UPDATED 9/19/12 8:25 a.m.

A Wahiawa senior center already under federal investigation may have received illegal kickbacks from a construction company, according to documents obtained by Civil Beat.

Honolulu city attorneys say they found a 2004 letter showing ORI Anuenue Hale asked for a $90,000 donation in exchange for a multi-million dollar construction contract. Although there’s no way to tell from the letter whether the transaction was executed, it prompted the city to notify the U.S. Attorney’s office.

City attorneys explained as much in an Aug. 20 letter to Budget Director Michael Hansen and Community Services Director Sam Moku. The attorneys described the 2004 letter from ORI President Susanna Cheung to KORL Construction in which Cheung agrees to a $5.3 million construction contract under the condition that the company would then donate $90,000 to ORI.

The possible pay-to-play deal between ORI and KORL was uncovered as part of a probe of ORI by the U.S. Department of Housing and Urban Development that began more than a year ago. (Civil Beat broke the news of that investigation last year, and has since followed it closely, including examining 10 years of ORI documents and the Carlisle administration’s decision to forgive $1.2 million in city loans to ORI.)

The 2004 letter in question — also obtained by Civil Beat — is addressed to KORL project manager Stephen Wong from Cheung. Here’s an excerpt:

This is to inform you that the revised price of $5,306,877 as indicated on your breakdown is accepted. This letter will also serve to confirm:

  1. A monetary donation of ninety thousand dollars ($90,000) will be made by KORL Construction, Inc. to ORI Anuenue Hale, Inc. at the completion of KORL Construction’s portion of the project. (Mahalo!)

City lawyers informed Moku and Hansen about their duty to preserve documents given the potential for litigation related to Cheung’s letter. Neither city officials nor a spokeswoman for ORI immediately responded to requests for comment Tuesday. A spokesman with the U.S. Attorney’s office in Honolulu told Civil Beat in an email, “we do not generally confirm or deny the existence of any criminal investigation which has not otherwise been made public.”

KORL Construction owner Karen Lee told Civil Beat in a phone call that she had not been contacted by city or Department of Justice officials, and said she was not aware of any investigation. “Is something happening?” she asked.

It’s not clear how a possible Department of Justice investigation would affect the Department of Housing and Urban Development’s ongoing monitoring of ORI, which began amid concerns that it was failing to meet eligibility requirements for the millions of dollars in federal Community Block Development Grants it has received via the city. A HUD spokeswoman told Civil Beat she’s looking into the matter.

Earlier this month, Civil Beat reported that HUD said it would need more time to determine the fate of nearly $8 million in federal grant money the city awarded to ORI. That came after the city had reported improvements at the Wahiawa senior center, including increased usage by eligible patrons — one of the key benchmarks federal officials required for compliance with federal grant standards.

HUD spokeswoman Gene Gibson told Civil Beat in an email on Wednesday that HUD is “continuing to work with the City to resolve findings from HUD’s City/ORI monitoring,” and that HUD discovered the letter from Cheung to KORL “during the follow up process.

“HUD revealed the letter to the City’s Budget Director Michael Hansen,” Gibson wrote. “The City then turned the letter over to the U.S. Attorney’s office. HUD cannot predict how the U.S. Attorney’s office will proceed in this matter, but it is unlikely to have any impact on HUD’s monitoring actions and decisions. HUD’s follow up and final decisions regarding the monitoring findings is nearly complete and is handled separate from any proceeding by other offices.”

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