A licensed contractor employed as a construction manager for the state’s Kauhale Initiative has written to Gov. Josh Green, alleging violations of building codes, contract terms and other issues with the homeless housing program — allegations that the initiative’s developer denies.

Jeffery Ben, an employee of the multinational construction and project management firm CM&D, outlined his concerns in a May 1 letter to Green and other senior administration officials.

“As a Construction Manager working on these projects, I have witnessed what I believe to be multiple violations, including potential fraud, conflicts of interest, and mismanagement of taxpayer funds,” Ben wrote in the email. “I do not want to be associated with these practices, nor do I want to be held accountable or publicly tied to these actions if they are exposed to the media in the future.”

Ben offered to “fully cooperate with any investigation into these matters” and provide a sworn deposition and testimony. The problems, he wrote, involve the state’s main contractor for the initiative, the nonprofit HomeAid Hawaiʻi, and CM&D, which HomeAid has hired to manage the sprawling statewide initiative. 

Nicolette Keaveney, CM&D’s Manhattan-based human resources manager, declined to comment, saying the matter has been referred to an attorney. In a statement, HomeAid called Ben’s allegations baseless. Following his complaint, the contractor said it launched an independent financial investigation by a certified public accountant. 

“Initial findings conclude there are no ethical violations, fraud, conflicts of interest, or breaches of the law by HomeAid Hawaii or its CEO, Kimo Carvalho,” the statement from HomeAid said.

Ben’s allegations, the statement said, “demonstrate a misunderstanding of applicable laws and the Governor’s Emergency Proclamations Related to Homelessness, the nonprofit builder model centered on philanthropic community support, and the internal safeguards upheld to ensure full legal compliance.”

Lawmakers this past session set aside another $88.2 million for the kauhale and related ʻOhana Zones programs over the next two years. The May 1 kauhale funding bill also increased oversight of the projects, following concerns about high operating costs of some kauhale, the unavailability of documentation to ensure accountability and the practice of awarding development contracts without public bids.

Ben, a licensed contractor in Hawaiʻi since 2012, said he decided to step forward now because he believes in the importance of using taxpayer money wisely. Five days after sending his letter to the governor, the construction company placed him on leave.

“I am worried,” he told Civil Beat, when asked why he didn’t stay silent. “It’s a small island. And it could affect my future. But that’s not who I am.”

Letter Includes Broad Bullet Points, Few Details

Ben’s letter to Green includes 10, broad bullet-pointed items, with headings but no details of the allegations or documentation. Ben said he hopes to fill in details directly with Green’s office.

He added that he had first brought his concerns to CM&D management in an email on March 12 and later met with company officials.

“I gave them ample time,” he said, “and they didn’t do anything.”

Green’s Kauhale Initiative is meant to address critical housing needs for Hawaiʻi’s homeless population and is being implemented under the governor’s emergency proclamation on homelessness.

“I gave them ample time, and they didn’t do anything.”

CM&D Construction Manager Jeffery Ben, on CM&D’s response to his internal complaint.

An overarching problem, according to Ben, is that HomeAid places such an emphasis on building quickly that it at times overlooks best construction practices and procedures — an allegation echoed by several other people with inside knowledge of kauhale projects who spoke on the condition of anonymity, citing confidentiality policies.

“Procedure is out when Kimo says, ‘Get this done now; just get it done,’” Ben said.

HomeAid said in its statement that that was not true. 

“While there is of course urgency in executing the projects to house those in need of homes, HomeAid Hawaii exercises best practices and procedures within its field, in compliance with applicable laws, emergency proclamations, contractual obligations and governmental directives,” it said.

A Few Specific Allegations

At Civil Beat’s request, Ben provided a few details of his broad allegations, focusing on Alana Ola Pono village in Iwilei, where he served as construction manager. 

The $5.2 million project opened in December with 43 small housing units, two security units, two community centers and common bathroom, kitchen and laundry spaces. Alana Ola Pono initially could house only 18 people because of utility issues.

As a charitable organization, HomeAid can receive funding through public donations as well as in-kind donations of labor and supplies to reduce costs to the public of building the kauhale villages. Ben alleged that one conflict of interest arose when he said HomeAid hired a company owned by Carvalho’s husband, Dotson Gardens LLC, to do the landscaping for the village.  

Legal experts said that had that happened it might not technically be a conflict of interest as defined by Hawaiʻi nonprofit law, but it could be problematic.

Among the fiduciary duties of trustees are prohibitions against favoritism and self-dealing. Hawaiʻi’s nonprofit corporations statute further specifies requirements for organizations like HomeAid Hawaiʻi, among them that directors must act with “the care an ordinarily prudent person in a like position would exercise under similar circumstances.”

