WAI'ANAE — Two sisters thought they found the perfect setting for their families last year when they purchased adjoining properties in a remote and peaceful section of Wai'anae with a picture-perfect view of the Wai'anae mountain range.

But after moving into their properties, the Smith and Naone families are seeing their dream turn into a nightmare.

Both families have been cited and fined by the state Health Department for having illegal cesspools. Meanwhile, city and federal officials are investigating other possible infractions, the most severe being the likelihood that the Naone property is the site of an illegal dump spanning several acres that are cut through by a stream bed.

The Smiths and Naones said they knew nothing about the problems on their properties and trusted their seller and the real estate agents on both sides of the transaction. Now, the two families are suing them all.

Kathy Naone said she wants other people to learn about what happened. She believes the man who sold them their properties is now attempting to sell another parcel.

"There are other people out there," she said. "I don't want the same thing to happen again."

The state Department of Health has cited both families for having homes with illegal cesspools instead of the standardized septic tanks that were submitted in building plans approved by the agency.

City officials said they are looking into whether there were other violations associated with the two properties, including the possibility that they were sold before building permits were closed on work tied to the two homes.

Perhaps most troublesome for the Naones, the U.S. Environmental Protection Agency is investigating the possibility that two raised mounds on several acres of the Naone property make up an illegal dump. The Naones estimated it could cost upward of $1 million to clean the property.

Sisters Charmaine Smith and Naone, and their spouses, John Smith and Winston Naone, said they knew nothing of the violations when they purchased their properties last year and blame their neighbor David Souza, who sold them the two properties, as well as their respective Realtors, for their problems.

The two families have filed lawsuits against Souza and his wife, Carol, as well as the Souzas' Realtors, Karen Tamabayashi Higuchi and Alae Realty Ltd. Also named in the lawsuits are Realtor Zenaida Wong Lopez and her company, West Oahu Realty, who represented the Smiths and Naones.

William McCorriston, an attorney for the Souzas, denied that his clients did anything wrong or improper, alleging instead that illegal dumping took place on the Smith and Naone properties before the Souzas purchased it.

Higuchi referred questions to her attorney, who could not be reached. Guy Tamashiro, principal broker for West Oahu Realty, said he believes much of the fault in this case is with the seller, who "lied about stuff."

PROBLEMS IN JUNE

The two parcels are on Puhawai Road just off Lualualei Homestead Road and near the Lualualei Naval Reservation.

John and Charmaine Smith, who purchased their parcel in March 2007, said it was Father's Day weekend this year when they first noticed problems with their toilet system. John Smith said the family tried to find a septic tank but couldn't. Smith said that when he tried to reach David Souza for help, Souza avoided the Smiths.

Smith said that when he began digging, he realized his wastewater was going into a cesspool, essentially a hole in the ground.

When he informed his in-laws and next-door neighbors, the Naones, they also dug into the ground and discovered a cesspool.

In mid-July, both families were visited by inspectors from the state Department of Health's Wastewater Branch and slapped with field citations for having illegal cesspools. They were each fined $100 and told to take steps to correct the violations by Aug. 28 or face stiffer penalties that could ultimately end up costing as much as $25,000 a day.

John Smith said they found city records showing permits were obtained by Souza for septic tanks that were supposed to connect to the two respective houses.

"We believed what our paperwork said, that we had a septic tank there," Kathy Naone said.

Janice Okubo, a Health Department spokeswoman, said the agency is empathetic to the situation of the two families but explained that they are ultimately responsible for the cleanup. However, "the families are going to have to go after the developer for this," she said.

In the past, the Health Department sent out inspectors to examine wastewater disposal systems, Okubo said. But the agency has become overburdened in the past several years because of an islandwide building boom. Now, she said, it's up to licensed design engineers to make the final inspections and submit a final construction report to the Health Department. Those weren't done with these two systems, she said.

"In our eyes, this is not completed yet," she said. "We have not granted approvals to use these systems."

Okubo said the Wastewater Branch was notified about the infractions by officials with the EPA's criminal investigations division.

McCorriston, speaking for David Souza, said his client installed septic tanks, not cesspools on the two properties. "Those are septic tanks that met City and County (of Honolulu) requirements," he said. "We'll go down fighting on that one."

INTENTIONAL DUMPING?

The Naones have encountered truck-size tires, broken asphalt, car parts, steel rods and construction waste as well as sections of their land that have been covered in cement. The Naones suspect the materials dumped there may be hazardous. What's worse is that the Naone property is divided by a stream and there appears to be evidence that debris may have purposely been dumped in the streambed, raising concerns about possible groundwater contamination and the potential for blockage of the waterway during flooding.

