Hawaii Corruption: Lawyers, Banks, Charities, and Non-profit Corporations
HAWAII CORRUPTION IS SO RAMPANT IT MAY BE UNWISE TO PUT YOUR MONEY IN A TRUST AND TRUST A LAWYER, ESPECIALLY IN HAWAII.
A CONSUMER ALERT
Why is the Charity business booming in Hawaii?
“The Charity Scam,” or “Guess where your money went?”
Creating a trust fund to hold and manage your money can be beneficial when done for the right reasons and by a competent honest lawyer. But there can be a down side to this carrot. The downside is that your lawyer must be trustworthy, because once the lawyer moves your money from your bank or investment fund, you may no longer have absolute control of the funds, and then become vulnerable to theft.
Its not easy to locate an honest attorney.
Creating a trust can be beneficial but attorneys who do not reveal existing connections or associations with so called “charities,” or “non-profit charitable corporations,” are usually up to no good. Their associations are sometimes a maze of closely woven non-profit corporations, banks and even people in the local government who scratch each others backs in the search for innocent victims and the later theft of your funds. Lawyers know how to convince and steal your money without leaving evidence that they did anything illegal, except point you in the wrong direction. That’s assuming you are still alive after the trust is in place.
The modus operandi of these lawyers is to contact wealthy people and sell them on the idea of protecting their money from the Federal Government Tax system. This in itself is not illegal but the non-profit or charity business is not always what it says it is. Just because they are legally designated as non-profit, or a religious corporation, doesn’t mean they are not able and willing to steal. These corporations are not regulated as they should be, and all too often the non-profit, non-taxable Federal and State laws benefit and enable unscrupulous lawyers and their clients.
These laws make it possible to move millions of dollars from the gun sights of the IRS into the sights of non-profit and or charitable corporations. The non-profit law in itself enables these lawyers to steal and hide your money. The common denominator of all of these scams are banks. Stolen funds cannot be “washed” without the use of bank accounts. Banks are the first step to change the money from legal possession to illegal possession. A victim’s money must be diverted from the victims bank into an account controlled directly by either the attorney, or an organization that is controlled or “friendly” with the attorney such as a living trust. Usually when this happens the transfer of the money is also the transfer of ownership. The formation of a living trust or regular trust can mean that a new owner (lawyer or trust) is now in control.
A competent lawless attorney would never have his/her name on the first bank account stepping stone (that would be illegal). So instead, your money is put in the name of one corporation or even transferred to a second Trust or Corporation, and possibly even a third entity, before individual names surface out of the fog of corporations, corruption, and scandals.
Hawaii Corruption is Especially Rampant
It is alleged that Hawaii attorneys, Nancy Budd, Katherine Lloyd, Paul J. Sulla Jr., and Joe Moss, are examples of “Hawaiian Trust Attorneys” who have personally benefited (at their direction) from the distribution of funds to non-profit charitable corporations, and non-profit corporations, or to other non-profit organizations to which they are either directly or indirectly associated.
The alleged plan for these funds is to eventually line the attorneys’ pockets in the form of cash, gratuities such as car rentals, exotic trips etc. These are all “perks” that may be rewarded to them for locating and eventually transferring money into the bank accounts controlled by their colleagues in the “charity business”.
In the case of lawyer Paul J. Sulla, Jr., it is alleged that client trust money was moved directly into “shell” companies owned or operated by him. He either was not sophisticated enough to hide his direct receipt of other peoples funds, or considered himself “untouchable.”
Local banks who themselves may have investment and legal departments available to their clients sometimes unwittingly or knowingly refer their customers to consulting lawyers who have obvious conflicts of interest, and even a history of complaints, fraudulent activities, and have colleagues who sit on the boards of directors of the banks used to hold the money.
In Kauai, for example, here’s how how the common trust scam worked.
First Hawaiian Bank has their own numerous trust corporations, and when people deposit large amounts of money in this bank, they are candidates for the formation of a trust to “protect” the money in ways that the Bank legally cannot. This is the perfect opportunity for “insider” corruption.
Katherine Lloyd worked as legal counsel for the First Hawaiian Bank, and so did Nancy Budd. Lloyd, for example, may refer the actual creation of a bank customer’s living trust to her colleague Nancy Budd. Alternatively, Nancy Budd may have been retained as an adviser for the client, and recommend the use of the First Hawaiian Bank. Budd will draw up the Trust, name an executor to control the trust, name another attorney colleague as the executor’s adviser (on the trust payroll) and recommend a “charity” to hold an interest in the trust such as the Hawaii Community Fund.
But Lloyd also worked for Hawaii Community Fund, until a conflict of interest complaint was made, and she resigned.
To make things worse for the client, and safe for Lloyd, Lloyd’s husband is Hugh R. Jones (who has served with the Hawaiʻi Attorney General’s office for over 21 years as the chief state official enforcing non-profit laws. Jones is also the Supervising Deputy Attorney in the Tax Division of the Hawaiʻi Attorney General’s office. Jones is supposed to be an investigator for the Hawaii Attorney General’s office, Trust and Charity Department. However, when a conflict of interest was made to the Hawaii Attorney Generals office by one of Lloyds victims, and also one of Sulla’s victims, Jones denied their pleadings. In Lloyd’s case, Jones denied he had anything to do with the business of his wife, except to say she is innocent of any wrong doing.
