A federal grand jury has indicted Al Hee, president of Waimana Enterprises, on charges that he skimmed $4 million from the company to pay for $92,000 in personal massages, a $1.3 million house in Santa Clara, California, and tuition, rent and other expenses totaling hundreds of thousands of dollars that went to his wife and three college-aged children.

Waimana Enterprises is the parent company of Sandwich Isles Communications, which has received tens of millions of dollars of ratepayer funds to provide telecom services to Native Hawaiians. Last year, the Federal Communications Commission cut the company’s subsidy after concluding that the company’s expenses appeared to be “grossly excessive and unreasonable.” The FCC also raised concerns about payments to affiliated companies owned or operated by Hee or his family members.

The 13-count indictment handed down on Wednesday charges Hee with corrupt interference with the administration of the Internal Revenue Service and lying on his tax returns.

Between 2002 and 2012, Hee received $4 million from Waimana Enterprises to pay the following expenses, according to the indictment:

$752,082  for tuition, books and rent payments for Hee’s three children.

— $1.3 million for a house in Santa Clara, California, used exclusively by two of Hee’s children

— $92,000 for personal massages for Hee

— $121,879 to cover Hee’s personal credit card charges

— $722,550 paid to Hee’s three children in “false wages”

— $590,201 paid to Hee’s wife in “false wages”

— $443,103 to cover false employment benefits for Hee’s wife and children

$28,216 in cash withdrawals by Hee

Hee did not report the $4 million in personal payments on his tax returns, according to the indictment, avoiding $425,988 in federal taxes. Because Hee improperly deducted some of the personal expenses as business expenses, Waimana Enterprises underpaid its corporate taxes by $140,651, according to the indictment.

The indictment also alleges that Hee instructed one of his employees who managed the company’s books to classify his children’s tuition as “business educational expenses” in 2004. For a decade, Hee also allegedly provided false information to this employee, who is only identified by the initials “NH” in the indictment, that resulted in false books, records and tax returns.

Hee faces up to three years imprisonment and a fine of up to $250,000 for each of the 13 charges.

Hee denies the charges.

“Mr. Hee is innocent of the charges and we look forward to defending him in court,” Kurt Kawafuchi, an attorney for Hee, told Civil Beat.

Al Hee is the brother of former Hawaii state Sen. Clayton Hee, who lost a bid for lieutenant governor this year.

You can read Civil Beat’s previous coverage of the controversy surrounding Sandwich Isles here:

Feds Crack Down on Telecom Company Serving Native Hawaiians 

What Should the Public Know About Sandwich Isles? PUC Won’t Say

 

You can read the grand jury indictment below:

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