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FCC paid $27 million to fraudulent Hawaiian communications company

The FCC is now fining the company $50 million, and the owner has been sentenced to time in prison.

Updated: October 25, 2020 - 7:09am

The Golden Horseshoe is a weekly designation from Just the News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s.

This week, our award is going to the Federal Communications Commission (FCC) for awarding more than $27 million to the sole shareholder of Sandwich Isles Communications and its parent company Waimama Enterprises, which used the taxpayer dollars fraudulently for a number of years.

For a decade-and-a-half, Albert Hee was awarded millions of dollars annually through the Universal Service Fund to provide the Hawaiian Homelands with a developed communications network and broadband service, something which the area was lacking. The Hawaiian Homelands are large  areas held in trust for native Hawaiians by the state of Hawaii.

In early October, Federal Communications Commission Chairman Ajit Pai announced that a nearly $50 million forfeiture of funds would be imposed against the businessman responsible for the fraud, Albert Hee, and his companies.

Over a period of 15-years, Hee diverted tens of millions of taxpayer dollars intended for "the deployment and maintenance of communications networks" in the Hawaiian Homelands to a series of vacations and personal expenses, including: college tuition payments for his children, vehicles, significant salaries for his wife and children, whom he kept on his payrolls, and $90,000 on the salary of a personal masseuse.

"As the Commission determined in 2016, and reaffirmed last year, Sandwich Isles has no claim to a single dime of the $27 million it improperly obtained from the Fund," said the FCC Chairman in a statement. In 2016, Albert Hee was sentenced to nearly four years in federal prison for using taxpayer-funded public money fraudulently. 

Hee was in charge of a "willful effort to defraud the Universal Service Fund —essentially, all taxpayers — for private gain," Pai said. 

The FCC is imposing a fine of $49.6 million on Waimana Enterprises and Albert Hee, which is the maximum possible amount allowed by law for their violation of the commission's rules. "The American people, and particularly, those living in the Hawaiian Homelands, deserve better," said Pai.

The FCC chairman called his agency's enforcement action "one of the largest forfeiture orders ever."

This is one tale of waste, fraud and abuse that has a happy ending. Despite a bad-faith businessman's successful (at least temporarily) attempt to defraud the government out of millions of taxpayer dollars, next month the FCC will oversee bidding by hopefully honest companies to become service providers for underserved Americans living in the Hawaiian Homelands. 

The area "will be eligible for bidding by service providers who will use taxpayer dollars to bring broadband to unserved Americans living there — not for massages, vacations, and cars," said Pai. 

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