Once the trust is in place, in at least two cases investigated by Codefore, the trust contributor (retiree who possessed the original funds) unexpectedly died. The assets were immediately liquidated and funds deposited into a living trust where the administrators distributed the funds to themselves other “trusts” or “charities.” In Lloyd’s case the first deposit of liquidated funds went into the First Hawaiian Bank and the American Savings Bank. But the CEO of the Hawaii Community Fund is on the Board of the American Savings Bank!
In common scams, surviving relatives either received a small fraction of the trust (inheritance) or received nothing. Two of the survivors Codefore investigated claimed that the “Living Trust” had been altered after the deceased death.
In Lloyd’s case, the Kauai Police Department had possession of a Trust that none of the surviving relatives had ever seen before. The Kauai PD claimed they took the “Living Trust” from the deceased home for “safe keeping.”
In answer to the allegations, Ms. Budd stated ” I can tell you in no uncertain terms that there was nothing illegal or unethical done with respect to my representation of Mr. ……….. (or any client, for that matter). His children’s inheritance was not “taken from them illegally,” and I want to be clear that any such suggestion they have made to you is false.”
But Codefore investigated further and discovered a pattern. On the Big Island of Hawaii, attorney Paul Sulla Jr. represented a seller in the sale of a valuable, “one-of-a-kind” geothermal property. Unfortunately, in this case, it was the property seller who died before the deed to the property could be transferred to the new owner. It is alleged that Sulla impersonated the seller falsely filing paperwork to quickly manufacture a sham “religious” trust while the seller was on his death bed in Arizona at the time. Sulla filed a new deed to the property using his new religious entity as cover, and later conveyed a deed to the property to a third party through the “trust.” The deed that was supposed to go to the new purchasers, went instead to the Trust and third party created and controlled by Sulla. Then, Sulla claimed the property had never been paid for and tried to auction off the property again using the sham “church” trust.
All of this information about Sulla came out in a civil court of law, in front of Third Circuit Court Judge Ronald Ibarra, who apparently didn’t think that Sulla had violated any criminal laws.
The purchasers are still trying to either get their money back or the deed to the property.
Washing Stolen Money
An example of a money laundering structure is indicated in the below schematic. This chart is the exact chart used for legal purposes to explain how trust funds become invisible, that is, “washed.”
In some cases the elderly are led to believe that a trust will insure that their surviving relatives will benefit after death by implementing a so-called “living trust.” Little do they know that once the money is in the newly formed trust, or these attorney’s “favorite” non-profit “church” or “charity,” their money may be out of the grasp of the Federal Government, but is now the property of, and under control of, the non-profit organization that may “wash” the money by moving it back and forth until there is no “paper trail” leading to the actual distribution. The money is then distributed, and is usually not distributed to poor people, or to charities who do charitable business.
The “SALON” news organization says this:
“Another way the wealthy avoid paying taxes on their billions is to make charitable donations. If you donate property, you never have to pay income tax on that donation, whatever it costs you and how much it’s worth right now. Well you might say, at least someone benefits from the charity. Whether or not the charitable donation is a scam in whole or in part depends on the answer to that old question: qui bono? Aka, who benefits? That’s where the real scam takes place.”
“And there’s no legal requirement that a charity must spend its wealth. In fact, IRS rules require only that charities spend about 5 percent of their investment assets annually, and all or part of this amount can be spent on salaries and “expenses,” rather than devoted to the charitable purpose the charity purports to be serving. So, what happens with a charitable trust, set up by a billionaire, and controlled by one of the billionaire’s children? The child gets a job and a salary for life. Maybe a mansion to live in and entertain in as a fringe benefit. This is a great gig for the heir.”
A good case on point is the “Hawaii United Way”–a “charitable” non-profit corporation that receives money from a central clearing house charity known as the “Hawaii Community Foundation.” A look at their “Annual Reports” only list assets and contributions.
2015 Hawaii Community Foundation disbursements? ( not sure what these figures are since the report simply says that this is their “Position”.
Donor Grants 2.7 Million
Scholarships 4.5 Million
Partner ships 8.2 Million
Donor advised grants 12.5 Million
HCF initiatives ??? 7.3 Million
Other Foundations: 7.3 Million
Other Grants: 4.1 Million.
The United Way might well be listed in “Other Foundation” or “Partnerships” on the Hawaii Community Foundation, but they most certainly received cash from the Hawaii Community Fund (HCF) as the HCF is listed as a contributor on the United Way web site along with a list of approximately 30 other charitable organizations that the United Way either received money from or donates money to; and each with a staff and Board of Directors etc., that presumably all receive money for their time. The United Way tax returns can be viewed on the internet at: https://www.auw.org/financial-information
The original CODEFORE article is linked HERE.