FBI approached rail contractor workers, lawsuit says

The FBI has approached employees of a major rail contractor, and federal investigators also served a search warrant on the city to gather data such as emails in connection with an ongoing criminal investigation into rail, according to court records and city officials.

City officials also report they have worked with federal investigators to resolve concerns about a grand jury subpoena served on the Honolulu Authority for Rapid Transportation in February that sought written minutes from executive sessions by the board of directors. Those issues have now been resolved, according to the city.

Those recent developments shed just a bit more light on what has been a mostly mysterious federal criminal investigation into the city’s $9.2 billion rail project.

It is still unclear what the focus of federal investigation may be, but HART was served with three grand jury subpoenas in February seeking tens of thousands of documents from the rail authority. HART also acknowledged that a few rail employees received subpoenas from investigators seeking interviews, but rail officials have not publicly identified those employees.

The first grand jury subpoena served on HART covered records from the early stages of the project. A second subpoena demanded information about the project’s relocation program, including files that revealed that overpayments were made to some owners or tenants who were being moved to make way for the 20-mile rail line.

A third subpoena sought minutes from all HART board of directors meetings from 2011 through 2018, including nonpublic discussions during executive sessions.

Federal investigators also have served a search warrant on the city to gather data in connection with the rail investigation, the Honolulu Star-Advertiser has learned.

That search warrant is separate from a search warrant served on the city earlier this year seeking emails reportedly tied to the federal corruption case centered around former Police Chief Louis Kealoha and his wife, former Deputy Prosecutor Katherine Kealoha.

The rail-related search warrant also sought data such as emails. The email systems for HART and a number of other city departments are all maintained by the city’s information technology department.

City spokesman Andrew Pereira said in a written statement Monday, “The city is fully cooperating with authorities concerning their investigation. In line with this objective, the city acknowledges receiving subpoenas regarding the rail project in the past, but respectfully declines to discuss specific details.”

Some city officials have said they are open to releasing more information about the investigation publicly but are being cautious out of concern that publicly discussing the details of the inquiry might not sit well with federal investigators.

In a related development, a lawsuit filed last week in Honolulu Circuit Court disclosed that investigators from the FBI have now approached employees of rail contractor Nan Inc.

Nan is a major player in the rail project and has a HART contract for up to $400 million to relocate utilities in the Honolulu city center to make way for construction of the elevated rail line. The company also has contracts worth $218 million to build six rail stations along the West Oahu and Kamehameha Highway segments of the rail line.

The lawsuit was filed by Bosco Petricevic, who briefly worked for Nan as its in-house litigation counsel, and alleges Petricevic learned from another company lawyer this year that the FBI approached “several” Nan employees.

Petricevic expressed concerns to Nan owner Patrick Shin “regarding FBI interviewing our employees,” according to the lawsuit. But when Petricevic asked Shin and Nan Vice President Wyeth Matsubara what was going on, Petricevic “was threatened and told to mind his own business,” the lawsuit says.

Joseph Rosenbaum, who filed the lawsuit on behalf of Petricevic, said Petricevic cannot elaborate on that reference to FBI involvement because Petri­cevic was Nan’s lawyer, and attorney-client privilege requires that Petricevic refrain from publicly discussing legal matters involving his former client.

Petricevic worked for Nan for just three months — from March 18 to June 10 — but says in the lawsuit he had at least four discussions with Shin in which Petricevic either reported illegal behavior or warned that he would not participate in allegedly illegal behavior by the company.

Petricevic’s lawsuit, filed under the Hawaii Whistleblower Protection Act, makes a number of allegations of wrongdoing by Nan, including a claim that Nan attempted to “double dip” by pursuing damage claims with both a subcontractor and HART for the same problems.

Petricevic also alleges in the lawsuit that Shin and Nan Vice President Nick Flores “came up with a scheme to try to blackmail” a company called Thompson Metal Fabrics by threatening to report the company to the federal government unless TMF agreed to pay damages to Nan.

“When Mr. Petricevic explained the highly illegal nature of such a scheme, Mr. Flores physically grabbed Mr. Petricevic and told him to shut up,” according to the lawsuit.

According to the lawsuit, Petricevic expressed concerns that Shin and Nan were taking “inconsistent and dishonest positions in making claims against both TMF and HART for the sole purpose of monetary gain.”

HART has been coping with problems with metal arms that were designed to support overhead station canopies to provide shelter for rail passengers. Cracks were discovered in the lower portions of some canopy arms, prompting HART to redesign and replace portions of 15 metal arms that had been erected at three rail stations.

Nan blamed TMF for failing to fabricate the canopies according to the proper specifications, while Shin made a claim against HART alleging the problem was with the design, according to the lawsuit.

Nan did not respond Monday to calls seeking a comment on the Petricevic lawsuit. Petricevic said he was fired in June, but the lawsuit says that Nan claimed he was laid off.

Bosko Petricevic’s complaint by Honolulu Star-Advertiser on Scribd