Former Hawaii County housing specialist gets 46 months in bribery scheme

A former Hawaii County housing specialist was sentenced in Honolulu to 46 months in federal prison after prosecutors said he turned the county’s affordable housing system into a private payoff machine, helping three development deals win approval while no homes were ever built.

Alan Scott Rudo, 59, who now lives in Cathedral City, California, was also ordered to surrender to the Bureau of Prisons by July 9 and to forfeit $483,265. Federal prosecutors said the money and property were tied to the offense. Rudo had already pleaded guilty on July 18, 2022, to conspiracy to commit honest services wire fraud.

Court records and Justice Department filings say Rudo admitted taking about $1,931,778 in bribes and kickbacks from Hilo attorneys Paul Sulla Jr. and Gary Zamber, along with former Big Island businessman Rajesh Budhabhatti. In return, he used his position inside the Hawaii County Office of Housing and Community Development to help push through three affordable housing agreements for Luna Loa Developments LLC, West View Developments LLC and Plumeria at Waikoloa LLC. Those agreements were worth more than $11 million in land and excess affordable housing credits, but the companies never built a single housing unit.

The case cut to the center of Hawaii County’s housing crisis because it involved Chapter 11, the county’s affordable housing policy, which is administered through OHCD’s Planning Branch. County audit material says purchasing affordable housing credits has been the most common way developers meet their obligations, accounting for about 44% of compliance. When the fraud surfaced in July 2022, the County Council responded with Resolution No. 467-22, requesting a performance audit of the credits program.

That audit found the scheme reflected years of weak monitoring and inadequate internal controls. It concluded the department could not properly evaluate the program’s success and recommended major reforms, including revising Chapter 11 and creating administrative rules. The county has said its Affordable Housing Production Program now receives at least $5 million a year under Ordinance 22-77, underscoring how much now rides on housing policy after the scandal.

Kehaulani Costa, the county housing administrator, said the sentencing closed an unfortunate chapter and highlighted the need for stronger internal controls, clearer segregation of duties, better documentation and more staff training. Related federal cases have already resulted in longer sentences for Rudo’s co-defendants: Zamber received 70 months, Budhabhatti 90 months and Sulla 60 months. The fallout has left Hawaii Island with a sharper question than one defendant’s punishment alone: how to rebuild trust in the office that is supposed to protect affordable housing for residents who can least afford to lose it.