Frances Miller, formerly a visiting professor at the University of Hawaiʻi’s William S. Richardson School of Law who has taught trusts and estates law for 50 years at Boston University, said a deal between a nonprofit CEO and the CEO’s spouse is ill-advised.

“The rule is you don’t do it,” she said. 

She added such a deal might be OK if no one else could do the work or if Carvalho’s husband offered “a better deal than anyone else would ever give,” equivalent to an in-kind donation.

Hugh Jones, the former head of the Hawaiʻi Attorney General’s charities division in charge of regulating nonprofits, said Carvalho hiring Dotson Gardens would probably not be a conflict of interest as defined by Hawaiʻi statutes, which he said “are kind of forgiving when it comes to conflicts of interest.”

Nonetheless, Jones said, HomeAid’s action could raise issues of favoritism and nepotism and whether the HomeAid board acted with the due care required by the Hawaiʻi statute. That would depend on internal policies the board has established, Jones said.

“Fran has a point,” he said, “regardless of whether it’s truly a legal ‘conflict of interest.’”

Documentation obtained by Civil Beat shows HomeAid paid Dotson Gardens for landscaping, although the documents do not say whether the money paid came from state funds or HomeAid’s coffers. An invoice from Dotson Gardens to HomeAid shows the company billed the non-profit $5,218 for a variety of goods and services for a 2023 kauhale project, not Alana Ola Pono, including “planter boxes, area foliage and hanging ferns,” as well as “Site Assessment, Design and consultation.”

The labor fee included $3,125 for 25 “units” of work, but Dotson provided a 40% “Labor Discount,” which reduced the labor fee to $1,875. 

In a statement, HomeAid said it used state funds to purchase materials such as plants and planter boxes from an independent supplier, while funds for the labor came from private donations to HomeAid. 

The organization added that costs were reasonable and fair and that Dotson “volunteering his time and offering discount labor to assist with landscaping at Alana Ola Pono, is consistent with HomeAid Hawaii’s charitable model and internal governance, and therefore required no specific board approval.”

“Mr. Carvalho conferred with board members and obtained guidance prior to authorizing his husband to perform landscaping work at Alana Ola Pono,” HomeAid added.

The Use Of Pre-Made Buildings From South Korea

Another question raised by Ben is whether HomeAid violated contract terms regarding local hiring when it used premade buildings imported from South Korea for some community buildings.

The contract between HomeAid and the state requires HomeAid to make sure “Hawaii residents compose not less than 80% of the workforce employed to perform the Contract work on the project.”

Even though Green’s emergency proclamation on homelessness suspended many state laws related to building kauhale, the contract says HomeAid must follow state law requiring government construction projects to hire local workers. The statute imposes the 80% requirement for construction.

In the case of Alana Ola Pono, HomeAid chose to use prebuilt units similar to large modular homes for the village’s common buildings, including an office, community center and communal bathrooms and showers. 

“How are you going to use 80% local labor when you’re buying these large buildings from South Korea and just shipping them here?” Ben asked.

HomeAid said that the “out-of-state manufacturing of the modular building shells does not qualify as ‘construction’” under the statute. The organization added that it “strives to employ local labor on-site and to ensure compliance” with the law.

Ben also alleges that the original plumbing system in the common bathroom unit didn’t follow federal and county codes and as a result allowed sewage fumes to come back into the residents’ common bathrooms.

“You could smell all the waste in the showers,” he said.

Mark Hee, a representative for the unit’s manufacturer, South Korea-based Staus, said the fumes problem involved outside plumbing and engineering, not plumbing related to the unit.

“We have documentation and pictures to prove it,” Hee said.

HomeAid said the sewage smell issue was fixed before the development was occupied by tenants and that it has investigated the cause of the problem and is taking action to address the issue under its agreements with contractors.

If any costs were incurred to remedy the problem, the organization said, “HomeAid Hawaii intends to recover such costs from the accountable parties,” not the state.

Construction Manager Placed On Paid Leave

Ben said he had no documentation supporting his allegations because he lost access to records when CM&D sent him a letter dated May 6 placing him on paid leave. 

“While on administrative leave, you are directed to refrain from entering any CM&D offices, project sites, or accessing any CM&D property, systems, or networks including but not limited to email, internal databases, shared drives, and communication platforms,” the letter reads. “Your access credentials have been temporarily suspended to ensure compliance.”

Ben’s lawyer, Bosko Petricevic, noted that CM&D’s May 6 letter doesn’t allege Ben has done anything wrong. Instead, it says the leave will allow CM&D to conduct an internal review.

“One can easily assume that this is an attempt by his employer to silence him and prevent him from engaging in further whistleblower action,”  Petricevic said.

Whether Green will agree to meet with Ben remains to be seen. The governor’s spokesperson, Makana McClellan, did not respond to requests for comment.