The Federal Communications Commission has launched an investigation into the finances of Sandwich Isles Communications and its parent company, Waimana Enterprises, in the wake of the tax fraud conviction of founder Albert Hee, according to government documents made public last week.

Meanwhile, Hawaii’s consumer advocate, Jeff Ono, recommended that the state Public Utilities Commission delay ruling on whether to recertify Sandwich Isles and Pa Makani, an affiliate. Recertification will allow them to continue receiving FCC subsidies. Ono has asked Sandwich Isles to provide documentation that it hasn’t misused ratepayer funds.

Both the federal and state probes raise questions about whether Sandwich Isles, which has relied heavily on ratepayer subsidies for more than a decade, will be able to continue its operations, which include providing telecommunications services to about 3,000 customers living on Hawaiian homelands.

Sandwich Isles has received more than $242 million from the FCC’s Universal Service Fund since 2003, according to federal documents. The fund is paid for through fees tacked on to people’s phone bills and distributed to telecommunications companies that operate in rural or remote areas to ensure those communities have affordable communication services.

Hee was convicted in July of seven counts of tax fraud after federal prosecutors accused him of skimming $4 million from Waimana Enterprises to pay for personal expenses, including his children’s tuition, personal massages and rent and living expenses for his family.

FCC officials suspended payments to the company in June, which have averaged several million dollars a month. In recent weeks, federal officials have declined to comment about whether the payments would resume or if they were conducting any investigations into Sandwich Isles.

However, documents filed by Sandwich Isles with the Public Utilities Commission last week show that the FCC has begun picking apart the company’s finances to see if any ratepayer funds were misused or if the company misrepresented its operations to regulators in the past. The documents include correspondence between the FCC and Sandwich Isles, as well as responses to inquiries from Ono.

Hee’s "conviction and the facts surrounding the case have brought into sharper focus questions about the nature of many of Sandwich Isles’ expenses as well as whether Sandwich Isles’ affiliate transactions are consistent with FCC rules and policies that govern the Universal Service Fund and High Cost Program," Karen Majcher, vice president of the Universal Service Administrative Co.’s High Cost Program, wrote in a letter to Abby Tawarahara, Sandwich Isles’ controller, earlier this month. The USAC administers the FCC’s universal service funds.

This isn’t the first time that the FCC has scoured the finances of Sandwich Isles and its affiliated companies, all of which have been owned or operated by Hee or his family members.

In 2013, the agency slashed Sandwich Isles’ subsidy after officials concluded that some of the company’s expenses were "grossly excessive and unreasonable." The FCC found that the company’s corporate expenses — which included salaries, legal expenses, consulting fees, audit expenses, insurance and management fees — were seven times higher than companies of similar size.

This latest probe into the expenses of Sandwich Isles spans the years 2002 to present and is expected to conclude in December, according to FCC documents.

So far, an internal auditor overseeing universal service funds has requested that Sandwich Isles turn over 49 different sets of documents, including detailed organizational charts, specifics about corporate ownership interests, audited financial statements, billing reports, accounts of vendor transactions, a listing of all employees, salary information and more.

The FCC appears to be particularly concerned about large payments Sandwich Isles has made to Waimana Enterprises over the years.

The auditor notes that between 2008 and 2011, Sandwich Isles increased the management fees it paid to Waimana by $1.4 million. These fees suddenly dropped by $900,000 in 2014. The auditor asks company officials to explain the fees.

Hee’s conviction centered on his failure to report as income millions of dollars that he used from Waimana for personal expenses. Federal and state inquiries in part focus on whether ratepayer subsidies that were paid to Sandwich Isles were filtered through Waimana and used by Hee for personal expenses.

"The consumer advocate has concerns whether (Hee’s) conviction involves USF monies received by Sandwich Isles Communications," Ono wrote in his recommendation to the PUC last week.

Ono told the Honolulu Star-Advertiser that the PUC’s deadline for certifying Sandwich Isles to continue receiving FCC subsidies next year is Oct 1.

"We have similar concerns at the state level as the FCC does at the federal level," Ono said by email. However, he said that his office has not been in communication with the FCC, suggesting that the federal and state inquiries are being carried out separately.

The PUC is responsible for scrutinizing the operations and finances of companies receiving universal service funds and annually certifying to the FCC that they are using the funds appropriately.

This is the first time that the consumer advocate’s office, which acts as an advisory arm to the PUC, has publicly raised serious concerns about whether the PUC should continue to certify Sandwich Isles.

Sandwich Isles President Janeen-Ann Olds declined an interview request for this story. But she’s maintained publicly that she expects Sandwich Isles to continue operating and receiving ratepayer subsidies.

"There has been no interruption in service and SIC and Pa Makani plan to continue serving our customers on Hawaiian home lands for years to come," Olds and Hee wrote in responses to questions from Ono last week.

Further, Sandwich Isles maintains that no universal service funds were paid to Waimana and that any further review of the company’s finances by the consumer advocate is unnecessary.

The USAC "is not only better equipped and more experienced in such investigations, but is already conducting it," Sandwich Isles wrote in PUC filings. "Any investigation initiated by the (consumer advocate) in this instance would be duplicative and unnecessary."

Sandwich Isles has long attracted interest from Hawaii’s political circles because of its ties to former lawmakers, business executives and officials connected with the heavily endowed Kamehameha Schools.

Albert Hee is the brother of former Sen. Clayton Hee.

However, it’s been unclear who has stuck with the company over the years — Sandwich Isles has closely guarded company information in filings with the PUC and other regulatory bodies.

In responses to questions from Ono this month, the company cites only Hee, Olds and Robert Kihune as officers of Sandwich Isles and its affiliates.

In addition to serving as president of Sandwich Isles, Olds is an attorney and Kamehameha trustee.

Kihune, a former Navy vice admiral and past chairman of the Kamehameha board of trustees, serves as chairman of the board for Sandwich Isles, according to PUC documents.

Hee stepped down as a director of Sandwich Isles shortly after his conviction, but remains president of Waimana.

Hee is expected to be sentenced in November for six counts of filing false income tax returns and one count that he corruptly impeded the Internal Revenue Service from correctly calculating and collecting his taxes. Each count could carry a sentence of up to three years.