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Tuesday, June 15, 2021
DOJ: Chinese Money Laundering Buys Big Island Properties
By News Release @ 12:50 PM :: 2267 Views :: Hawaii County , Development, Law Enforcement

Property Was to be Sold to Hawaii County ‘Open Space Fund’

WHT June 16, 2021: … From 2010 through October 2018, Claypool developed and then sold ... properties located in Waikoloa, Puuanahulu, Kukio and Kailua-Kona, for more than $11.4 million and later transferred the proceeds to investments accounts at brokerage firm Edward Jones.

The Big Island properties together totaled nearly 6.3 acres with lots ranging from less than a quarter-acre to just under 3 acres. Among them were a 0.35-acre oceanfront parcel near the popular Banyans surf spot and a 10-bedroom, 5.5-bath home on 2.87 acres in Kukio.

Two of the properties, one on Eleele Street in Waikoloa and the other on Makani Eka Place in Kukio, were transferred to Kilohana Makai LLC for sale to unaffiliated third parties. Kilohana Makai LLC remains the landowner on the lone parcel not sold, the 0.35-acre parcel off Alii Drive.  (76-6276 Ali'i Dr: MAP)

That oceanfront lot is the same parcel that went before the Leeward Planning Commission in April 2019 when Kilohana Makai LLC sought a five-year extension of a special management area use permit that had expired nearly two years prior. That permit would have allowed a five-story, 11-unit condominium on the parcel.

The developer agreed several months later during mediation prompted by a contested case to take the plan off the table. The landowner’s representative said Kilohana Makai LLC planned to work toward making the lot a public space for the community.

Also known as Keakealaniwahine, the Hawaii County Council approved purchasing the site May 5 using Public Access, Open Space and Natural Resources Preservation Commission (PONC) funds. Market value for the property Tuesday was $1.245 million.  (May 5, 2021: Council AgendaCouncil Actions  Res 80-21: Text, Status)

Kona Councilwoman Rebecca Villegas, who introduced the resolution authorizing the purchase, said she will be looking into the ownership matter.

“I had no idea,” she said late Tuesday. “The representative of the property that I was working with was somebody local and reputable.”

Claypool was still listed at the start of this year as the sole manager of Kilohana Makai LLC, according to the state Department of Commerce and Consumer Affairs. The company received a certificate of good standing on Tuesday….

read … Chinese national indicted for conspiracy in Hawaii

  *   *   *   *   *

China Resident Indicted For Laundering Millions Of Fraud Proceeds Through Big Island Properties

News Release from USDoJ, June 14, 2021

HONOLULU – A federal grand jury returned an indictment on June 10, 2021, charging Yao Zhungjun, 50, of Beijing, China, a former project manager at J.R. Simplot Company, an entity operating out of China, which had acquired the Jacklin Seed Company, a producer and marketer of grass seed and turfgrass based in Liberty Lake, Washington, with conspiracy to commit money laundering as part of multiple schemes to defraud Simplot, and route the proceeds through real estate developments in Hawaii.

Judith A. Philips, Acting U.S. Attorney for the District of Hawaii, said that according to the indictment, Yao solicited grass seed orders at artificially inflated prices from Chinese customers and then negotiated kickback payments from those customers in exchange for rebate payments from Simplot. Christopher Claypool, Jacklin’s general manager, approved and Yao collected millions of dollars in kickbacks from just one Chinese grass seed distributor, Beijing Oasis, on more than $10 million in rebates Simplot paid to Beijing Oasis.

The indictment also alleges that Yao and Claypool conspired to defraud Simplot directly. Specifically, Claypool arranged for seller commissions purportedly owed to a European partner to be paid to Yao through a Citibank Hong Kong account in Yao’s wife’s name. Claypool directed the payment of more than $7.3 million in fraudulent commissions to this account from 2008 through 2014.

As part of the money laundering conspiracy for which Yao was indicted, he and Claypool then routed the proceeds of these schemes through at least six pieces of real estate on the Island of Hawaii. From not later than March 2010 and continuing through June 2016, Yao caused more than 55 wires, totaling more than $11.6 million, to be sent from accounts he controlled in Hong Kong to accounts at First Hawaiian Bank for use in the acquisition and development of six parcels under Claypool’s control. From 2010 through October 2018, Claypool developed and then sold those properties for more than $11.4 million and later transferred the proceeds to investments accounts at brokerage firm Edward Jones.

Claypool was separately charged and pleaded guilty to this conspiracy in the District of Oregon. Yao remains at large. If convicted, he faces a maximum sentence of ten years in prison, a fine of more than $20 million, and three years’ supervised release.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

This case is being investigated by IRS Criminal Investigation and the U.S. Department of Agriculture Office of Inspector General. It is being prosecuted by Ryan W. Bounds, a Special Assistant U.S. Attorney for the District of Hawaii.

---30---

Feb, 2021: Former Grass Seed Company Manager Charged in Scheme to Defraud Simplot and Its Customers

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