Posted on: Friday, February 25, 2005

Contract probe leads to arrest

By Jim Dooley
Advertiser Staff Writer

Honolulu police investigating improprieties in the awarding and performance of city janitorial services contracts yesterday arrested the president of an 'Aiea company on suspicion of racketeering, money laundering, theft, bribery and monopolization.

The 11:40 a.m. arrest of Nelson Aguinaldo, president of Diversified Janitorial Services, followed a search Tuesday of Aguinaldo's office on Hekaha Street in 'Aiea by officers attached to the Honolulu Police Department's White Collar Crime Unit.

"The company has multiple contracts with the city and there is probable cause to believe that conducts criminal in nature have been committed," HPD Maj. Daniel Hanagami said of the search, which involved seizure of financial and personnel records.

Hanagami declined comment on yesterday's arrest of Aguinaldo.

Aguinaldo, 41, was released 20 minutes after his arrest without being charged.

Repeated attempts to reach Aguinaldo and his attorney, Pablo Quiban, for comment on the search and arrest were unsuccessful.

The Advertiser reported in November that Aguinaldo's ex-wife, Mary Lantano, who works for the city in the Department of Community Services, repeatedly complained to the city that Diversified underpaid workers on city contracts, failed to fulfill the terms of those contracts and won contracts with the assistance of a city employee who was a friend of Aguinaldo.

Lantano said Chang Yoo, a supervisor in the Department of Facility Maintenance, was the best man at Aguinaldo's wedding last year and vacationed in the Philippines in 2002 with Aguinaldo and his family.

Yoo is a member of the Hawai'i National Guard's 29th Support Battalion, which was activated in October for service in Iraq. He declined to discuss his relationship with Aguinaldo when reached in November by phone at Fort Bliss, Texas.

"I've got no comment on that," Yoo said.

City records show that last year Diversified Janitorial Services held 18 city contracts for janitorial and landscaping services worth $344,879. Since 1999 the firm received more than two dozen jobs from the city worth at least $461,000.

Many of the contracts were worth less than $25,000 and were awarded through an informal bidding procedure in which competing firms submitted price quotes by faxing unsealed price quotes to city personnel.

In at least five of those contracts, Yoo was the city official who met with interested bidders at the job sites and discussed contract specifications with them, city records show. Yoo also directly recommended awarding at least two of those contracts to Diversified and recommended that other contracts the company held be extended by the city, according to public records.

Less than a month after Aguinaldo and Yoo returned from a trip to the Philippines in April 2002, Aguinaldo and other prospective bidders met with Yoo at the Kuhio Beach police substation to discuss the requirements of a cleaning contract for the facility.

Diversified won the job with a bid of $24,996 — $4 under the legal threshold that would have required formal, sealed bidding for the job. A year later, the city Purchasing Division extended the contract for another year, based on a recommendation from Yoo, city records show.

Lantano alleged that Aguinaldo purposely befriended Yoo to improve Diversified's chances of landing city contracts.

"Chang Yoo was a straight shooter. He always went by the book before Nelson started working on him," Lantano said.

She charged that the two men became so friendly that Yoo would give the contractor advice on how much to bid for city contracts.

"I was there. I heard them talking," Lantano said.

City purchasing records show that in December 2003, Aguinaldo acknowledged underpaying employees working on city jobs but blamed the problem on Lantano, who "was responsible for preparing the company's payroll" at the time.

Lantano said that after the couple was divorced, she complained to the city about Diversified's business practices "because what was done on those city contracts was wrong and I can prove it."

She said she was not motivated by personal animosity toward her ex-husband, although the divorce case included acrimonious disputes over money and child custody issues, according to court files.

Staff writers Curtis Lum and Peter Boylan contributed to this report. Reach Jim Dooley at 535-2447 or jdooley@honoluluadvertiser.com.