGMA provided health insurance coverage to 28,000 island residents, including thousands of UPW members and their families, before it was seized by state regulators in March 1997.

The insurer's collapse left behind more than $27 million in unpaid bills. PGMA's failure has been blamed, at least in part, on the fraudulent diversion of funds from the insurance business into a murky network of businesses and bank accounts controlled by the company's founder.

Documents sought by federal investigators include records seized when the attorney general executed a search warrant in early 1997, as well as records subpoenaed by the insurance commissioner during ongoing liquidation proceedings.

They include documents previously subpoenaed from a Kauai company headed by Rodrigues' daughter, Robin H. Rodrigues, which received payments for unspecified services related to the PGMA-UPW insurance agreement.

The Star-Bulletin has reported on several other questionable transactions, including Gary Rodrigues' role as the only authorized dealer in the state for log materials used to build UPW offices on three neighbor islands, and Rodrigues' alleged use of union staff over a period of years to build and maintain his private home in Bend, Ore.

State of the Unions

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