 Rodrigues known as loyal leader, dedicated father among friends
By David Waite
Advertiser Staff Writer
United Public Workers leader Gary Rodrigues, one of the state’s most powerful union leaders, was indicted by a federal grand jury yesterday on charges of defrauding union members of at least $200,000 by overcharging them for medical and dental benefits.
| Gary Rodrigues charges
Mail fraud, 17 counts
Embezzlement, 3 counts: Allegedly siphoning UPW money by rigging excess premiums for dental insurance.
Scheme to defraud, 1 count: Allegedly defrauding UPW by setting up consulting fees to daughter Robin Sabatini’s companies.
Money laundering, 21 counts: Allegedly disguising the nature of payments to Sabatini’s companies.
Forfeiture, 1 count: Forfeiture by Rodrigues and Sabatini of $200,200, if convicted of all counts of money laundering. |
Rodrigues’ daughter was also charged in the 43-count indictment.
Rodrigues, 59, faces almost certain prison time if convicted of the charges, which carry maximum prison terms ranging from five to 20 years, and removal as the head of the 12,000-member union. UPW represents blue-collar workers for the city, Neighbor Island counties and the state.
U.S. Attorney Steven Alm yesterday declined to speculate on whether Rodrigues will remain as UPW’s state director. Rodrigues and UPW officials at the union office on North School Street did not return telephone calls yesterday.
One UPW member working at a wastewater treatment plant at Sand Island stressed that the indictment is aimed individually at Rodrigues and his daughter, not at the union. Plant operator Roy Hirohama said the union remains important and valuable.
"What happens with the indictment, the courts will decide," Hirohama said. "That doesn’t mean the union itself is not something to be defended."
Details of indictment
During a news conference, Alm told reporters the indictment alleges that Rodrigues negotiated agreements with Hawaii Dental Service and the Pacific Group Medical Association. Under the agreements, some of the money paid by union members for monthly premiums was later used to pay consultants to review the health plans negotiated with the two companies, Alm said.
The indictment claims that Rodrigues instructed the health-care companies to issue checks for consultant services to companies owned by his daughter, Robin Haunani Rodrigues Sabatini.
But Rodrigues never told the UPW’s executive board or its members that he had included consulting fees as part of the contracts and he set his daughter and her company up primarily to receive those consulting fees, Alm said.
"So in these schemes the UPW members were paying for the consulting fees without their knowledge. That’s where the embezzlement comes in and the theft from the UPW in both of those," he said.
He said Rodrigues’ daughter, who has an accounting background, prepared one or more reports for the union, but that her work was far short of what would be expected given the money involved.
In all, the indictment lists 42 criminal charges against Rodrigues and 39 against his daughter. In addition, each faces one forfeiture count. The two were both charged with mail fraud, conspiracy to defraud a health care benefit program, conspiracy to launder money and money laundering. The forfeiture count seeks to have the two forfeit a total of $200,200.
In addition, Rodrigues alone faces three counts of embezzlement of labor organization assets.
The indictment comes slightly more than two months after Rodrigues and the United Public Workers reached contract agreements with the state for two units in negotiations that extended into the holidays. The contract provided 11 percent pay increases to the union’s members of Unit 1, covering jobs in trash collection, operations of the counties’ sewer and water systems and maintenance of government buildings and grounds.
Rodrigues remarked at the time that the negotiations had taken place over the Christmas weekend.
"While everyone was at home celebrating," he said, "we were negotiating."
A second contract provided similar terms for members of the union’s Unit 10 for people working as correctional officers, practical nurses and in other institutional jobs.
Loan also questioned
Among the specific allegations in the indictment against Rodrigues are claims that he used $10,000 of the money that was to go toward consultant fees to repay a personal loan to a man who is now deceased. Alm would not identify who made the loan.
In another instance described by Alm, Rodrigues allegedly had one of the health care companies make out a check on Dec. 2, 1996, for $14,213 to Honolulu Ford and deliver the check to one of the companies owned by Rodrigues’ daughter. The following day, Rodrigues allegedly went to Honolulu Ford and used the same check to pay for a new Ford Ranger pickup.
The indictment lists 19 checks paid by Hawaii Dental Services or a Pacific Group Medical Association subsidiary between February 1996 and March 1998 that went, either directly or indirectly, to companies owned by Rodrigues’ daughter, Four Winds RSK Inc. and Auli‘i Inc.
Transfer of assets
In one instance, Robin Sabatini instructed Hawaii Dental Service to mail a check for $25, 381 on March 28, 1996, to Four Winds RSK to pay for the company’s consultant services for the period of January 1994 to December 1995, according to the indictment. But the company did not exist until February 1996 "and could not have and did not perform any consulting work for (the) UPW," the indictment said.
The Pacific Group Medical Association was ordered shut down by the state insurance commissioner in March 1997. After a newspaper article in January 1998 established the link between Rodrigues and companies owned by his daughter, Robin Rodrigues Sabatini started a new company, Auli‘i Corporation, on March 10, 1998, using her middle name and married last name, Haunani Sabatini, according to the indictment. She then transferred all of the assets of her former company Four Winds RSK Inc. to Auli‘i Inc., according to the indictment.
Alm said information provided by the Honolulu Police Department led to the three-year investigation by the federal Department of Labor, the IRS, the FBI, Honolulu police and his office that culminated yesterday with the indictments of Rodrigues and his daughter.
Rodrigues and Sabatini were not arrested in connection with the case and will be issued a penal summons within the next week or two to appear to answer to the charges, Alm said. No court date has been set.
Advertiser staff writer Glenn Scott contributed to this report.
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