A Hawaiʻi County employee who pleaded guilty for his role in a bribery scheme worth millions told a federal judge that no affordable housing stock was lost as a result of the plot – a claim the judge resoundingly dismissed when sentencing him to nearly four years in federal prison last week.
Alan Rudo, a former housing specialist on the Big Island, sought or received $1.8 million in bribes and kickbacks in exchange for ensuring lucrative affordable housing agreements that went to three companies controlled by Rudo and his partners. Those companies never built a single affordable unit.
At his sentencing, prosecutors explained how the county employee was the linchpin of the plan who pocketed the “lion’s share of the proceeds.”
“Mr. Rudo conspired to corrupt Hawaiʻi’s government to line his own pockets,” Mohammad Khatib, the federal prosecutor, said.
In doing so, Khatib said, Rudo denied the public the benefits of affordable housing, a particular blow in a county that has long lacked enough affordable housing.
At his sentencing on Thursday, Rudo argued the opposite was true.
“I never wanted to jeopardize any affordable housing,” he said, adding that he had a reputation as “the guy that got the affordable housing developed.”
U.S. District Court Judge Jill Otake didn’t buy it when handing down a sentence of 46 months incarceration and three years of supervised release.
“I genuinely believe that affordable housing was not built because of this scheme,” the judge said. “At least I suspect you knew that there was good reason to believe that affordable housing wouldn’t be built because of the scheme.”
Rudo’s attorney, Gary Gurmail Singh, told Civil Beat his client takes full responsibility.
Millions In Credits At Stake
Rudo was a housing specialist until 2018 at the Hawaiʻi County Office of Housing and Community Development, where he was responsible for drafting affordable housing agreements with developers and advising his supervisors on whether to enter into those deals. Part of his job was to make sure that developers followed through by building affordable units.
In Hawaiʻi, developers can earn excess affordable housing credits for building more units than required. These credits can be sold to someone else to fulfill affordable housing mandates on another project — sometimes for tens of thousands of dollars.
Federal prosecutors argued that Rudo used his position to funnel three affordable housing agreements worth more than $11 million to companies owned and controlled by Rudo and his co-conspirators. Rudo pleaded guilty in 2022 to one felony count of conspiracy to commit honest services wire fraud.
One deal transferred 212 affordable housing credits to Luna Loa Developments LLC, which was created by businessman Rajesh Budhabhatti, and partly owned by Rudo and attorney Gary Zamber, according to court records. In exchange, Luna Loa was required to develop 106 affordable units. Instead, the company sold some of the excess credits for at least $350,000, without building a single unit.
Another agreement required an LLC owned by Rudo, Budhabhatti and Zamber — West View Developments — to build a total of 52 affordable units after receiving 104 affordable housing credits. The company traded 46 of the housing credits and $14,000 for land in Kailua-Kona, which the company later sold along with two more housing credits for a total of more than $1 million.
The defendants also failed to build affordable housing on land in Waikoloa that was transferred to an LLC operated by Rudo, attorney Paul Sulla and Zamber to satisfy another unnamed developer’s affordable housing requirements. Instead, the defendants sold the property for $1.5 million.
All told, FBI investigators found that these three transactions brought in land and excess affordable housing credits worth at least $10.98 million.
As part of his plea deal, Rudo forfeited his portion of over $2.3 million and 45 affordable housing credits that federal officials recovered as part of the investigation and agreed to a $2.1 million judgment against him. But federal officials were unable to recover more than $483,000 in additional funds, according to prosecutors.
‘I Really Didn’t Think I Could Do Wrong’
At Rudo’s sentencing, Otake found that the former county employee was significantly involved in the scheme in his capacity as “the public servant who was voluntarily, for lack of a better word, corrupted.”
Despite Rudo’s significant role, prosecutors asked the judge for leniency when handing down a sentence. Rudo was also the only one of the four co-conspirators to plead guilty and turn state’s witness, testifying against the others at trial in 2025. Prosecutors had also made a mistake when negotiating Rudo’s plea agreement. Both parties stipulated that the total amount lost through the scheme was $1.5 million to $3.5 million — significantly less than the roughly $11 million used to calculate his co-conspirators’ sentences.
“Of the four members of the conspiracy, Mr. Rudo is the only one — the only one — who has demonstrated the capacity to self-reflect, to recognize the harm he caused, to admit that he even committed the crime,” Khatib, the prosecutor, said. “Mr. Rudo’s rehabilitation has been remarkable.”
But Rudo showed little of that remorse in his statement before the judge at his sentencing, instead giving a defiant, roughly 20-minute speech rationalizing his actions.
“The truth was I thought I really could make a difference,” he said. “I was doing affordable housing. I was the fair housing guy. I was meeting with seniors, I was meeting with homeless people. I really didn’t think I could do wrong.”
While he said he knew that it was wrong to pocket money meant to incentivize developers to build affordable housing or hold a stake in the companies to which he steered affordable housing contracts, he insisted that no opportunities to build affordable housing were lost as a result of the scheme.
Rudo’s statements didn’t persuade Otake to go easy on him. If anything, they had the opposite effect.
“You’re somebody who’s convinced himself that he is a noble person, and has convinced himself that he is really doing things for the right reasons when I’m not so convinced that’s true,” the judge said. “I do think that here you acted selfishly in many ways.”
His lack of contrition pushed the judge to hand down a sentence that was at the high end of the possible range, although still significantly less than that of his co-conspirators. At their sentencing hearings earlier this year, Budhabhatti was handed 90 months in prison, Zamber received 70 months and Sulla received 60 months.
Rudo is still involved in affordable housing, he told the court. He works with a nonprofit that helps homeless veterans find housing, and he recently secured a roughly $30,000 grant, as well as a grant from the U.S. Department of Veterans Affairs for six beds to serve homeless veterans. He’s also working on grants and bid proposals for another contractor working on affordable housing.
Rudo has asked to serve his 46 months at a federal prison in Oregon. He is required to report to the facility by July 9.
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This story was originally published by Honolulu Civil Beat and distributed through a partnership with The Associated Press.