Winston Naone said that before his family bought the property, it was strewn with construction equipment, rock separators, shipping containers and other heavy machinery, which made it difficult for his family to walk the property.

It wasn't until much later, after the family had purchased the property, that he and his daughter found the different debris.

When an EPA investigator who had gone on the property to examine the cesspool situation in June saw what was in the back portion of the property, "she said this is an illegal dump," Naone said. She warned of possible infractions and said she would be back.

Dean Higuchi, a spokesman for EPA's Honolulu office, said the agency cannot comment specifically about any ongoing criminal case. However, he said, "We are looking into the situation of possible or alleged illegal dumping in that area."

In May, the EPA used armed federal agents to raid a suspected illegal dump on Hakimo Road in nearby Nanakuli. Two men were arrested. EPA officials said the dumps contained toxic waste and pointed out that they were investigating several other illegal dumps in West O'ahu. It is not clear if the Puhawai area is part of that initiative.

McCorriston, meanwhile, said the EPA is looking at Souza's current property, next door to the Naones and Smiths, and that the property, not the Naones', is the main focus of the investigation.

BOUGHT AT AUCTION

The property was once owned by Wai'anae resident Sabrina Grace and Souza purchased it at auction for $50,000. McCorriston said dumping occurred on the property when the Grace family owned it, and that the dumping also spilled over to the Naones' side.

Souza spent more than $100,000 and much of his labor cleaning up his site, which is now clear, McCorriston said.

Grace told The Advertiser that Souza had full knowledge of what was on the property her family once owned when he purchased it at auction.

"He talked to the inspectors; everybody told him what the situation was on the property when he paid for it, that it had potentially environmental issues," Grace said.

As for the property sold to the Naones, McCorriston said, Souza knew nothing of any illegal dumping.

"He was not aware of any underground dumping," he said. And while Souza was told by city officials that he needed to remediate the former Grace property, "nobody told him that about the adjacent properties."

The property was a vegetable farm when Souza bought it, McCorriston said, and there was no reason for him to check below the surface.

Souza did leave surface debris on the property, which he promised he would clean up and was told by the Naones "no rush," McCorriston said.

The Naones said they obtained copies of stockpiling permits issued by the city to Souza in 2005 for all three parcels, thus clearly showing that Souza was dumping materials onto all three.

OWNERS' RESPONSIBILITY

Meanwhile, officials with the city's Department of Design and Construction inspected the property and told the Naones that there appeared to be waste dumped into the stream bed and that they were responsible for cleaning it up, the Naones said.

The Naones, as well as the Smiths, also said they have been visited by electrical and plumbing inspectors from the city Department of Planning and Permitting who said they had a number of outstanding issues dealing with their permits that had not yet been resolved.

When The Advertiser inquired about the properties, Planning and Permitting Deputy Director David Tanoue said computerized records show "their permits are still outstanding — they're still under construction, in our computers."

DPP inspectors went out to the Naones' property last week and slapped Souza, who obtained the building permit as owner and contractor, his architect and his agents with two violation notices tied to the cesspool.

Art Challacombe, the department's chief of customer service, said failure to rectify the situation in a timely manner could result in stiffer fines that may accumulate daily.

'WHO DIDN'T CHECK IT?'

Naone said he wonders how so many infractions were able to get past multiple government agencies and his Realtors.

"Who missed all that on their check?" Naone said. "Who didn't check it? For me, the question is how did all this stuff get passed?"

Tamashiro, the broker for West Oahu Realty, who represented the Naones and Smiths, said the onus is primarily on the seller and his agent to disclose all information about a property. "I think the burden is more on the seller's agent rather than the buyer's agent, although we should have looked into some of the issues involved."

Tamashiro said from what he understands, the seller misrepresented many of the facts about the property, although he would not give specifics, citing the lawsuit.

Neil Fujitani, supervising executive officer for the Real Estate Branch of the state Department of Commerce and Consumer Affairs, said state statutes require a seller to provide a disclosure statement that details any material issues associated with a property.

That provision, however, is not enforced by his agency and is typically resolved through civil court proceedings, Fujitani said.

McCorriston said the Souzas intend to file a counter-claim.

"My opinion is that this whole thing was an attempt to set up Mr. Souza to make a case," McCorriston said, "I think this is an attempt to defraud Mr. Souza by Sabrina Grace and the neighbors." He added that he had evidence that debris was actually being taken to and planted on the Naones' yard, a charge the Naones vehemently denied.