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Investigator testifies
inconsistencies led
him to suspect fraud,
‘bid rigging’

By Debra Barayuga
Star-Bulletin

A police investigator asked to look into allegations of theft in the city's Ewa Villages relocation project found that the city paid five companies that were consistently awarded the jobs -- a total of $5.8 million.

Certain companies consistently winning bids "amounted to a possible bid-rigging scenario," police Capt. Daniel Hanagami testified yesterday in the theft trial of fired city housing official Michael Kahapea.

Kahapea is on trial for allegedly stealing $5.6 million in city relocation funds by allegedly funneling work to friends and relatives by fixing bids and getting them to set up bogus moving companies in exchange for kickbacks.

Hanagami was asked in August 1997 to investigate allegations of theft from the city's Ewa Villages relocation funds by then Budget Director Malcolm Tom and Finance Director Roy Amemiya.

The city paid a total of $5,863,849 to A-1 Hawaii Trucking, American Hauling, Specialty Pacific Builders, Titan Moving and RJ Hauling to move tenants from Ewa Villages, Hanagami said.

When reviewing the relocation rules, Hanagami learned that the tenants were supposed to select the movers, but in actuality, the city was selecting them.

Solicitation letters to movers had been sent out by Norman Tam, who designated himself as relocation coordinator and worked with Kahapea, Hanagami said.

Kahapea was the one to select the movers.

A review of the bid proposals involved in the relocations raised his suspicions, Hanagami said.

Titan Moving's address was bogus and the company could not be located. Specialty Pacific Builders and RJ Hauling shared the same office and phone number. Other companies who submitted bids but were not selected gave the same phone number as Specialty Pacific Builders.

Of the five companies awarded contracts for relocation work, only Speciality Pacific was listed in the directory as a mover, Hanagami said. One of the five gave an address next to Specialty Pacific Builders, but when he checked, it turned out to be a seamstress' shop.

Checked with tenants

To verify that the moves actually took place, Hanagami began calling and making appointments with all the tenants who were supposed to have been moved by the five companies who were paid by the city. His purpose was to find out if they had moved and if the payments were justified.

If they hadn't been moved and the city paid for it, that would have constituted "outright fraud," Hanagami said.

Hanagami said he visited Ewa Villages personally and tried to contact all the tenants who had allegedly been relocated. At least four companies were supposed to have moved but were still there: Independent Sandblasting, Ewa Beauty Shop, American Welding and American Hauling -- one of the winning bidders.

Hanagami also spoke with Stephen Swift, president of a recycling company called Transcend, which moved from Ewa Villages to Waipahu Sugar Mill. He was later charged with one count of second-degree theft and is standing trial with Kahapea.

Problem with voided check

Swift was reimbursed $19,495 by the city for electrical work done by C&C Electric at his new location in Waipahu. He had submitted to the city a copy of the check he wrote out to C&C Electric and an invoice by C&C to seek reimbursement.

But Hanagami found no such check in Transcend's subpoenaed bank records. When asked for more information, Swift produced a voided $19,495 check made out to C&C Electrical on Transcend's account. "I felt I had probable cause to arrest him for violations," Hanagami said.

Swift contended there were certain amenities and changes he had to make at the Waipahu location that he wasn't being compensated for and so he worked it into the $19,495 check, Hanagami said. Swift also said Kahapea told him to write the check and void it.

An analysis of the five moving companies' bank records also raised a red flag, Hanagami said.

Records showed that Donna Hashimoto-Abelaye, doing business as Specialty Pacific Builders received $54,047; Russ Williams dba RJ Hauling, $1,366,807; Donald and Shirley Hall of A1 Hawaii Trucking, $860,584; David Kaahaaina of American Hauling, $775,205 and Claude Hebaru of Titan Moving & Hauling, $1,987,711.