Rick Blangiardi’s bank problems from 35 years ago resurface as mayoral race heats up

Rick Blangiardi, who started every game at middle linebacker for the University of Hawaii football team in the 1960s, thought he was prepared to take plenty of hits during his first run for political office.

With early support in his rookie run for Honolulu mayor, Blangiardi said that “there’s a target on my back.”

“I knew campaigning was going to be tough. … You’ve got to play through.”

But Blangiardi, 73, said he was still surprised to hear that someone last month was distributing old-school, microfiche copies of a front-page Honolulu Star-Bulletin article from August 1985 and other materials related to lawsuits that were filed by the Federal Deposit Insurance Corp. against Blangiardi in an alleged bank fraud scheme.

“This is why good people from the private sector don’t want to enter politics,” he said Friday during an interview at his South Beretania Street campaign headquarters. “It leads to a leadership void.”

The microfiche copies of hard-copy stories by the Star-Bulletin and United Press International cannot be found in a typical Google search and have to be purchased on a paid online site.

Blangiardi said he was disappointed that news website Honolulu Civil Beat posted a story Thursday about the 35-year-old lawsuits that led to his personal bankruptcy — five weeks before the Aug. 8 nonpartisan primary for Honolulu mayor.

The well-known broadcast industry veteran, who retired in January as president and general manager of Hawaii News Now, maintains he was a victim in the bank scam and had testified against the ring leaders, who went to prison.

The FDIC lawsuits have never been an issue since then, he insisted, noting background checks by the FDIC in 2003 when he became a director on Central Pacific Bank’s board and that he underwent further federal scrutiny before taking jobs at CBS and Telemundo that also required clearance.

But the reemergence of the original stories covering the lawsuits could play an outsize role in the crowded race to replace Mayor Kirk Caldwell, who is prevented by term limits from seeking a third consecutive term, said retired University of Hawaii political science professor Neal Milner.

CROWDED RACE

The 15 candidates include three familiar political faces: former U.S. Rep. Colleen Hanabusa, former Mayor Mufi Hannemann and current Councilwoman Kym Pine, along with political outsiders Blangiardi and Keith Amemiya.

The others are businesswoman and community advocate Choon James; the Rev. William “Bud” Stonebraker, a pastor with Calvary Chapel who served in the state House of Representatives from 2000 to 2006; David “Duke” Burgoin; Ernest Caravalho; former state Sen. John Carroll; Karl Dicks; Tim Garry; Audrey Keesing; Micah “Laakea” Mussell; and Ho Yin “Jason” Wong.

The FDIC lawsuits against Blangiardi and four others, as reported in 1985, were the result of an alleged bank fraud scheme linked to the defunct Indian Springs State Bank in Kansas City, Kan.

The FDIC, at the time, alleged that former Realtor Sam Daily and real estate developer Franklin Winkler received loans from Indian Springs for apparent real estate deals in Hawaii. According to the FDIC, to get around loan limits and to raise about $2.4 million, a plan was hatched to pay 28 “warm bodies” to apply for loans from Indian Springs.

Even though Indian Springs State Bank had closed two years before, the FDIC in 1985 said Blangiardi and the other defendants were legally obligated to repay three loans of $50,000 each and two other loans of $100,000 each.

Milner called Blangiardi’s bank problems from 35 years ago “relevant” in the 2020 mayor’s race, partially because this year’s campaign season is unlike any other.

COVID-19 is preventing candidates from going door to door and holding typical meet-and-greet events. On top of that, Hawaii elections for the first time will be conducted by mail-in voting, Milner said.

In a crowded race with limited opportunities for candidates to get their messages out, Blangiardi’s troubles from a generation ago “certainly could make a difference,” Milner said.

With Oahu’s notoriously low voter turnout, that means those who bother to vote are more likely to follow the twists and turns of candidates’ perceived weaknesses, he said.

Even though Blangiardi said the lawsuits and subsequent settlements destroyed him financially, he said he has “rebuilt” himself multiple times since. “You put that stuff away as a bad chapter,” he said.

Blangiardi was a 37-year-old “young guy raising a family” and got involved in what sounded “like a good investment at the time.”

“Candidly, I was naive,” he said. “We got conned by some slick guys.”

ISSUE IS RELEVANT

But Milner said “Blan-giardi would be a lot better off without this than with this. I don’t think he can just let it slide. … His explanation is so dumb that it sounds like he was trying to make quick money. I think he has to have a better response.”

The issue is relevant this many years later because Blangiardi touts his business background and skills with a “conservative-leaning” bent, as he calls it.

And the resurrection of the 1985 story also belies Blangiardi’s overall reputation, Milner said.

“I’ve never heard a bad thing about him until this,” Milner said.

Colin Moore, a UH associate professor of political science and director of the Public Policy Center at UH, said the reemergence of stories about Blangiardi’s bank problems means “it’s going to be an even more exciting race than I expected.”

Unlike whispered rumors in previous Hawaii races, “this is not good for Blan-giardi, particularly because it runs counter to the narrative that Blangiardi is trying to tell: ‘Here’s a successful businessman who can turn Honolulu around.’”

But Moore also suspects that untold numbers of voters could overlook the issue because “it happened 35 years ago and he wasn’t convicted of anything. If it happened five years ago, this would have been a very big deal; 35 years ago, it’s far less of a deal. I’m not sure it’s going to have much of an impact.”

But Moore agrees with Blangiardi’s interpretation of why the stories from 35 years ago have been resurrected and offered to Honolulu media.

“People go after the candidates they see as front-runners,” Moore said, “and Blangiardi is certainly considered one of the front-runners now.”

Blangiardi, while saying he was caught off guard by the story coming to light, insisted there is nothing in his past that he fears could also be spread as “opposition research,” and certainly nothing scandalous.

He called the reports of his bank problem and subsequent bankruptcy from 35 years ago “a distraction” in his goal to become Honolulu’s next mayor.

“My life is an open book,” he said.