A Honolulu company with $8 million in annual federal contracts is accused in a whistle-blower lawsuit of setting up as a Native Hawaiian nonprofit under questionable circumstances, illegally reimbursing family members for campaign contributions and avoiding state general excise taxes.
The lawsuit filed Aug. 30 in state court by former employee Sharon Amano accuses Hawaii Resource Group owners Charles Pires and Edward Morris of using past close ties with deceased U.S. Sen. Daniel Inouye and former U.S. Rep. Neil Abercrombie to secure nonbid sole-source contracts.
Hawaii Resource Group, a collection of companies, has two primary contracts, including providing program management software to the Department of Veterans Affairs and running supply boats for the U.S. Fish and Wildlife Service to the Northwestern Hawaiian Islands, court papers state.
Both are nonbid contracts bringing in revenues of about $8 million a year, the suit said.
Morris and Pires gave campaign contributions to Inouye and Abercrombie, and Pires had his wife and daughter also make contributions — for which they were reimbursed by the company — allowing Morris and Pires to give more contributions than federal law allowed, according to the suit.
"All campaign contributions were properly and publically filed and reported in explicit compliance with federal election regulations," Abercrombie, now governor, responded by email Thursday. "Contributors receive in writing exact instructions regarding federal election regulations."
Hawaii Resource Group is 51 percent owned by Mana‘o Nui Inc., a nonprofit Native Hawaiian organization headed by Pires’ daughter, Sara Ibara, the suit filed by attorney David F. Simons said.
According to the court filing, Ibara’s name is used because she is part-Hawaiian, and her control of 51 percent of the business makes the company eligible for sole-source, nonbid contracts.
However, Ibara "has no actual operational control" of Hawaii Resource Group, and she performs clerical functions at her father’s and Morris’ direction, the suit alleges.
Ibara is not mentioned among four individuals — Pires and Morris among them — listed as being the Hawaii Resource Group "executive team" on the company’s website.
Companies owned by Native Hawaiians or Hawaiian organizations and certified by the Small Business Administration can receive sole-source Defense Department service contracts above a $3.5 million ceil- ing placed on non-Native Hawaiian companies, the lawsuit said.
Amano, a bookkeeper, controller and chief financial officer with Hawaii Resource Group, claimed in the suit that she was wrongfully terminated in November because she refused to "passively accept HRG’s many violations and suspected violations of the law."
Amano maintains she was fired after she repeatedly objected to the "unethical and illegal practices" of Pires and Morris and contacted tax attorneys to set up a review "of the GET tax avoidance that she suspected was a violation of Hawaii law."
Neither company officials nor an attorney representing the company responded to a Star-Advertiser request for comment.
The suit said Hawaii Resource Group did not pay GET taxes on its Veterans Affairs work because it claimed a "scientific work" exemption that Amano suspected was illegal.
Amano also was suspicious of GET exemptions claimed for services provided to the U.S. Fish and Wildlife Service and a contract for water taxi services transporting Navy personnel from submarines to shore, the court filing states.
The lawsuit said Amano had been a chief financial officer for a division of Theo H. Davies & Co. for 39 years, retiring at age 60 after a buyout at Theo Davies in 2004.
Amano worked for Hawaii Resource Group from 2005 until her dismissal in 2012, and had never received any reprimands by the company before that, the suit said.
The company has affiliates that perform various water taxi and tugboat services, according to the suit.
When Amano was hired, she found the company was engaging in dishonest practices, the filing said, including paying the wife of an employee who worked as a welder, Kevin Yee, because Yee had been classified as "disabled" by the Social Security Administration, and was collecting Social Security disability income.
The suit said Pires "explained that Mr. Yee is an old friend and he was going to keep paying Mrs. Yee for Mr. Yee’s work."
"Plaintiff Amano found her job was equivalent to being a school teacher for a couple of adolescent boys. Mr. Pires and Mr. Morris often refused to play by the rules," the suit alleges.
Amano is seeking special, general and punitive damages "in amounts to be proven at trial."
