Posted on: Friday, March 25, 2005
Local 5 sues Unity House
By Jim Dooley
Advertiser Staff Writer
The Hawai'i hotel-restaurant workers union has filed a civil racketeering lawsuit against Unity House Inc., charging that former president Anthony Rutledge Sr. and other officers used Gov. Linda Lingle's chief of staff Robert Awana, former state Rep. Romeo Mindo and others to divert millions of dollars of Unity House money for the personal benefit of Rutledge, his family members and associates.
The lawsuit, filed in federal court last weekend, does not name Awana as a defendant but calls him a "co-conspirator and/or wrongdoer" in an alleged scheme to defraud the nonprofit labor organization of assets.
Awana could not be reached for comment yesterday. His attorney, state Sen. Colleen Hanabusa, D-21st (Nanakuli, Makaha), yesterday said, "I don't know anything about the suit. I can't comment." Hanabusa said in January that Awana testified before a federal grand jury investigating Unity House but was told he was not a target of the investigation.
Mindo's attorney Eric Seitz said he hadn't seen the suit and had no comment on it. He has previously said Mindo, a former Unity House employee, committed no wrongdoing.
The racketeering lawsuit was filed Sunday by the union and Eric Gill, head of the Hotel Employees and Restaurant Employees Union Local 5 and a longtime opponent of Tony Rutledge. Fourteen other officials and members of Local 5 are plaintiffs in the suit seeking unspecified monetary damages from the senior Rutledge and other defendants.
The lawsuit repeats many allegations in a criminal fraud case against Tony Rutledge and his son Aaron, a former Unity House executive. That case is scheduled to go to trial in federal court in May. Some of the allegations contained in the suit are also drawn from records introduced in court after federal agents seized control of Unity House Dec. 14.
IRS agent Gregory Miki said in a sworn statement justifying the Unity House seizure that, "The unchecked use of Unity House contracts and monies have resulted in political influence that has opened doors from which (Tony) Rutledge has benefited personally."
One example cited by Miki was a "generous consulting contract" that Unity House gave Awana in 1999-2000 to survey union members. The Local 5 lawsuit said the value of the contract was $250,000 and the survey "included questions on whom they would vote for in the upcoming mayoral and other elections."
The suit also repeated an allegation from Miki that Rutledge met with Awana 11 times after Awana became Lingle's chief of staff in 2002.
Jeff Rawitz, defense attorney for Tony Rutledge, declined comment on the lawsuit other than to note that it was filed for Local 5 by T. Anthony Gill, brother of Eric Gill.
"That has the appearance of a conflict of interest because the brother who filed the lawsuit stands to make money from it regardless of the merits of the case," Rawitz said.
T. Anthony Gill declined to respond to Rawitz's statement.
Brian DeLima, attorney for Aaron Rutledge, said he had not seen the suit and could not comment on its contents.
Former Unity House officials named as defendants in the Local 5 lawsuit were represented in the past by attorney Seitz, who again declined comment yesterday.
Prominent Honolulu criminal defense attorney Michael Green, a former Unity House director, is also named as a defendant in the lawsuit. His office said yesterday Green was out of state and unavailable for comment.
David Louie, an attorney who represents another defendant, former Unity House director Arlene Ilae, was unavailable for comment yesterday on the lawsuit.
Ilae this month filed a legal protest against the government's "usurpation of control" of Unity House, saying the takeover "impairs and impedes" the ability of Ilae and other officers and directors to protect the rights and assets of Unity House.
In response, Anthony Pounders, the receiver appointed by federal court to run Unity House while the criminal case against the Rutledges is pending, said: "Even if some members of the prior management were not directly involved in any corporate mismanagement or malfeasance, I have found no evidence of any attempts to expose, investigate or otherwise stop such mismanagement or malfeasance."
Pounders said the net worth of Unity House declined from $49 million at the end of 2001 to $31 million today, owing largely to bad investments.
He also said Unity House last year was billed $793,000 in legal expenses to defend the Rutledges in the federal criminal investigation.
Unity House has paid $50,000 a year for insurance coverage of its offices and directors but "failed to make a claim" for insurance coverage of the legal bills, Pounders said.
"Instead, Unity House used its own money to pay Anthony Rutledge Sr.'s attorneys' fees," said Pounders.
Rutledge lawyer Rawitz yesterday declined comment on Pounders' statements.
Reach Jim Dooley at 535-2447 or jdooley@honoluluadvertiser.com.
