Lyon Bribery: $240K to Buy DHHL Contract?

by Andrew Walden

Frank James Lyon’s guilty plea to federal bribery charges may be only the beginning.  Under the terms, “(Lyon) is required to submit…an accurate and complete list of all business he is currently affiliated/involved with that involve federal contacts.”  

Journalists are already digging into clues from Lyon’s January 22, 2019 plea agreement.  

HNN, January 30, 2019, reports:

… Jim Lyon, owner of the Honolulu-based company Lyon Associates, pleaded guilty last week to conspiracy charges in the alleged bribery scheme. Multiple sources say the bribe helped land a $2.5 million DHHL engineering contract on Kauai.

“It’s a system-wide problem, and it’s government graft and corruption," said Mililani Trask, a native Hawaiian attorney and cultural activist. “It’s $240,000 for this incident, but how much was paid for other incidents?”

Sources say that Lyon’s firm was hired in 2010 to assess the safety of four dams that the DHHL owned in the Anahola area of Kauai. After the 2006 collapses of the Ka Loko Dam, reservoir owners were required to assess the safety of their dams….

Cedric Duarte, DHHL spokesperson, tells Hawai’i Free Press: “The DHHL has not received any target letter or subpoena from any authorities related to this case with Lyon and Associations.  As such, we are unable to confirm if this complaint is referring to our department.”

The State Professional Services Awards database (search “Lyon Associates”) shows Lyon as primary or sub contactor on dozens of State contacts between 2009-2015.  Each of these contracts could be a target for investigators.

The $2.5M contract awarded October 28, 2010, for “Design and Assessment of five DHHL owned reservoirs in Anahola and Kekaha” appears to match the timeframe and amount in the indictment.  A 2017 record shows Lyon applying for a DLNR “Dam Safety Permit” for the project.  

The database (scroll right) also lists six DHHL employees who may have played a role in awarding the contract. 

Lyon’s indictment shows $240,000 in bribes paid out annually from March 31, 2011 through December 12, 2016, to “Co-Conspirator 3 … an employee of ‘State Agency’ from at least approximately 2008 until at least approximately 2012.”  These sums were them passed on to “certain State Agency officials who would have influenced the award….”  Other corrupt payments went to a “relative of Co-Conspirator 3, purportedly for consulting services….”   

In a separate whistleblower lawsuit filed September 28, 2016, former Lyon Associates corporate President Ronald Gonzales asserts he informed owners Frank Lyon and his deceased father James Lyon of “criminal property damage, failure to pay wages and salaries, falsified and fraudulent official documents, sexual harassment of employees and terroristic threatening.”

Gonzales names 30 witnesses including a Federated States of Micronesia official and numerous employees of Lyon and other building contractors active in Hawaii, Guam and Micronesia. 

AP reports: “Lyon faces up to five years in prison. He’s scheduled for sentencing on May 13.”

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Link: Lyon Indictment

Link: Gonzales Suit

Link: State Professional Services Awards database

Related: Lyon Bribes: Caldwell Appoints Crook to Zoning Board After Receiving $16.5K